MANAGEMENT OF ENTREPRENEURSHIP IN A ...janek.uek.krakow.pl/~kzzo/MM2.pdfmanagement and intangible resources in the organization are very important nowadays and their importance over

MANAGEMENT OF ENTREPRENEURSHIP IN

A KNOWLEDGE BASED ECONOMY

THE ISSUE OF KNOWLEDGE AND INTELLECTUAL

CAPITAL MANAGEMENT

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Scientific Editors:

Marek Makowiec, Tomasz Kusio

ISBN: 978-83-941580-6-4 (printed version),ISBN: 978-83-941580-7-1 (PDF, online)

This book presents part of the results of PERSPECTIVE project. PERSPECTIVE is a European Union educational project dedicated to improve the way of teaching in the context of building the entrepreneurial spirit. The school is seen as a natural learning environment in which it is possible to develop the entrepreneurial mindset. […] In fact, human resources are becoming the most important factor in the job, where teamwork and cooperation take on increasing importance. […] The leadership situation in human capital management and the relations between organization’s intangible resources and company’s intellectual capital are described in order to identify their connections focus on the role of social capital in shaping the level of an organization’s intellectual capital. There has been introduced a helpful tool in determining the assessment of the impact of human resources management on the performance of the entire enterprise. […]

(Fragment of the review)

Professor María Segovia-Vargas,Professor Teresa Blanco-Hernández


A KNOWLEDGE BASED ECONOMYTHE ISSUE OF KNOWLEDGE

AND INTELLECTUAL CAPITAL MANAGEMENT

CRACOW UNIVERSITY OF ECONOMICSDEPARTMENT OF ORGANIZATIONAL BEHAVIOUR

Cracow 2015


A KNOWLEDGE BASED ECONOMYTHE ISSUE OF KNOWLEDGE

AND INTELLECTUAL CAPITAL MANAGEMENT

CRACOW UNIVERSITY OF ECONOMICSDEPARTMENT OF ORGANIZATIONAL BEHAVIOUR

Scientific editors:


Cracow 2015

Scientific Editors:Marek Makowiec, PhD

Tomasz Kusio, PhD

Reviewers:Professor María Segovia-Vargas (University of Madrid, Spain),

Professor Teresa Blanco-Hernández (University of Madrid, Spain)

All papers have been prepared in English by the Authors.The editors are not responsible for its form and style.

© Copyright by Department of Organizational Behaviour,Cracow University of Economics, Cracow 2015

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, transmitted or utilized in any form or by any means, electronic, mechanical,

photocopying or otherwise, without permission from the Publisher.


The project has been funded with support from the European Commission, project Leonardo da Vinci, Number 540455-LLP-1-2013-1-IT-COMENIUS-CMP. This

publication reflects the view only of the authors and the Commission cannot be held responsible for any use which may be made of the information contained therein.

Publishing House:Department of Organizational Behaviour,

Cracow University of Economics,ul. Rakowicka 27, 31-510 Kraków, Poland

CONTENTS

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part ITHE DEVELOPMENT AND PRACTICAL USE OF KNOWLEDGE IN ORGANIZATIONS

Chapter 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Marek Jabłoński THE KNOWLEDGE AS FACTOR OF THE COMPETITIVENESS OF ENTERPRISES – RETROSPECTIVE APPROACH

Chapter 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Marek Ćwiklicki, Angelika Wodecka-HyjekFACTORS FOR THE DEVELOPMENT OF ENTREPRENEURSHIP IN THE PUBLIC SECTOR

Chapter 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Sebastian WacięgaPRACTICAL USE OF KNOWLEDGE ABOUT HISTORY FOR ENTREPRENEURIAL LEARNING. THE SKETCH OF THE METHOD

Chapter 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Mirosław BorekKNOWLEDGE MANAGEMENT IN OUTSOURCING

Chapter 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Maciej Jan MalarskiCOMPETENCIES REQUIREMENTS FOR SALES PEOPLE AS GUIDELINES FOR EDUCATION

Chapter 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Grażyna StańczakTHE CHANGE IN MARKETING TECHNIQUES IN THE ECONOMY OF THE DIGITAL AGE

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19

31

45

57

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PART IITHE ROLE OF INTANGIBLE ASSETS IN ORGANIZATIONAL TRANSFORMATIONS

Chapter 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Snežana Knežević, Aleksandra MitrovićTHE ACCOUNTING TREATMENT OF INTERNALLY GENERATED INTANGIBLE ASSETS

Chapter 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Anna Pietruszka-OrtylSOCIAL CAPITAL AS COMPARED TO AN ORGANIZATION’S INTELLECTUAL CAPITAL AND INTANGIBLE RESOURCES

Chapter 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Aldona Wiktorska-ŚwięckaCREATING OF COMPANY’S SOCIAL INNOVATION POTENTIAL IN THE CONTEXT OF THE IDEA OF CORPORATE CITIZENSHIP

PART IIIINSTRUMENTS SUPPORTING THE DEVELOPMENT, TRANSFER AND USE OF KNOWLEDGE IN ORGANIZATIONS

Chapter 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Mariusz MakowskiFROM THE ENTREPRENEURIAL TEACHER TO ENTREPRENEURIAL GRADUATE. CONCLUSIONS FROM PERSPECTIVE PROJECT DEVOTED TO CREATING NEW CURRICULA FOR TEACHERS

Chapter 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Paweł ŁukasikCOMMUNICATION METHODS SUPPORTING ORGANIZATIONAL LEARNING PROCESS

Chapter 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Andrzej LisTEAM LEARNING THROUGH AFTER ACTION REVIEWS

Chapter 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Anna J. Piwowarczyk CULTURAL INTELLIGENCE OR ENTREPRENEURSHIP IN HIGHER EDUCATION LANGUAGE COURSES

97

107

121

135

149

159

171

PART IVCHANGES AND TRENDS OCCURRING IN HUMAN RESOURCE MANAGEMENT IN THE FACE OF NEW CHALLENGES

Chapter 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Ana Langović Milicević, Tatjana Cvetkovski, Zlatko LangovićNEW DIRECTIONS IN HUMAN RESOURCE MANAGEMENT

Chapter 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Jolanta Walas-TrębaczTHE APPLICATION OF BALANCED SCORECARD IN THE HUMAN RESOURCE MANAGEMENT IN THE ENTERPRISE

Chapter 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Piotr ZającSITUATIONAL LEADERSHIP IN HUMAN CAPITAL MANAGEMENT

183

193

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INTRODUCTION

Marek MakowiecPhD, Cracow University of Economics

Tomasz KusioPhD, Cracow University of Economics

This publication is a summary of the European project “PERSPECTIVES – Experiences Entrepreneurial Spirit Challenge in School Education”. The main objective of this project was the development of European models of teachers education in primary and secondary schools in order to promote the development of their skills. Another goal of the project was to develop a methodology of entrepreneurship education in order to possess the education tool for improvement of pupils’ knowledge and practice. The project was implemented by the international consortium, headed by an Italian organization TUCEP and CUE was one of the partners. The project consortium was formed of following entities: TUCEP – Tiber Umbria Comett Education Programme (Italy) – Coordinator, CUE – University of Economics in Krakow (Poland), UPRC – University of Piraeus Research Center (Greece), RCE – Regional Centre of Expertise on Learning for Sustainable Development RCE Rhine-Meuse (Netherland), PRAGMA – Pragma Engineering srl (Italy), STVG – Styrian Association for Education and Economics (Austria), AEVA – Associação para a Educação e Valorização dos Recursos Humanos for Distrito de Aveiro, Escola Profissional de Aveiro (Portugal), JAH – Junior Achievement Magyarország Oktatási Informatikai Stratégia, Vállalkozásszervezési Alapítvány (Hungary), TAALUMA – Holistic education for social change (Belgium).

Aspects relating to broadly understood entrepreneurship, knowledge management and intangible resources in the organization are very important nowadays and their importance over time will become even greater.

Assuming that entrepreneurship is a specific form of human activity that triggers in people the strength to overcome various complex and also piled up around obstacles, problems and resistance, and forces them to engage in human interaction, the authors of this publication, in order to establish cooperation necessary when making a particular activity, would like to assist both those who are considering making the entrepreneurship only option in their lives, but also those – experienced practitioners, who have to deal with it every day, leading a particular activity – and are already entrepreneurs. The publication is also directed towards experts involved in the transfer of knowledge to others, i.e. scientists, business coaches and teachers shaping the attitude and personality of young people.

Entrepreneurship becomes nowadays an important factor in the development of the organization. It can be defined both in terms of setting up and running businesses, as well as in terms of attitudes and behaviors of specific individuals.

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The issue of social innovations is very important when discussing topics concerning entrepreneurship and innovation for education institutions. New methods of solving social problems, of which the results can be solutions of a social nature, refer explicitly to the functioning of educational organizations. Appropriate educational materials, as well as the orientation of the educational process, including new teaching methods, constitute an added value to the current situation of the creation of innovation of a social nature. Thereby offering and providing knowledge seems to be an important factor in creating a knowledge-based economy. On the other hand when discussing the results of the educational process, it is important that in terms of the functioning of economic organization, knowledge and skills of people who are undergoing training, are discussed in categories of human capital.

The success of the organization in a competitive market, in terms of increasing globalization, is the reason of knowledge, skills and experience of organization employees. Creative thinking and involvement of employees can undoubtedly positively affect the functioning of the company, hence the considerable significance in this context has the appropriate knowledge management. Ability to use the knowledge resources and efficient management becomes a determinant of competitiveness and success. Knowledge and the necessity of its generation, dissemination and management ability are the conditions for success and sustainable competitive advantage.

Nowadays all economic entities are forced to seek more and better mechanisms of functioning, guaranteeing them the flexibility, innovativeness, quick responsiveness and consequently adequate quality. There is a need for a new recognition of the most important organizational resources which means people, human capital characterized by competencies, subjectivity, responsibility and creativity. Success, gained by today organizations, is not based on a carefully structured process of action, but is largely a derivative of intangible assets being in the possession of organizations, as well as the ownership of the relevant product adaptive capacity, promptness in making the right decisions, using intuition and accepting the risk, at their core there is knowledge, which is part of intellectual capital.

Earlier, the economy was dominated by the approach relying heavily on the material resources and thus condensing resources, raw materials, tools, machinery and equipment, and using only a “little bit” of knowledge. Today, in terms of the new economy, knowledge-based economy (KBE), the dominant approach and attitude is to condense knowledge and so appropriate gathering, sharing and developing it among employees in conjunction with an emphasis on other intangible resources of the organization.

Intangible resources allow today companies to build a sustainable competitive advantage, and among them the great importance should be assigned to the knowledge that allows to provide customers a unique value – products and services.

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INTRODUCTION

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The development of computerization has changed the structure of the strategic resources of the organization. Knowledge-based company focuses on intellectual capital and creates the majority values from intangible assets. Knowledge is therefore a critical resource, a strategic one, creating a competitive advantage and causing differentiation of businesses in the market. Such companies typically have very few tangible assets, and their intangible assets are valued generally significantly higher than those materialized. Such organizations cannot function without a network of different stakeholders (customers, suppliers) to support and strengthen their knowledge base. What is the regularity in such entities, is considering knowledge as a strategic resource, and majority of workers are highly skilled and educated employees whose job is mainly to exchange possessed data and information into knowledge, using for that purpose competencies, experience, network of contacts business, etc.

Today, access to the resources of knowledge accumulated over the years is virtually unlimited thanks to the Internet which has become almost omnipresent, and the most important issue becomes the ability to correct selection, proper connection of it in many aspects and efficient incorporation of it into force. Knowledge thus acquires special importance and becomes one of the most valuable resources which possession and appropriate usage more and more often decides and will decide upon the position and importance of the organization in the industry or sector, both today and in the future.

The aim of the publication is to present the views of different scientific communities and practitioners of management on issues related to broadly understood enterprise, knowledge management and human capital in organization.

The first part of the monograph entitled: “The development and practical application of knowledge in organizations”, include six chapters, where following topics are discussed:

• The importance of knowledge as an essential factor in the competitiveness of enterprises with the regard to the retrospective approach. The various shots of knowledge and its importance in selected types of organizations were presented. The genesis and importance of knowledge in modern organizations was also described;

• Factors for development of entrepreneurship in the public sector. The attempt of identification the factors supporting and limiting social entrepreneurship was taken;

• Methodical use of historical knowledge for contemporary entrepreneurship education. On the basis of a practical example the authors described how to support people at any stage of development in obtaining historical knowledge concerning regional development which is at the same time helpful in promoting entrepreneurial attitudes;

• Rank and the importance of knowledge in strategic outsourcing. The basic issues related to the importance of knowledge transfer and knowledge management in outsourcing relationships were discussed;

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• Presentation of the results of research conducted among companies hiring employees in sales departments. These studies made it possible to develop applications on identified changes that affect the sales processes of an organization of modern entities and related competency requirements necessary for employees engaged in these areas in organizations;

• Analysis of the factors that have the greatest impact on the optimal shape of modern marketing, and directly contribute to the reference in the organization’s success. Description of marketing and solutions that are currently being used by companies – leaders in their respective industries.

In the second part of the publication entitled: “The role of intangible assets in organizational transformations” the following issues were discussed:

• Rank, importance and valuation of intangible assets in the organization. Despite its immaterial character such resources are often the most valuable assets in organization. It was presented how the accounting process of intangible assets within the organization might look;

• Detailed explanation of the definitions: intangible resources, intellectual capital, intangible assets and an indication of their mutual dependence. The social capital of an organization was described – its dimensions and determinants – as part of the intellectual capital of the company;

• The concept of corporate citizenship and issues related to the generation of social innovation by the company. Forming positive relationships with the local community, in which the company operates, allows her to use of valuable and still more desirable resources, which can contribute to the emergence of social innovations.

In the third part of the monograph entitled: “Instruments to support the development, transfer and application of knowledge in organizations”, the following topics are described:

• Conclusions from the project “PERSPECTIVE”, dedicated to the creation of new training programs for teachers. There were presented the results, conclusions and best practices derived from implemented international project promoting the ideas of fostering an entrepreneurial mindset among young people and how to prepare teachers to educate young people in this area;

• The importance of communication in contemporary organizations. The results were presented of research on verifying of how and if communication supports organizational learning thus leading to generate innovation in organizations;

• Aspects relating to collaborative learning through discussion after completing the task (After Action Review – AAR). The essence and assumptions of AAR techniques. An analysis of the process of discussion

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INTRODUCTION

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after the execution of the task was also presented as well as the attempts to assess the potential of the AAR in the context of the characteristics of effective learning in a team;

• Issues concerning the development of entrepreneurial attitudes in the context of teaching foreign languages in high school. Taking into consideration issues of intercultural communication the essence and components of cultural intelligence as an important element of entrepreneurship was described.

The last, fourth part of the monograph entitled: “Changes and trends occurring in human resource management in the face of new challenges” contains studies developing the following topics:

• New trends in human resource management. There were described aspects concerning, among other things: cultural differences and their impact on the functioning of international corporations, staff policies, which unfortunately often do not take into account the cultural specificities of employees, aging of the population, increasing global mobility of corporate employees, need of continuous investment in the human capital which is a source of sustainable competitive advantage;

• Use of Balanced Scorecard in human resource management in the organization. Balanced Scorecard is a recognized modern management tool that ensures balance of the measurement elements of implementation of the strategy in various business areas. One of the areas of this instrument application is the human resource management. To be effective, it must be supported by IT systems;

• Situational Leadership in human capital management. Three skills that a leader should possess are related to situational leadership: flexibility, diagnosis and partnership. They are essential for managers to be able, together with their employees, to obtain effects which will result in organizational success.

The elaboration, in the authors’ opinion, can provide valuable support for all those seeking information on widely understood organizations management with particular emphasis on aspects related to entrepreneurship, identification and then development of knowledge within organizations, increasing systematically rank/ importance of intangible assets in enterprises and human resource management in the era of knowledge-based economy (KBE).

The multithreading content discussed in the publication which is directly connected with interdisciplinary of interests of individuals who are the authors of individual chapters can be noticed.

We are firmly convinced that the studies included in the monograph will initiate and stimulate reflection and discussion, and at the same time be an inspiration to develop the topics, conduct investigations and inquiries and will contribute to improvement of the functioning of already existing organizations.

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We also assume that the issues discussed may help in the development of economic activities of those who are considering such an activity option in the distal and proximal period of time.

PART I

THE DEVELOPMENT AND PRACTICAL USE OF KNOWLEDGE IN

ORGANIZATIONS

Marek JabłońskiPhD, Professor, Department of Organizational Behaviour, Cracow University of Economics

THE KNOWLEDGE AS FACTOR OF THE COMPETITIVENESS OF ENTERPRISES – RETROSPECTIVE APPROACH

Keywords: knowledge, organizational knowledge, levels of organizational knowledge

SummaryThe aim of the paper is presenting the knowledge as factor of the

competitiveness of enterprise basing upon retrospective approach. At first there is produced the review of knowledge definitions on different scientific fields and origins of knowledge management on management science. Paper characterizes the knowledge as the primary resource of organization and specifies organizational knowledge in selected types of organizations, i.e. pre-Taylorian, Taylorian, Human Relations, Humanized and modern organization. Final part of the paper is devoted to showing the origins and meaning of knowledge within modern organization as well as the organizational knowledge in the broad and narrow sense.

IntroductionThe concept of knowledge can be found in the field of different scientific,

i.e. philosophy, psychology, economics. Plato’s interpretation of knowledge is the basis for defining this concept by Western philosophers1. According to Plato, knowledge is legitimate and true beliefs associated with the universal objects2. In this sense, it includes the creation of social effort and mental human activity ordered by their experiences, communication processes and reasoning3. Psychologists treat knowledge as a field of cognition based on the senses and

1 N.K. Kakabadse, A. Kakabadse, A. Kouzmin, Reviewing the knowledge management literature: towards a taxonomy, “Journal of Knowledge Management”, Vol. 7, No. 4, 2003.2 I. Nonaka, H. Takeuchi, Kreowanie wiedzy w organizacji, Poltex, Warszawa 2000, p. 40-41.3 F. Blacker, Knowledge, knowledge work and organizations: an overview and interpretation, “Organization Studies”, Vol. 15, No. 6, 1995.

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the intellect4 according to Psychologists main sources of knowledge are the processes of thinking and possessed experience. In economics knowledge is identified as human capital, spending on R&D, technologies determining growth of economies, i.e. J. Schumpeter’s creative destruction5, models and theories within endogenous growth theory i.e. learning-by-doing, spillover, threshold externalities, approach based on the concept of Rostov-growth stages.

However, the conceptualization of knowledge on the basis of management science was established primarily as a result of the work of P. Romer, particularly article published in 1986, which is a shorter version of his doctorate dissertation form 1983. He noted that one of the main sources of technological progress are: innovation, ideas, concepts, or general knowledge6. It is worth mentioning that much earlier, many economists have pointed the importance of knowledge as a factor of production. For example, Alfred Marshall in 1924 indicated that the role of “nature” in production may be subject to the law of diminishing returns, while the role of a man is linked to the law of increasing returns. On the other hand, J. Clark argued that knowledge is the only instrument of production that is not subject to the law of diminishing returns. Nobel laureate Kenneth Arrow has proposed dynamic interpretation to explain the increase returns by taking into account learning by doing (learning-by-doing)7.

Knowledge as the “primary” resource of organizationKnowledge is the information, which is gathered (accumulated) and

systematized in the right way. With such an approach may fade difference between knowledge and information. Element distinguishing these two categories is that the transformation of information into knowledge takes place in the human mind, through the process of judgment concerning the identification, analysis and interpretation8. Information is a reflection of the process, activities, while the concept of knowledge reflects the state of the information available. Thus, the concept of knowledge is wider and deeper than the notion of information. Knowledge is of dynamic and open nature, while a closed and static information.

Knowledge is the result of a process of thinking, in which the information is combined with their understanding of how to use them. In this sense

4 J.G. Monks, Operations Management – theory and problems, McGraw-Hill, New York 1982, p. 223.5 J. Schumpeter, Teoria rozwoju gospodarczego, PWN, Warszawa 1960.6 P. Romer, Increasing returns and long run growth, “Journal of Political Economy”, Vol. 94, No. 5, 1986.7 G.M. Meier, J.E. Rauch, Leading issues in economic development, Oxford University Press, New York-Oxford 2005, p. 79.8 M. Martensson, A critical review of knowledge management as a tools, „Journal of Knowledge Management”, Vol. 4, No 3, 2000; G.M. Steyn, Creating knowledge through management education: a case study of human resource management, “Education”, Vol. 123, No. 3, 2003.

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knowledge represents the human capacity to interpret information by giving its meaning. New information are not connected to already existing knowledge resource, but first interpreted and established in particular context. This does not change the fact that knowledge is the result of observation, experience and learning process. It is a flexible and dynamic immaterial substance, caused by a mental processing of information held by the man, and derived from the environment9.

Knowledge is the basis of all forms of organized activities occurring in any socio-economic systems. As axiological category is the cornerstone of ordering things and interactions thus determining the efficiency of each company. Members of the organization basing on the knowledge adapt systems and other categories of organizations (ontological, epistemological and axiological) to gain competitive advantage of enterprise. In this sense, knowledge is the “original”, and as indicated by A. Koźminski, a fundamental resource organization (figure 1). This means that knowledge controls the multiplication processes and configuration of other resources, and also is an indispensable material of consciously realized projects in the organization10. It represents factor of production, in addition to land, capital and labor. It allows to obtain and organize individual organization’s resources and their spatial coordination to achieve goals. Employee at each station, in addition to spatial workplace, equipment resources, in the form of fixed assets and objects of labor, must have adequate knowledge, to combine productive factors in the process of generating value. As a result, knowledge as a primary resource is associated with all the “hard” and “soft” resource determining their configuration setting in the process of generating value. ‘Hard’ resources of organizations may include: capital (physical and financial); technologies and know-how; strategies conceived as a long-term action plans clear, both for employees and for markets; structure conceived as a formal principle of separation of duties, powers and responsibilities and information within organization. “Soft” resources include: people with their qualifications, aspirations, motivations and attitudes; culture, which established patterns of behaviour, norms and values; knowledge, resources information that is useful for the functioning of the company; brand, or public perception of the company and its products; access to the market, which is legally and socially established contacts with buyers11. resources “hard” are those that are subject to categorization and counting using of the nominal, ordinal, interval and quotient scale. “Soft” is such resources, which are not categorized at least one of the above scale.

9 B. Mikuła, A. Pietruszka-Ortyl, A. Potocki, Zarządzanie przedsiębiorstwem XXI wieku – wybrane koncepcje i metody, Difin, Warszawa 2002, p. 73.10 A.K. Koźmiński, Zarządzanie w warunkach niepewności. Podręcznik dla zaawansowanych, Wydawnictwo Naukowe PWN, Warszawa 2004, p. 96.11 Ibidem, p. 93.

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Figure 1. Knowledge as the “primary” resource of organization

Source: elaborated basing upon: A.K. Koźmiński, Zarządzanie w warunkach niepewności. Podręcznik dla zaawansowanych, Wydawnictwo Naukowe PWN, Warszawa 2004, p. 96-97.

Organizational knowledge in selected types of organizationsIn any organization knowledge is a key factor for competitive advantage.

Its different perception in various types of organizations results from many factors. However, all can be reduced to two basic. Firstly, in particular types of organizations developing a competitive advantage was associated with a different of enterprise resources. Secondly, in the activity of embers of the organization dominated different types of purposes. These two variables set out rules for praxeological efficiency to ensure the development of competitive advantage, i.e. valued knowledge in different types of organizations (table 1).

In pre-taylorian, taylorian and human relations organizations, operating in a relatively stable environment, developing a market position was mainly determined by physical, financial capital resources, technologies and know-how. These resources which are characterized by quantifiability, concreteness and strong basis in reality relatively slower subject to change and reconfiguration. Rules for their use and operation were known, described and codified. As a result, organizational knowledge associated mainly with technical expertise (skills in the use of technology)12.

12 B. Wawrzyniak, Odnawianie przedsiębiorstwa na spotkanie XXI wieku, Poltext, Warszawa 1999, p. 39.

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Table 1. Organizational knowledge in different types of organizations

Type of organi-

zation

Analysis criteria

Pre-Taylorian, Taylorian

Human relations Humanized Modern

Nature of the objectives, processes, tasks

Routine Routine and partly problem

Problem and partly innovative

Innovative

Key resources „Hard” resourcesThe growing role of „soft” resources

„soft” resources

The scope of knowledge Distributive set Distributive

and fuzzy set Fuzzy set

Type of knowledge

Technical knowledge (technology)

Commercial knowledge and associated with change management

Knowledge related to learning organization

Knowledge representation

System of norms and organizational principles

The range of „framework instruction”

Self-organization of employee actions

Employees innovativeness

Sources of knowledge

External (knowledge delivered to the workplace and to the organization)

External and partly internal through the „Framework instruction”

External and internal

Economic cooperation netwirks

Knower Management

Executives and members of informal groups

Autonomous task groups, quality circles

Members of organizations operating in the network

Levels of knowledge

Individual, organizational

Individual, organizational

Individual, group, organizational

Individual, group, organizational, interorganizational

Source: own elaboration.

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Marek Jabłoński

Within pre-Taylorian organisation knowledge included the ability of the human factor to organize company’s resources basing upon the division of labor and specialization. Increasing labor productivity was achieved on the intensification of human labor. The system elaborated by F. Taylor allowed the formalization of experience and hidden skills of workers in the objective principles and organizational rules, which guaranteed “smarter” and not heavier work in order to achieve higher results13. As a result, knowledge as a key factor of competitive advantage of Taylorian organizations, might be associated with system of standards and procedures which formed the basis of organizing resources. Such an approach to knowledge was also dictated by the dominance within this type of organization of routine work, which gauges were deviations from accepted standards.

Human relations organization has enriched knowledge of Taylorian organization mainly through the use of so-called framework instruction and the perception of informal groups as productivity factor. In human relations organization in addition to routine purposes, there were also problem purposes which gauges were solutions and established deadlines. The fundamental difference between knowledge of Taylorian and human relations organization resulted from the freedom of action of workers within the framework instructions. According to such an approach organizational knowledge might be interpreted as the ability of the members of the organization for the intended purposes (implementation of the norms and principles) with a relatively broad framework instruction at different positions.

Pre-Taylorian, Taylorian, human relations organizations (including organizational units and positions) were treated as objects isolated from the environment. As a result, the source of organizational knowledge were outside the place of its use (specialized institutions within business surroundings, planning department, chief technologist, functional units responsible for solving problems). The homogeneous nature of the various functions of the company, the subordination of the management system and “soft” resources to “hard” resources of organization and the sphere of regulation caused that the knowledge of these organizations have “nature” of distributive set14. As a result, it was possible to distinguish the stock of knowledge corresponding to specific processes or functions. Set of norms and organizational procedures, appoint interpretation of information uniquely qualifying them as useful for achieving the objectives. The subordination of organizational knowledge to “hard” resources of organization strengthened existing relationships in the structure of the company, and “closed” the organization to the ambient signals contrary to the current system of norms and values, thus promoting mechanistic interaction

13 Z. Martyniak, Organizatoryka, PWE, Warszawa 1987, p. 18.14 Distributive set is an abstract object covering any quantity capable of being mentally bind together: A. Łachwa, Rozmyty świat zbiorów, liczb, relacji, faktów, reguł i decyzji, Akademicka Oficyna Wydawnicza EXIT, Warszawa 2001, p. 11.

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between resource. In this sense organizational knowledge related to the “hard” assets can be linked to the information system of collective entity15. Includes reflected in the mind of man the relationship between objectively perceived phenomena and the relations16. Objectification of phenomena occurring in the environment of the organization was performed by organizational rules and rules of conduct.

The key factors determining the competitive position of humanized organization on the market were: operational effectiveness and commercial efficiency (i.e. the need to use effective marketing strategies). Particularly important was trading knowledge and knowledge related to change management17. Therefore there was grow in importance of resources “soft” organization, in particular: people with their skills, attitudes, values, organizational culture, brand, access to markets. Despite the increasing role of human resources in the humanized organization, “soft” resources were still organized against the imposed technological structure of company.

The interpretation of knowledge of humanized organization was expended by: systems theory (knowledge in organizational surrounding), mathematical approach (knowledge within systems optimization) and the formalization of knowledge teams and employee groups (autonomous task groups, quality circles). As the result humanized organization knowledge included also: intuition, the values of employees and subjective rules and principles of work, especially managerial work (neoclassical school, management by objectives, exceptions, the theory of the growth of the firm – E.T. Penrose) adapted to the specific decision-making situation (situational approach). In this sense, the humanized organization saw knowledge directly related to the human factor of organization necessary to achieve the target problems. Problem objectives and tasks became more widespread as a result of increasingly rapid “moral” obsolescence of stocks of fixed resources of organization and the increasing competitiveness of markets.

Despite the development of systems theory, sources of humanized organization knowledge still fall substantially within the organization: R&D departments, group of employees called to solve specific organizational problems and develop innovations. An important difference compared with the previous types of organizations based on the fact that were melted “boundaries” between stations. On the one hand, integrated workstations were grouping into autonomous task forces, and quality circles, on the other hand, employees representatives were included to the boards of companies. These phenomena are associated with the formation of networks within the organization (around

15 W. Flakiewicz, Informacyjne systemy zarządzania – podstawy budowy i funkcjonowania, PWE, Warszawa 1990, p. 82, 206.16 J. Zieleniewski, Organizacja i zarządzanie, PWN, Warszawa 1979, p. 47.17 B. Wawrzyniak, Odnawianie przedsiębiorstwa na spotkanie XXI wieku, Poltext, Warszawa 1999, p. 39-40.

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Marek Jabłoński

processes, tasks, goals), which they were perceived as sources of knowledge and the development of enterprises. In this sense smoothly functioning networks within organization can be identified with high levels of organizational knowledge. Researchers of this trend – simply using the term of knowledge – analysed knowledge in various aspects of the organization. H. Simon captured knowledge in terms of bounded rationality in decision-making18. E. Penrose analysed organizations as a reservoir of knowledge stressing the importance of accumulation of experience and knowledge in the enterprise19. R. Nelson and S. Winter also interpreted the company as a reservoir of knowledge, however, they identified her with cyclical and predictable patterns of behavior and organizational routines20. P. Drucker proposed the concept of the knowledge worker and the concept of the knowledge society.

Knowledge of modern organizations Conceptualization and instrumentalization of knowledge of contemporary

organization was the result of:• Increase of the role of “soft” resources (off-balance sheet assets) in

developing a competitive advantage of organizations,• domination of innovative purposes in the set of corporate goals,• the development of modern management concepts, in particular the

proliferation of institutional and neo-institutional theory of the firm and a process approach.

Starting in the late 70s of the twentieth century there was we observed a gradual increase the role of off-balance sheet assets of an organization in developing a competitive advantage. These assets associated primarily with the knowledge used in the current functioning of the organization, i.e.: human resources, hidden assets or intellectual capital. It was emphasized that the strategy of doing business basing solely on traditional factors of production does not guarantee sufficient revenue growth for companies. It turned out that information and knowledge to a greater extent than land, capital and labor determine the survival of the organization and an increase in revenues in companies21. As the result, in the second half of 80s of the twentieth century researchers started to operate the term of organizational knowledge. Referring

18 H. Simon, Bounded rationality and organizational learning, “Organizational Science”, Vol. 2, No. 1, 1991.19 E.T. Penrose, The theory of the growth of the firm, Basil Blackwell, Oxford 1959.20 R.R. Nelson, S.G. Winter, An evolutionary Theory of Economic Change, MA: Belknap Press, Cambridge 1982.21 A. Toffler, Trzecia fala, PIW, Warszawa 1986; N. Bontis, N.C. Dragonetti, K. Jacobsen, G. Roos, The knowledge toolbox: a review of the tools available to measure and manage intangible resources, “European Management Journal”, Vol. 17, No. 4, 1999.

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to the Karl Weick sense making theory22 organizational knowledge has been identified in reality the organization, it became an objective category, separable from other subsystems of organization and knowledge was included in the area of interest of enterprise decision makers.

Organizational knowledge of the modern enterprise has been extended due to the dominance of the innovative objectives, which gauges are not deviations from accepted standards (routine goals), or solutions and established deadlines (problematic goals), but productive changes constructed and obtained at a certain time. Their domination is not associated with the elimination of routine and problem operations from the sphere of activity of the company. The knowledge needed to achieve the routine and problematic objectives is contained in the systems based on ICT, in particular based on the concept of Business Intelligence. Therefore there is the increasing demand for use of knowledge for innovative actions in every workplace, so production as well as administrative positions. As the result, particularly important is the individual knowledge of every worker.

The development of modern management concepts, process approach and the proliferation of institutional and neo-institutional theory of the firm resulted in blurring the boundaries between the organization and the environment. As a result, plays an important role both organizational knowledge available to members of the organization and external market players, as well as knowledge of staff teams and individuals. Modern enterprise organizational knowledge applies to all members of the organization and structures, systems and processes, by which all business assets are subordinated to knowledge. In other words, the existing networks within humanized organization have been transferred in contemporary organizations to the level of cooperation between market players. As a result, through networking, modern organization also implements innovative activities together with other market players, and the human factor of enterprise is extended to shareholders, stakeholders and employees of other companies. Today, innovation is more often the result of R&D activities carried out in cooperation with business partners and the result of commitment to process innovation all the company’s employees. In summary, knowledge of contemporary organizations is analysed on four levels, i.e. The individual knowledge, group knowledge, organizational knowledge and inter-organizational knowledge.

ConclusionsOrganizational knowledge is created as a result of the integration

of information flows (including codified knowledge of organizational surroundings) with the reality in which the organization operates, because only such knowledge to the greatest extent captures the essence and the peculiarities

22 M.J. Hatch, Teoria organizacji, Wydawnictwo Naukowe PWN, Warszawa 2002, p. 55-56.

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Marek Jabłoński

of the process of creating value in the company. Consequently, it is marked by subjectivism. Moreover, it is impossible to give knowledge full objectively perceived motives and characteristics. In this sense organizational knowledge does not reflect the true solutions and objectively effective (in the environment of the organization), but appropriate to the context, where value is generated. Organizational knowledge resources are increased on four levels, i.e.: individual, group, organizational and inter-organizational.

Figure 2. Organizational knowledge in the broad and narrow sense


Knowledge of modern organizations can be analysed in a broad and narrow sense (figure 2). In the first case it relates to a resource (stream) of information, the rules of interpretation (including the values and experiences) and context of organization reality and levels of organizational knowledge. In contrast, organizational knowledge in the narrow sense is associated only with the processing of information. However, regardless of the scope of its analysis, organizational knowledge requires a deep understanding of dependencies, consistency and intangible conditions of the enterprise, hence the special role and responsibilities of the members of the organization (“soft” resources) in its development.

Literature:1. Blacker F., Knowledge, knowledge work and organizations: an overview and

interpretation, “Organization Studies”, Vol. 15, No. 6, 1995.2. Bontis N., Dragonetti N.C., Jacobsen K., Roos G., The knowledge toolbox:

a review of the tools available to measure and manage intangible resources, “European Management Journal”, Vol. 17, No. 4, 1999.

3. Flakiewicz W., Informacyjne systemy zarządzania – podstawy budowy i funkcjonowania, PWE, Warszawa 1990.

4. Hatch M.J., Teoria organizacji, Wydawnictwo Naukowe PWN, Warszawa 2002.

5. Kakabadse N.K., Kakabadse A., Kouzmin A., Reviewing the knowledge management literature: towards a taxonomy, “Journal of Knowledge

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Management”, Vol. 7, No. 4, 2003.6. Koźmiński A.K., Zarządzanie w warunkach niepewności. Podręcznik dla

zaawansowanych, Wydawnictwo Naukowe PWN, Warszawa 2004.7. Łachwa A., Rozmyty świat zbiorów, liczb, relacji, faktów, reguł i decyzji,

Akademicka Oficyna Wydawnicza EXIT, Warszawa 2001.8. Martensson M., A critical review of knowledge management as a tools,

„Journal of Knowledge Management”, Vol. 4, No. 3, 2000.9. Martyniak Z., Organizatoryka, PWE, Warszawa 1987.10. Meier G.M., Rauch J.E., Leading issues in economic development, Oxford

University Press, New York-Oxford 2005.11. Mikuła B., Pietruszka-Ortyl A., Potocki A., Zarządzanie przedsiębiorstwem

XXI wieku – wybrane koncepcje i metody, Difin, Warszawa 2002.12. Monks J.G., Operations Management – theory and problems, McGraw-Hill,

New York 1982.13. Nelson R.R., Winter S.G., An evolutionary Theory of Economic Change, MA:

Belknap Press, Cambridge 1982.14. Nonaka I., Takeuchi H., Kreowanie wiedzy w organizacji, Poltex, Warszawa

2000.15. Penrose E.T., The theory of the growth of the firm, Basil Blackwell, Oxford

1959.16. Romer P., Increasing returns and long run growth, “Journal of Political

Economy”, Vol. 94, No. 5, 1986.17. Schumpeter J., Teoria rozwoju gospodarczego, PWN, Warszawa 1960.18. Simon H., Bounded rationality and organizational learning, “Organizational

Science”, Vol. 2, No. 1, 1991.19. Steyn G.M., Creating knowledge through management education: a case study

of human resource management, “Education”, Vol. 123, No. 3, 2003.20. Toffler A., Trzecia fala, PIW, Warszawa 1986.21. Wawrzyniak B., Odnawianie przedsiębiorstwa na spotkanie XXI wieku,

Poltext, Warszawa 1999.22. Zieleniewski J., Organizacja i zarządzanie, PWN, Warszawa 1979.

Marek ĆwiklickiPhD, Professor, Department of Management Organization Methods, Faculty of Management, Cracow University of Economics

Angelika Wodecka-HyjekPhD, Assistant Professor, Department of Management Organization Methods, Faculty of Management, Cracow University of Economics

FACTORS FOR THE DEVELOPMENT OF ENTREPRENEURSHIP IN THE PUBLIC SECTOR1

Keywords:factors, entrepreneurship, public sector

SummaryThe purpose of this chapter is to identify factors shaping entrepreneurship

in the public sector. The text presents an analysis of the previous condition of knowledge regarding the topic defined above which results in the classification of factors, namely reasons causing the development of entrepreneurship, with an indication of the most important ones as supporting factors (enablers) and restricting factors (constraints). The structure of the study is subject to the objective referred to above. First, terminological issues related to entrepreneurship, with reference to the public sector, are presented. Then, the results of studies on factors shaping entrepreneurship in the analyzed area are characterized. As a consequence, the subsequent point presents the results of studies on factors in the form of their classification.

IntroductionThe purpose of this chapter is to identify factors shaping entrepreneurship

in the public sector. The text presents an analysis of the previous condition of knowledge regarding the topic defined above which results in the classification of factors, namely reasons causing the development of entrepreneurship, with an indication of the most important ones as supporting factors (enablers) and restricting factors (constraints). The structure of the study is subject

1 The publication was financed from the resources allocated to the Management Faculty of Cracow University of Economics, under the grant for the maintenance of the research potential in 2015.

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Marek Ćwiklicki, Angelika Wodecka-Hyjek

to the objective referred to above. First, terminological issues related to entrepreneurship, with reference to the public sector, are presented. Then, the results of studies on factors shaping entrepreneurship in the analyzed area are characterized. As a consequence, the subsequent point presents the results of studies on factors in the form of their classification.

Entrepreneurship – terminological issues

Premises for including entrepreneurship in public managementEntrepreneurship in the public sector appeared as a consequence of

a change in the organizational culture resulting from the implementation of new principles for the functioning of this sector in the United States of America and Western Europe at the end of the 20th century2. These principles referred to the implementation of the idea of New Public Management (NPM), characterized by:

• „Hands-on professional management’ in the public sector.• Explicit standards and measures of performance.• Greater emphasis on output control.• Shift to disaggregation of units in the public sector.• Shift to greater competition in the public sector.• Stress on private-sector styles of management practice.• Stress on greater discipline and parsimony in resource use”3.

NPM may also be described synthetically as the emphasis on rights to services in relations between the client and the authorities, the recognition of responsibility towards clients, treating effectiveness and achieving results as the core principle of action in which innovativeness and professionalism become the main attributes4.

The general pressure on the rationalization of public expenses resulted in the interest in the market model of providing public services. D. Osborne and T. Gaebler emphasized that public authorities are free to choose from various producers and forms of providing services on the basis of valid tender procedures5.

2 T. Kraśnicka, Przedsiębiorczość sektora publicznego i jej uwarunkowania, [in:] Zarządzanie publiczne – elementy teorii i praktyki, (ed.) W.A. Frąckiewicz-Wronka, Wydawnictwo Akademii Ekonomicznej im. Karola Adamieckiego w Katowicach, Katowice 2009, p. 54.3 C. Hood., A Public Management for All Seasons?, “Public Administration”, No. 69, 1991, p. 4-5.4 P. Zerka, Innowacyjna administracja: oksymoron czy nowy standard?, demosEUROPA Centrum Strategii Europejskiej, Warszawa 2011, http://www.demosservices.home.pl/www/files/raport_demos_Innowacyjna_Administracja_PL.pdf, p. 51, [10.05.2015].5 D. Osborne, T. Gaebler, Rządzić inaczej: jak duch przedsiębiorczości przenika i przekształca administrację publiczną, Media Rodzina, Poznań 1994, p. 50, 62.

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FACTORS FOR THE DEVELOPMENT OF ENTREPRENEURSHIP IN THE PUBLIC SECTOR

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A separate premise, of a theoretical nature, is the development of management sciences where the sub-discipline public management is conventionally separated. One of the assumptions is the possibility to use principles, methods, etc. coming from the theory and practice of general management in the public administration6. This also involved attempts to transfer the experience from the business sector, including entrepreneurship, to the area of public administration7.

Definitions of public entrepreneurshipEntrepreneurship is characterized by complexity and the statement that it

applies to various types of organizations8. The Polish literature on the subject has introduced the distinction into economic and non-economic entrepreneurship9. The latter refers to the public sector.

Entrepreneurship, in general, may be identified as a special type of people’s activity, acting individually or inside an organization, consisting in the use of opportunities emerging in the environment, by the implementation of projects that bring economic and/ or non-economic effects to their entities and to the environment. In the public sector this means the creation of value for the citizen (a user of services) through a non-routine combination of resources, being both the public (social) as well as private responsibility, used in order to detect and take advantage of opportunities and possibilities for development as well as to obtain new results (higher value)10.

Internal entrepreneurship (corporate, intra-enterprise) is suggested as the theoretical basis to understand public entrepreneurship. From this perspective, this is a process (the activity of individuals or teams) depending on numerous

6 A. Frąckiewicz-Wronka, Nowa koncepcja zarządzania sprawami publicznymi: współzarządzanie rozwojem lokalnym, „Problemy Zarządzania”, No. 3, 2007, p. 39; B. Kożuch, Zarządzanie publiczne. W teorii i praktyce polskich organizacji, Placet, Warszawa 2004, p. 30; S. Sudoł, B. Kożuch, Rozszerzyć nauki o zarządzaniu o zarządzanie publiczne jako ich subdyscyplinę, [in:] Osiągnięcia i perspektywy nauk o zarządzaniu, (eds.) W.S. Lachiewicz, B. Nogalski, Wolters Kluwer, Warszawa 2010, p. 393.7 A. Wodecka-Hyjek, The Forms of Enterprising Activities of the Public Sector – Polish Context, [in:] Knowledge-Economy-Society. Dilemas of the contemporary management, (eds.) W.A. Malina, T. Rojek, R. Oczkowska, Foundation of the Cracow University of Economics, Cracow 2012, p. 429-443.8 S. Sudoł, Przedsiębiorczość – jej pojmowanie, typy i czynniki kształtujące, „Problemy Zarządzania”, No. 2, 2008, p. 9-13.9 T. Kraśnicka, Przedsiębiorczość sektora publicznego i jej uwarunkowania, [in:] Zarządzanie publiczne – elementy teorii i praktyki, (ed.) W.A. Frąckiewicz-Wronka, Wydawnictwo Akademii Ekonomicznej im. Karola Adamieckiego w Katowicach, Katowice 2009, p. 54.10 Z. Barczyk, Przedsiębiorczość i samorządność lokalna, Górnośląska Wyższa Szkoła Przedsiębiorczości im. K. Goduli, Chorzów 2004, p. 81, cit. in: T. Kraśnicka, Przedsiębiorczość sektora publicznego i jej uwarunkowania, [in:] Zarządzanie publiczne – elementy teorii i praktyki, (ed.) W.A. Frąckiewicz-Wronka, Wydawnictwo Akademii Ekonomicznej im. Karola Adamieckiego w Katowicach, Katowice 2009, p. 61.

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factors: individual (subjective), organizational and external (political, economic, social and educational)11.

One of the first definitions of entrepreneurship is N. Boyet’s terminological proposition: „Entrepreneurship occurs in the public sector where there is an uncertain environment, a devolution of power, and at the same time re-allocation of resource ownership, to unit management level. It is driven by those individuals, particularly susceptible to the »manipulation« of their stakeholders and with a desire for a high level of social »self-satisfaction«, who have the ability to spot market opportunities and who are able through follower »manipulation« to act on them”12.

From a broader perspective, the definition of public sector entrepreneurship with regard to state/ semi-state enterprises was formulated by C. Kearney, R.D. Hisrich, F. Roche as a „process that exists within the public sector organization that results in innovative activities such as the development of new and existing services, technologies, administrative techniques, and new improved strategies, risk taking and proactivity”13.

More detailed analyses of entrepreneurship make it possible to separate its main elements, such as:

• Innovativeness – the commitment to the creation of new products, goods, services as well as the implementation of new business models,

• proactivity – the creation of new businesses for the existing or new markets, the development of new competences and skill of an organization or the maintenance of the organization in a condition of alertness towards opportunities,

• strategic renewal – the reflection of various activities aimed at stimulating the organization’s activities, building new competitive skills or changing the strategic sequence in a fundamental manner, essentially transforming the technological base, systems and processes as well as challenges towards the previous assumptions about the market and competition14.

11 T. Kraśnicka, Przedsiębiorczość sektora publicznego i jej uwarunkowania, [in:] Zarządzanie publiczne – elementy teorii i praktyki, (ed.) W.A. Frąckiewicz-Wronka, Wydawnictwo Akademii Ekonomicznej im. Karola Adamieckiego w Katowicach, Katowice 2009.12 I. Boyett, The public sector entrepreneur – a definition, “International Journal of Public Sector Management”, No. 9(2), 1996, p. 36-51, http://doi.org/10.1108/09513559610119546, p. 49, [10.05.2015].13 C. Kearney, R.D. Hisrich, F. Roche, Public and private sector entrepreneurship: similarities, differences or a combination?, “Journal of Small Business and Enterprise Development”, No. 16(1) 2009, p. 26-46, http://doi.org/10.1108/14626000910932863, p. 29, [09.05.2015].14 M. Bratnicki, Konfiguracyjne ujęcie przedsiębiorczości organizacyjnej, „Ekonomika i Organizacja Przedsiębiorstwa”, No. 6, 2008.

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According to another perspective, entrepreneurship may be referred to the public sector in the following dimensions:

• alertness to profit opportunities – sensing shifts in public preferences, anticipating common problems, identifying out-of-date practices, agencies, and other institutions, avoiding undesirable outcomes in the public interest,

• judgmental decision-making under uncertainty – investment of public resources to meet political objectives, evaluating the suitability of various policies for achieving particular outcomes, identifying gamesmanship nominally in pursuit of public interests but truly in private interests,

• innovation (introduction of new goods, markets, production methods, organizational practices) – introduction of new policy proposals, political positions, or paradigms, Introduction of new procedures (e.g. the local ballot initiative), changing administrative or electoral procedures, lobbying and other forms of rent-seeking15.

Factors for the development of entrepreneurship – review of research resultsThe analysis of literature on the subject made it possible to select these

studies where the results of research on entrepreneurship and its elements, mainly innovativeness, are presented.

In the first place, we should note the accountability for taken decisions. It is understood as the relation between entities accountable and entities enforcing the accountability in which the latter are assigned rights regarding sanctions necessary to assess and then punish or reward, on the basis of standards of conduct accepted by both parties. Public authorities, as is noticed by R. Behn, are usually held accountable on the basis of formalized standards. However, informal standards still play an important role in public management processes16. The standards of cooperation accountability are focused on the achievement of measurable results of activities by the public sector that are transparent, effective and satisfactory for clients. Therefore, this set of factors may be defined as economic and environmental.

Another issue detailed in studies on public entrepreneurship is the widely understood innovativeness dimension, taking into account, among others, the capacity to conduct a policy focused on the participation in creating values

15 P.G. Klein, J.T. Mahoney, A.M. McGahan, C.N. Pitelis, Toward a theory of public entrepreneurship, “European Management Review”, No. 7(1), 2010, p. 1-15, http://doi.org/10.1057/emr.2010.1, [16.05.2015].16 R.D. Behn, Rethinking Democratic Accountability, D.C. The Brookings Institution, Washington 2001, p. 3-5, cit. in.: E. Sørensen, Measuring the accountability of collaborative innovation, “The Innovation Journal: The Public Sector Innovation Journal”, No. 17(1), 2012, p. 3.

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through innovations as well as political decisions from people in power17.With regard to innovativeness in the public sector, researchers agree that

innovativeness, like entrepreneurship in this area, is determined by a number of factors with emphasis on the following constraints:

• the accountability of executives of public organizations for made decisions and the risk of administering public funds,

• the possibility of significant political impacts on decisions,• the impossibility to overcome rigid principles and procedures,• the inability to notice long-term benefits18.

M.A. Smith and A.P. Starkey believe that the public sector is burdened with the risk of relative failure in the implementation of enterprising and innovative activities due to exposing formal procedures in action that form an organizational culture opposed to innovations, while the individual attitudes of employees emphasize the desire to test new ideas which characterize entrepreneurs in small and medium enterprises of the private sector. The authors have identified the attributes of organizational culture in public organizations, substantially determining the development and the tendency to implement innovations:

• culture of control eliminating risk taking,• excessive exposing risk leading to avoiding it and abandoning changes,• unclear accountability for actions,• the acceptance of the principle which states that it is better not to make

any decisions than to make wrong ones19.

Large institutions of the public sector are averse to risk. Entrepreneurship and innovativeness are perceived as a problem rather than a potential used for development. At the same time, researchers notice the need to refer this issue to the factor of accountability towards a wide group of social stakeholders. In this respect, it may be assumed that the desire to preserve transparency of the actions of public officials, which often has a political nature, determines the aversion to risk related to the accountability for spending public funds.

In other research conducted by I. Miles and R. Røstea the perception of innovations by the private sector and the public sector from the perspective of the following factors was compared: principles of organization, organizational

17 J. Baruk, Innowacyjność organizacji administracji publicznej funkcjonujących w Unii Europejskiej, „Przegląd Organizacji”, No. 3, 2013, p. 24.18 P.G. Klein, J.T. Mahoney, A.M. McGahan, C.N. Pitelis, Toward a theory of public entrepreneurship, “European Management Review”, No. 7(1), 2010, p. 1-15, http://doi.org/10.1057/emr.2010.1, p. 6, [10.05.2015].19 M. Smith, A. Starkey, The Utilisation of Private Sector Governance Paradigms for the Development and Implementation of Innovations in the Public Sector, “International Journal of Innovation Science”, No. 2(3), 2010, p. 103-111, http://doi.org/10.1260/1757-2223.2.3.103, p. 103-106, [11.05.2015].

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structure, result measurement, management issues, relations with users, employees, supply chain as well as the time horizon for the implementation of innovations. The authors noticed that despite clear differences in motivation for innovative activities, determined by different approach to employees, a diverse budget or the nature of relations, there also exists a number of factors that are similar in compared areas. In this matter, they draw attention to the intensity of changes taking place in the public sector which result in the fact this sector e.g. starts to perceive citizens as clients of public organizations and these, on the other hand, begin to compete using the level of providing public services20.

The research on innovativeness of European organizations of public administration conducted by the Gallup Organization in 2010 in 27 member states of the European Union as well as Switzerland and Norway concluded that public organizations in which innovations had recently been implemented saw managers actively participating in their development and implementation, and innovative solutions were assessed21.

F. Damanpour and M. Schneider notice that despite institutional barriers for innovations in the public sector, the individual attitudes of public managers are significant for the development of innovations because their competences and individual features foster the creation of a pro-innovation culture22.

Innovativeness in the public sector (like entrepreneurship) is related to constraints. They include:

• the accountability of executives of public organizations for made decisions and the risk of administering public funds,

• the possibility of significant political impacts on decisions,• the impossibility to overcome rigid principles and procedures,• the inability to notice long-term benefits23.

H.A. De Vries, V.J.J. M. Bekkers, L.G. Tummers, having analyzed factors determining innovations in the public sector, indicate that most frequent ones appearing in the literature on the subject include:

• within the group of factors defined as environmental: environmental pressures (media attention, public pressures, economic challenges,

20 I. Miles, R. Røste, Differences between public and private sector innovation, [in:] On the differences between public and private sector innovation, (eds.) W.T. Halvorsen, J. Hauknes, I. Miles, R. Røste, NIFU STEP, Oslo 2005, http://unpan1.un.org/intradoc/groups/public/documents/apcity/unpan046809.pdf, p. 26-29, [15.05.2015].21 The Gallup Organization, Innobarometer. Analytical Report. Innovation in Public Administration, 2011.22 F. Damanpour, M. Schneider, Characteristics of Innovation and Innovation Adoption in Public Organizations: Assessing the Role of Managers, “Journal of Public Administration Research and Theory”, No. 19(3), 2009, p. 495-522, http://doi.org/10.1093/jopart/mun021, [16.05.2015].23 P.G. Klein, J.T. Mahoney, A.M. McGahan, C.N. Pitelis, Toward a theory of public entrepreneurship, “European Management Review”, No. 7(1), 2010, p. 1-15, http://doi.org/10.1057/emr.2010.1, p. 6, [12.05.2015].

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changing technologies, political demands) and participation in networks and inter-organizational relationships (collaboration with private partners/involvement of citizens),

• within the group of factors defined as organizational: slack resources (information, time, money, ICT facilities, talented personel, communication, professionalism, skills) and leadership styles,

• within the group of individual factors: employee autonomy (empowerment, voice), organizational position (tenure, mobility) and job-related knowledge and skills (professionalism/ experience)24.

M. Huczek believes that resources necessary to activate enterprising processes in the public sector may also be the responsibility of the private sector or the civic sector. Therefore, the process of public entrepreneurship often involves the need to cooperate with organizations from other sectors (private and social)25. W. Townsend suggests that the selection and practice of cooperation strategies of public sector organizations with other entities is an equally important factor for the development of innovativeness in the public sector26. The range of methods for the implementation of various enterprising activities is wide also in Poland and that is why attention should be paid to projects of an enterprising nature which include, in particular: the outsourcing of public services, cooperation with non-governmental organizations, public-private partnership, public-social partnership27.

The analysis above should be supplemented with conclusions from the research on public entrepreneurship in Great Britain. This research indicated that public entrepreneurs may serve as agents: political, stakeholder and entrepreneurial28.

24 H.A. De Vries, V.J.J.M. Bekkers, L.G. Tummers, Innovations in the Public Sector: A Systematic Review and Future Research Agenda, IRSPM Conference, Ottawa 2014, http://www.lipse.org/userfiles/uploads/De%20Vries,%20Bekkers%20en%20Tummers%20Innovations%20in%20the%20public%20sector.pdf, [12.05.2015].25 M. Huczek, Przedsiębiorczość sektora publicznego, „Zeszyty Naukowe Wyższej Szkoły Humanitas w Sosnowcu”, No. 1, Sosnowiec 2008, p. 22.26 W. Townsend, Innovation and the Perception of Risk in the Public Sector, “International Journal of Organizational Innovation”, No. 5(3), 2013, p. 29.27 A. Wodecka-Hyjek, The Forms of Enterprising Activities of the Public Sector – Polish Context, [in:] Knowledge-Economy-Society. Dilemas of the contemporary management, (eds.) W.A. Malina, T. Rojek, R. Oczkowska, Foundation of the Cracow University of Economics, Cracow 2012, p. 429-443.28 G. Currie, M. Humphreys, D. Ucbasaran, S. Mc’Manus, Entrepreneurial Leadership in the English Public Sector: Paradox Or Possibility?, “Public Administration”, No. 86(4), 2008, p. 987-1008, http://doi.org/10.1111/j.1467-9299.2008.00736.x, [10.05.2015].

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Proposal of classification of factors for the development of entrepreneurshipOn the basis of results obtained from the enquiry, we may state that the

factors of entrepreneurship relate to two basic dimensions: accountability and innovativeness.

In the first case, the factors of entrepreneurship in the public sector include:• transparency, namely obtaining explicit results of undertaken activities,• effectiveness of activities,• potential customer satisfaction,• means (resources) administered by organizations of the public

administration,• changes in technological and organizational knowledge of public

administration employees.

On the other hand, the factors for shaping innovativeness, as a significant element of entrepreneurship, include:

• culture of control that eliminates taking risk,• excessive exposing risk leading to avoiding it and abandoning changes,• aversion to risk, the perception of innovativeness and entrepreneurship

as a problem rather than potential for the development,• political nature of the transparency of actions of public officials,• unclear accountability for actions,• acceptance of the principle that it is better not to make any decisions

than to make wrong ones,• intensity of changes taking place in the public sector,• change in the perception of citizens as clients of public organizations

and becoming competitive in providing public services,• attitudes and competences of public managers fostering the creation of

a pro-innovation culture,• active participation of managers in the development, introduction and

assessments of innovations,• cooperation of public sector organizations with other entities.

The above lists may be presented in the form of a table taking into account groups of factors supporting and constraining public entrepreneurship.

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Table 1. Classification of factors supporting and constraining public entrepreneurship

Enablers Constraints

• the need to change orientation from bureaucratic to focused on citizens,

• the need to care for an increasingly wider group of stakeholders,

• the intensity of changes in the environment of public organizations,

• the potential of resources available to public organizations,

• limited autonomy of management,• aversion to risk,• the perception of innovativeness

and entrepreneurship as a problem rather than potential for the development,

• excessive exposing risk leading to avoiding it and abandoning changes,

• changes in technological and organizational knowledge of public administration employees,

• cooperation of public sector organizations with other entities,

• shaping attitudes and building competences of public managers fostering the creation of a pro-innovation culture,

• active participation of managers in the development, introduction and assessments of innovations,

• potential client satisfaction,• diversity and ambiguity of objectives

treated as the potential for change.

• transparency –obtaining explicit results of undertaken activities,

• effectiveness of actions,• culture of control that eliminates

taking risk,• unclear accountability for

undertaken actions,• political nature of actions by public

officials,• fear of making wrong decisions,• long-term results of implemented

changes.


ConclusionsThe essence and evolution of public entrepreneurship clearly shows and

stresses the need to implement guidelines for public management in public organizations that imply: active support for inter-sectoral and intra-sectoral cooperation, promotion of competition in providing public services as part of public tenders, creating conditions for the development of management forms and not administering the public sector, as well as paying great attention to achieved results, controlling results on the basis of generated indicators as well as development of human resources29. The result of the implications is the

29 A. Frąckiewicz-Wronka, O potrzebie wprowadzania zasad zarządzania publicznego do organizacji publicznych, [in:] Wokół polityki społecznej, (eds.) W.K. Głąbicka, M. Brewiński, Polskie Towarzystwo Polityki Społecznej, Warszawa 2008, p. 11.

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transformation of the public organization management style to a managerial ones, characterized by the use of a wide range of new methods and techniques verified in the business sector.

Currently, entrepreneurship in the public sector is a conscious search for innovative changes, generating new sources of revenue for greater effectiveness of actions with the active participation of citizens30.

The attempt to identify factors supporting and constraining public entrepreneurship in this study makes it possible to state that the set of these factors is diverse both in terms of their origin (individual, organizational, environmental), importance (small/ great impact) and variability. Variability is understood as the possibility to change the attribute of the factor’s nature to constraining or supporting. For example, attitudes and competences of public managers, depending on their shaping, may either support or constrain the development of entrepreneurship. This provides an impulse to conduct research focused on a given organization of the public sector, the result of which will be the identification of its typical determinants. The text above makes it possible to initially focus such research in terms of the identification of factors of public entrepreneurship.

Literature:1. Barczyk Z., Przedsiębiorczość i samorządność lokalna, Górnośląska Wyższa

Szkoła Przedsiębiorczości im. K. Goduli, Chorzów 2004.2. Baruk J., Innowacyjność organizacji administracji publicznej funkcjonujących

w Unii Europejskiej, „Przegląd Organizacji”, No. 3, 2013.3. Behn R.D., Rethinking Democratic Accountability, D.C. The Brookings

Institution, Washington 2001.4. Boyett I., The public sector entrepreneur – a definition, “International

Journal of Public Sector Management”, No. 9(2), 1996, http://doi.org/10.1108/09513559610119546, [10.05.2015].

5. Bratnicki M., Konfiguracyjne ujęcie przedsiębiorczości organizacyjnej, „Ekonomika i Organizacja Przedsiębiorstwa”, No. 6, 2008.

6. Currie G., Humphreys M., Ucbasaran D., Mc’Manus S., Entrepreneurial Leadership in the English Public Sector: Paradox Or Possibility?, “Public Administration”, No. 86(4), 2008, http://doi.org/10.1111/j.1467-9299.2008.00736.x, [10.05.2015].

7. Damanpour F., Schneider M., Characteristics of Innovation and Innovation Adoption in Public Organizations: Assessing the Role of Managers, “Journal of Public Administration Research and Theory”, No. 19(3), 2009, http://doi.org/10.1093/jopart/mun021, [16.05.2015].

30 B. Luke, M.L. Verreynne, K. Kearins, Innovative and entrepreneurial activity in the public sector: The changing face of public sector institutions, “Innovation: Management, Policy & Practice”, No. 12(2), 2010, p. 138-153, http://doi.org/10.5172/impp.12.2.138, p. 139, [10.05.2015].

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8. De Vries H.A., Bekkers V.J.J.M., Tummers L.G., Innovations in the Public Sector: A Systematic Review and Future Research Agenda, IRSPM Conference, Ottawa 2014, http://www.lipse.org/userfiles/uploads/De%20Vries,%20Bekkers%20en%20Tummers%20Innovations%20in%20the%20public%20sector.pdf, [12.05.2015].

9. Frąckiewicz-Wronka A., Nowa koncepcja zarządzania sprawami publicznymi: współzarządzanie rozwojem lokalnym, „Problemy Zarządzania”, No. 3, 2007.

10. Frąckiewicz-Wronka A., O potrzebie wprowadzania zasad zarządzania publicznego do organizacji publicznych, [in:] Wokół polityki społecznej, (eds.) W.K. Głąbicka, M. Brewiński, Polskie Towarzystwo Polityki Społecznej, Warszawa 2008.

11. Hood C., A Public Management for All Seasons?, “Public Administration”, No. 69, 1991.

12. Huczek M., Przedsiębiorczość sektora publicznego, „Zeszyty Naukowe Wyższej Szkoły Humanitas w Sosnowcu”, No. 1, Sosnowiec 2008.

13. Kearney C., Hisrich R.D., Roche F., Public and private sector entrepreneurship: similarities, differences or a combination?, “Journal of Small Business and Enterprise Development”, No. 16(1) 2009, http://doi.org/10.1108/14626000910932863, [09.05.2015].

14. Klein P.G., Mahoney J.T., McGahan A.M., Pitelis C.N., Toward a theory of public entrepreneurship, “European Management Review”, No. 7(1), 2010, http://doi.org/10.1057/emr.2010.1, [16.05.2015].

15. Kożuch B., Zarządzanie publiczne. W teorii i praktyce polskich organizacji, Placet, Warszawa 2004.

16. Kraśnicka T., Przedsiębiorczość sektora publicznego i jej uwarunkowania, [in:] Zarządzanie publiczne – elementy teorii i praktyki, (ed.) W.A. Frąckiewicz-Wronka, Wydawnictwo Akademii Ekonomicznej im. Karola Adamieckiego w Katowicach, Katowice 2009.

17. Luke B., Verreynne M.L., Kearins K., Innovative and entrepreneurial activity in the public sector: The changing face of public sector institutions, “Innovation: Management, Policy & Practice”, No. 12(2), 2010, http://doi.org/10.5172/impp.12.2.138, [10.05.2015].

18. Miles I., Røste R., Differences between public and private sector innovation, [in:] On the differences between public and private sector innovation, (eds.) W.T. Halvorsen, J. Hauknes, I. Miles, R. Røste, NIFU STEP, Oslo 2005, http://unpan1.un.org/intradoc/groups/public/documents/apcity/unpan046809.pdf, [15.05.2015].

19. Osborne D., Gaebler T., Rządzić inaczej: jak duch przedsiębiorczości przenika i przekształca administrację publiczną, Media Rodzina, Poznań 1994.

20. Smith M., Starkey A., The Utilisation of Private Sector Governance Paradigms for the Development and Implementation of Innovations in the Public Sector, “International Journal of Innovation Science”, No. 2(3), 2010, http://doi.org/10.1260/1757-2223.2.3.103, [11.05.2015].

21. Sørensen E., Measuring the accountability of collaborative innovation, “The

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Innovation Journal: The Public Sector Innovation Journal”, No. 17(1), 2012.22. Sudoł S., Kożuch B., Rozszerzyć nauki o zarządzaniu o zarządzanie publiczne

jako ich subdyscyplinę, [in:] Osiągnięcia i perspektywy nauk o zarządzaniu, (eds.) W.S. Lachiewicz, B. Nogalski, Wolters Kluwer, Warszawa 2010.

23. Sudoł S., Przedsiębiorczość – jej pojmowanie, typy i czynniki kształtujące, „Problemy Zarządzania”, No. 2, 2008.

24. The Gallup Organization, Innobarometer. Analytical Report. Innovation in Public Administration, 2011.

25. Townsend W., Innovation and the Perception of Risk in the Public Sector, “International Journal of Organizational Innovation”, No. 5(3), 2013.

26. Wodecka-Hyjek A., The Forms of Enterprising Activities of the Public Sector – Polish Context, [in:] Knowledge-Economy-Society. Dilemas of the contemporary management, (eds.) W.A. Malina, T. Rojek, R. Oczkowska, Foundation of the Cracow University of Economics, Cracow 2012.

27. Zerka P., Innowacyjna administracja: oksymoron czy nowy standard?, demosEUROPA Centrum Strategii Europejskiej, Warszawa 2011, http://www.demosservices.home.pl/www/files/raport_demos_Innowacyjna_Administracja_PL.pdf, [10.05.2015].

Sebastian WacięgaPhD, Consultant and facilitator of the process of strategic planning for non-profit organizations in Małopolska Institute of Culture in Krakow (MIK)

PRACTICAL USE OF KNOWLEDGE ABOUT HISTORY FOR ENTREPRENEURIAL LEARNING. THE SKETCH OF THE METHOD

Keywords:entrepreneurship, learning, history, method, tools, game, simulation, facilitator, teacher, trainer, heritage, knowledge management, competence, heritage interpretation, history interpretation, key competences, lifelong learning

SummaryThe article presents the sketch of the method of economic education with use

of knowledge about history. History based entrepreneurial learning is a method for facilitators of learning process that could be described in three steps.

The first step is connected with knowledge about history (know-what knowledge and know-why knowledge) and means gaining knowledge about selected historical period or phenomenon.

The second step reveals that this knowledge can be utilized for the purpose of entrepreneurial learning by interpretation of that knowledge into a story (know-how knowledge) for participants of the entrepreneurial learning process (selection of content and aspects to develop, thematisation in accordance with educational purpose selected by facilitator). In the third step facilitator of learning process utilizes interpreted knowledge about history as source for constructing learning tools (know-how knowledge) that are capable to initiate entrepreneurial learning activities for individuals or groups (questions, workshops scenarios, games, cooperative projects, etc.).

IntroductionThe knowledge management embraces the issue of historic knowledge

as a source for entrepreneurial learning. The knowledge about history can be utilized as a source of inspirations for teachers and adult trainers providing entrepreneurship education. It has potential for catalyzing the process of

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history based entrepreneurial learning. This process is a practice of knowledge management that transforms and develops knowledge about history into learning tools and actions inspired by selected and interpreted history.

The preparation of that learning actions could be described in three steps. The first step, the starting point for educator (facilitator of the learning process) is gaining objective knowledge about selected period or phenomenon in history. In the second step the knowledge needs to be interpreted – themathised and described in language available for participants of the entrepreneurial learning process. The third step of the preparing the process of history based entrepreneurial learning is selecting or constructing learning tools for individuals or groups (questions, workshops scenarios, cooperative projects, games, etc.). These steps will be illustrated by the example of educational initiative conducted in Poland by the Malopolska Institute of Culture from 2007 called “Chłopska Szkoła Biznesu” (Peasant Business School) which became the national winner in the contest of European Commission called European Enterprise Promotion Awards 2014 in the category of “Promoting the entrepreneurial spirit”.

Step number one – history as a source of economic educationHistory according to Bill Nasson is “the study of the past in order to

understand the meaning and dynamics of the relationship between cause and effect in the overall development of human societies. (…) The claim of history is (…) to interpret, to handle a rich variety of sources in order to draw out their general relevance or to reveal their general significance for human understanding of why and how change occurs”. That means that it involves critical thinking ability which is also needed to understand interrelations and influences in contemporary society and economy. History has not only autotelic value but also has utilitarian dimension. The knowledge about history “equips” learner with the ability of critical thinking. “The usefulness of history, therefore, is not only that it constantly offers new ways of viewing and understanding the grip of the past: it is also a means of generating the confidence about, and absorption of, critical knowledge, to produce a changing consciousness”1. History allows to analyze interrelations between facts, figures, persons and recognizes causal relations between the reasons and results. It also engages the creativity to think about different possible scenarios of the actions. The history can be perceived as a system of thinking with “interpretative nature” which collects, orders and analyzes data as evidence of the passed facts and “create historical narratives”2.

1 B. Nasson, History. The meaning and the role of history in human development, [in:] Encyclopedia of Life Support Systems (EOLSS), UNESCO-EOLSS, Paris 2001, www.eolss.net/sample-chapters/c04/e6-22-00-00.pdf, [21.06.2015].2 Introduction to Standards in Historical Thinking, University of California-Los Angeles. National Center for History in the Schools, http://www.nchs.ucla.edu/history-standards/historical-thinking-standards, [28.06.2015].

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Especially, the historical analysis and interpretation of the history3:• develops the skills of analyze cause-and-effect relationships which

embraces “multiple causation including: − the importance of the individual in history; − the influence of ideas, human interests, and beliefs; and − the role of chance, the accidental and the irrational”,

• develops the attitude that allow to “hold interpretations of history as tentative, subject to changes as new information is uncovered, new voices heard, and new interpretations broached”.

The analytical aspect of history is not only one that makes it helpful in facilitating entrepreneurial learning process. The second aspect is narrative aspect of history which involves analytical skills as well as creativity and attitude of openness to different possibilities. This open-mindedness for different options is close to entrepreneurial sensitivity for opportunities which are points of reference for thinking and acting according to J.A. Timmons definition of entrepreneurship4.

The additional value that makes the history attractive and convenient source of inspirations for economic education is its narrative potential. In brief: history is a story. It means that:

• it can be constructed as a story in accordance with classical Aristotle’s principles – with its aim and plot, composed episodes and characters,

• a teller of the story (facilitator of entrepreneurial learning process) can select the figures and aspects of the history that would be presented,

• a story itself triggers imagination, empathy and curiosity.

This last feature of history reveals the connection between the past and the contemporaneity:

• it allows to see the present as a consequence of the past events and actions,

• it allows to reflect upon the present with the use of the knowledge about the past as an inspiration for better understanding of contemporary phenomena.

Step two – interpretation of the history for the purposes of entrepreneurial learningThe history based on entrepreneurial learning process uses triple: analytical,

narrative and creative potential of history. These three aspects make the historical knowledge a particularly attractive source of teaching economics. The

3 Historical Analysis and Interpretation, University of California-Los Angeles. National Center for History in the Schools, http://www.nchs.ucla.edu/history-standards/historical-thinking-standards/3.-historical-analysis-and-interpretation, [28.06.2015].4 A. Kurczewska, Przedsiębiorczość, PWE, Warszawa 2013, p. 87.

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problem of interpretation is connected with fundamental choice of facilitator: what or which aspects should be selected from history to illustrate or to reflect upon. For example in order to explain the phenomenon of speculative bulbs excellent exemplary would be Dutch Tulip Bulb Market Bubble – historical case of “tulip madness” (Dutch. Tulpenwoede) in XVII century when people in Holland began to perceive tulip bulbs as the best investment location. During several months of 1637 the price of some tulip skyrocketed about 20 times. The prices of some of bulbs were comparable to the values of luxury houses in Amsterdam like famous “Semper Augustus”, which cost merely 1.000 guilders in 1620’s and 5.500 guilders per bulb in 1637 just before the market collapse. Many of people sold their houses or land to acquire rare tulip bulbs which became not only investment but also signs of social status. The story of Tulpenwoede finished with catastrophic fall of the prices and stores overloaded with goods whose prices become equal to onion bulbs. Many investors were hit by the wave of bankruptcies which were not held back by “the state honor contracts at 10% of the face value”5.

This history could be used to reflect upon the speculation crisis, its mechanisms, reasons and possible consequences. The history of Tulpenwoede can be thematised with a stress on different aspects, for example:

• the changes in supply and demand during speculation crises,• the psychology of the speculation market (were the investors rational or

irrational?),• the role of a state in the free market – possibilities, tools and conditions

of a possible intervention of the state and its consequences.

The choice of perspective and historical details to develop and expose for the facilitating learning process are related to the educational purpose of the facilitator (school teacher or adult trainer). After selection of the content, next important step is the chosen way of interpreting the knowledge. According to Freeman Tilden, pioneer of interpretation, interpreting heritage is telling the story. It is an art of choosing the topic, developing it and presenting it to the receiver. It makes the data “alive”, sharing the knowledge, but first of all catching the interest of audience and giving them inspirations and personal involvement into the story. One of the principles of successful interpretation is “provoking” – inspiring to self-reliant critical thinking and its opposite: to “instructing” (teaching or transmitting the information)6.

5 A. Beattie, Market Crashes: The Tulip and Bulb Craze, [in:] Investopedia, www.investopedia.com/features/crashes/crashes2.asp, [21.06.2015].6 F. Tilden, Interpreting Our Heritage, The University of North Carolina 2008.

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Step three – the creation of tools for entrepreneurial learning processTeaching entrepreneurship means developing entrepreneurial competence of

the learner. That is why tools of the history-based entrepreneurial learning should correspond with the concept of competence-based learning (embracing the component of knowledge, skills and attitude). The common feature of possible methods and tools of the history-based entrepreneurial learning is that the content they use stems from history which became interpreted for the purposes of learning process. There are many possible tools that meet this condition:

• Tools used in “approaches of competence driven heritage education” like storyline approach, action learning, problem-based learning, co-operative learning and guided discovery7;

• Case studies analysis with “actualization questions” (for example: where can you see similar behaviors of investors like during “tulip madness” in XVII century?, how can you avoid the loss in your investment nowadays?);

• Workshops with role-playing (getting into shoes of a historical figure and making decisions in this role; exemplary task: if you had been Amsterdam inhabitant in XVII century how would you have located your money?);

• Simulation games for individuals and groups.

Figure 1. History based entrepreneurial learning in three steps – tentative model


Among many systems of knowledge categorization there is one which divides knowledge into four categories8:

• know-what – knowledge about “facts” that are very close t information,

7 Acquiring Key Kompetences through Heritage Education, (eds.) J.V. Lakerveld, I. Gusen, A. Biesen 2011, http://the-aqueduct.eu/download/Aqueduct-Manual_EN.pdf, [21.06.2015].8 Zarządzanie wiedzą w społeczeństwie uczącym się, Centre For Educational Research and Innovation, OECD, Warszawa 2000, p. 13-14.

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• know-why, refers to the recognition of laws, principles of nature and causal relations,

• know-how, refers to ability, capacity of making something,• know-who – knowledge about who disposes of indispensable knowledge.

In the sketched model the knowledge management proceeds from the know-what and know-why knowledge (knowledge about historical facts and causal relations between them) to the know-how knowledge (the knowledge how to interpret, how to apply it into the entrepreneurial learning process). The source of that knowledge (know-who) lies in works of historians and can be used (interpreted) by know-how operators – facilitators of history based on entrepreneurial learning.

The “peasant business school” (2007–2014) – history based entrepreneurial learning

What is “Peasant Business School” (Chłopska Szkoła Biznesu)?Educational initiative composed of projects linking historical and

economic education that was initiated in 2007 by the Malopolska Institute of Culture (MIK) in Kraków in cooperation with the local Friends of Andrychów Society (Towarzystwo Miłośników Andrychowa). In the years 2007–2014 ca. 30.000 participants took part in the projects financed by the Polish History Museum, National Bank of Poland and the Municipality of Andrychów, among them school teachers and pupils and about 100 institutional partners (state and regional centries for teachers development, labor market institutions, cultural institution and nongovernmental organizations). In 2014 the Peasant Business School became the national winner in the European Commission contest European Enterprise Promotion Awards 2014 in the category of “Promoting the entrepreneurial spirit”, as well as award of the Minister of Economy of the Republic of Poland in 20149.

First step – gaining knowledge about local historyThe first challenge in 2007 was collecting of data about the local history

of Andrychów for the purpose of preparation of a new educational offer in the form of an attractive event in local museum (Izba Regionalna Ziemi Andrychowskiej)10. The source of knowledge were historians’ books, local

9 The Peasant Business School Recommendations, http://pbs.mik.krakow.pl/recommendations/, [28.06.2015].10 Izba Regionalna Ziemi Andrychowskiej, http://tma-andrychow.blogspot.com/p/izba-regionalna.html, [28.06.2015].

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documents, museum collection and the knowledge of the museum’s staff. The following questions were the key to this inquiry:

• which period of the history of the town was the most attractive and inspiring for the purpose of learning process (and chosen tool of that process: workshops for school groups in the local museum)?

• which topics taken from the local history would be told to the visitors and participants of the workshops?

• which characters and important episodes from the history should be used?

The synthetic answer based on the collected materials was that the most inspiring history for the event and educational activities would be the story of the bloom of entrepreneurship in the poor village of Andrychów and its neighboring villages (Roczyny, Inwałd, Sułkowice, Targanice, Wieprz, and Zagórnik) in the 18th century. Their success was based on producing and exporting flax linens which were sold by specialized traders called Itinerant Drapers (Drelicharze). The entrepreneurial villagers set up trade partnerships and exported 80% of their production abroad, to distant cities like Barcelona, Hamburg, Marseilles, Istanbul and Moscow. After several decades of economic growth Andrychów received town privileges from the Polish king Stanisław August Poniatowski in 176711.

Figure 2. Male and female itinerary drapers from Andrychow painted by Kajetan W. Kielisiński

Source: archive of the Society of Andrychow Enthusiasts: A. Błachowski, Ubiór i krajobraz kulturowy Polski i Ukrainy Zachodniej w ikonografii J. Głogowskiego i K.W. Kielisińskiego, Toruń 2011.

11 A. Zwoliński, Miasto Ankwiczów. Z dziejów Andrychowa, Aneks nr 1 Królewski przywilej lokacyjny, Kraków 1993, p. 164.

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The analysis based on historical literature revealed how this growth was possible and what caused the economic fall in the 19th century.

Second step – interpretation of the local socio-economic historyThe interpretation of the history was focused on the local entrepreneurs who

participated in production or trading processes in the period of a flourishing linen trade. The story embraced details about linen production and knowledge about organization and management of local village industry before the Industrial Revolution. The story was presented in the form of thematic paths in the local museum: “Peasant Business School” that explained the source of success and fall of local economy between XVIII and XIX century. Second path was called “The strength in cluster. What did the cooperation of craftsmen look like in Andrychów?”12. The interpretation of that history embraced also the suggestions what are the common sources of the successful entrepreneurship in presented history and nowadays (unique idea, freedom, know-how, quality, cooperation, investment, trust – social capital)13.

Third step – constructing of learning tools

Peasant Business School – workshops for schools in museum (2007–2009)The first tool constructed on the need of learning process were workshops

for school groups which linked historical and economic education. The pupils got familiar with the story of business success of XVIII-century entrepreneurs from Andrychów. Their purpose during workshop was to construct business plan of a ancient weavers and tradesmen. The pupils received only part of needed knowledge about business organization and were supposed to construct their own simple business plans. The stuff of the museum (Maria Pytel-Skrzypiec, Maria Przybyłowicz) in cooperation with MIK trainers (Piotr Idziak, Sebastian Wacięga) in project called “Muzeobranie” (2007–2009) acted as facilitators helping to implement business thinking inspired by local history. The workshops, which were experimental at first, became a constant element of the educational activities in local museum.

12 Strength in unity. What did the cooperation of craftsmen look like in Andrychow, http://csb.mik.krakow.pl/files/tablice-w-gronie-2013.pdf, [28.06.2015].13 Peasant Business School. Andrychów, or to understand the contemporary, http://pbs.mik.krakow.pl/files/Peasant_Business_School_ANG_A4.pdf, [25.06.2014].

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Peasant Business School – activities with historical-economic game (2010–2014)On the basis of experiences gained in the Andrychow museum the trainers

from Małopolska Institute of Culture designed the game – a simple simulation of the free market operation, inspired by the history of XVIII-century entrepreneurship14. Players take on the roles of bakers, blacksmiths or weavers who trade with each other at local fairs and organize expeditions to cities of Europe. During 45 minutes of play, the participants develop trade skills and learn how to plan and cooperate in business. The game has been also used as a tool for group integration or for simulation to demonstrate in practice the economic phenomena:

• microeconomic (operations of a company, revenue, cost, profit, risk),• macroeconomic (supply, demand, inflation, monopoly, duopoly).

All these elements are introduced in practice – the players learn in action and after the game they can reflect upon the changing market conditions and their decisions made during the game. The board game designed for groups of 12–30 people is conducted by a moderator (school teacher, museum educator, adult trainer, coach). This person can facilitate the process of entrepreneurial learning – aid to recognize and understand market phenomena15. The rules of the game are flexible and a facilitator can modify them depending on the educational purpose (for example to evoke inflation on the market). The players act as independent entrepreneurs or as two-member partnerships (microeconomic dimension) in real time (the player acts simultaneously – there are no rounds in the game), and the sum of their decisions affects the macroeconomic situation in the market, for example the prices of bread, wagons and linen. The game was used at least in three ways:

• as an entrepreneurial learning tool for lessons for teenagers or workshops for adults (educators, career advisors, history and entrepreneurship teachers),

• as a learning tool during interschool tournaments which involved thousands of pupils and hundreds of teachers in several regions of Poland who took part in competitions (Andrychów, Ropczyce, Goleniów, Toruń)16,

14 Chłopska Szkoła Biznesu, [in:] „Board Game Geek”, https://boardgamegeek.com/boardgame/85216/chlopska-szkola-biznesu, [25.06.2015].15 The prototype of the Peasant Business School was created in 2009 and it was honored with the patronage of the European Year of Creativity and Innovation 2009, The Peasant Business School, www.create2009.europa.eu/projects/participating_countries/polska_poland.html, [30.06.2014].16 Tournaments of the Peasant Business School for the Cup of the Itinerant Draper from Andrychów organized by the Society of Andrychow Enthusiasts, Podkarpacie Tournaments of the Peasant Business School named after Rev. Jan Zwierz from Ropczyce, as well as tournaments organized by 3rd Secondary School in Toruń, Local Action Group in Goleniów and social economy tournaments conducted periodically by The Regional Centre of Social Policy in Krakow, http://pbs.mik.krakow.pl/category/turnieje/, [25.06.2015].

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• as a tool for local integration and inspiration for grassroots initiatives for nearly 100 local agents in Poland (local cultural institutions, schools, NGOs) which organized different events in cooperation with local partners17. This form of activity turned out unexpectedly to be the tool for catalyzing local social capital and strengthening “the spirit of entrepreneurship”.

ConclusionsThe key issue for successful entrepreneurial learning is preparation of

the facilitator (school teacher or adult trainer). The preparation embraces interpretation of the selected history for the educational purpose and in accordance with learner’s specificity (absorptivity, concentrations ability, self-reliance, etc.) as well as with competence based education concept which treats entrepreneurship as one of the key competences for lifelong learning. According to recommendation of European Parliament and the Council of the European Union from 2006, key competence called “sense of initiative and entrepreneurship refers to an individual’s ability to turn ideas into action. It includes creativity, innovation and risk-taking, as well as the ability to plan and manage projects in order to achieve objectives. (…) An entrepreneurial attitude is characterized by initiative, pro-activity, independence and innovation in personal and social life, as much as at work. It also includes motivation and determination to meet objectives, whether personal goals, or aims held in common with others, including at work”18.

Another challenge for the entrepreneurship facilitator is also awareness of his or her role in the process of entrepreneurial learning. This is the role of facilitator which helps learners to discover and to construct their own knowledge on the basis of experience, questions and interpreted history given by facilitator.

“History based entrepreneurial learning” is a practice and process of knowledge management understood as “the concept under which information is turned into actionable knowledge and made available effortlessly in a usable form to the people who can apply it”19. It can be divided into three steps. The first step is connected with knowledge about history (know-what knowledge and know-why knowledge). The second step reveals that this knowledge can be utilized for the purpose of entrepreneurial learning by interpretation of the history into a story (know-how knowledge). The effective interpretation of the history works in the third step as a source for constructing learning tools that are capable to initiate entrepreneurial learning activities.

17 Peasant Business School. Cooperation, http://pbs.mik.krakow.pl/cooperation/, [25.05.2015].18 Recommendation of European Parliament And Of The Council of 18 December 2006 on key competences for lifelong learning (2006/962/EC), http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:32006H0962, [25.05.2015].19 K. Dalkir, Knowledge management in the theory and practice, McGill University, Burlington-Oxford 2005, p. 5.

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Literature:1. Acquiring Key Kompetences through Heritage Education, (eds.) I. Gusen, J.V.

Lakerveld, A. Biesen 2011, http://the-aqueduct.eu/download/Aqueduct-Manual_EN.pdf, [21.06.2015].

2. Beattie A., Market Crashes: The Tulip and Bulb Craze, [in:] Investopedia, www.investopedia.com/features/crashes/crashes2.asp, [21.06.2015].

3. Błachowski A., Ubiór i krajobraz kulturowy Polski i Ukrainy Zachodniej w ikonografii J. Głogowskiego i K.W. Kielisińskiego, Muzeum Etnograficzne w Toruniu, Toruń 2011.

4. Dalkir K., Knowledge management in the theory and practice, McGill University, Elsevier Buttterworth-Heinemann, Burlington-Oxford 2005.

5. Dutch Tulip Bulb Market Bubble, [in:] Investopedia www.investopedia.com/terms/d/dutch_tulip_bulb_market_bubble.asp, [21.06.2015].

6. Economic history. Was tulipmania irrational? [in:] The Economist, London, Oct 4th 2013, www.economist.com/blogs/freeexchange/2013/10/economic-history, [21.06.2015].

7. Historical Analysis and Interpretation, University of California-Los Angeles, National Center for History in the Schools, http://www.nchs.ucla.edu/history-standards/historical-thinking-standards/3.-historical-analysis-and-interpretation, [28.06.2015].

8. Idziak P., Wacięga S., Peasant Business School. Inspirations for Teachers, MIK, Kraków 2014, http://pbs.mik.krakow.pl/files/PBS_Inspirations_2014.pdf, [25.06.2015].

9. Introduction to Standards in Historical Thinking, University of California-Los Angeles. National Center for History in the Schools, http://www.nchs.ucla.edu/history-standards/historical-thinking-standards, [28.06.2015].

10. Kurczewska A., Przedsiębiorczość, Polskie Wydawnictwo Ekonomiczne, Warszawa 2013.

11. Nasson B., History. The meaning and the role of history in human development, [in:] Encyclopedia of Life Support Systems (EOLSS), Paris 2001, www.eolss.net/sample-chapters/c04/e6-22-00-00.pdf, [21.06.2015].

12. Nodine T.R., Petrides L.A., Knowledge Management in Education: Defining the landscape, The Institute for the Study of Knowledge Management in Education, Half Moon Bay, March 2003, http://iskme.path.net/kmeducation.pdf, [21.06.2015].

13. Peasant Business School. Andrychów, or to understand the contemporary, http://pbs.mik.krakow.pl/files/Peasant_Business_School_ANG_A4.pdf, [25.06.2014].

14. Peasant Business School. Cooperation, http://pbs.mik.krakow.pl/cooperation/, [25.05.2015].

15. Peasant Business School. Tournaments, http://pbs.mik.krakow.pl/category/turnieje/, [25.06.2015].

16. Recommendation of European Parliament And Of The Council of 18

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December 2006 on key competences for lifelong learning (2006/962/EC), http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:32006H0962, [25.05.2015].

17. Rusin D., Wacięga S., Edukacja ekonomiczna w oparciu o historię. Przypadek Andrychowa (2007–2014), „Kwartalnik edukacyjny”, nr 4 (79)/2014, http://pbs.mik.krakow.pl/downloadable-materials/, [25.05.2015].

18. Strength in unity. What did the cooperation of craftsmen look like in Andrychow?, http://csb.mik.krakow.pl/files/tablice-w-gronie-2013.pdf, [25.06.2014].

19. The patronage of the European Year of Creativity and Innovation 2009, The Peasant Business School, www.create2009.europa.eu/projects/participating_countries/polska_poland.html, [30.06.2014].

20. The Peasant Business School Recommendations, http://pbs.mik.krakow.pl/recommendations/, [28.06.2015].

21. Tilden F., Interpreting Our Heritage, The University of North Carolina 2008.22. Zarządzanie wiedzą w społeczeństwie uczącym się, Centre For Educational

Research and Innovation, OECD, Warszawa 2000.23. Zwoliński A., Miasto Ankwiczów. Z dziejów Andrychowa, Aneks nr 1

Królewski przywilej lokacyjny, Kraków 1993.

Mirosław BorekMSc, PhD candidate at Cracow University of Economics

KNOWLEDGE MANAGEMENT IN OUTSOURCING

Keywords:outsourcing, knowledge management, knowledge transfer, tacit knowledge, explicit knowledge

SummaryThis paper discusses some fundamental issues related to the importance

of knowledge transfer and knowledge management in the outsourcing relationship. Knowing that knowledge transfer is not a one-way communication outsourcers must understand criticality of this element and how to determine the right approach for conducting it when outsourcing. Knowledge transfer cannot be considered as one-time set of activities. It is an ongoing process which encompasses the spirit of collaboration and the willingness to continuously share information to support the success of the outsourcing deal throughout the entire agreement term. Putting trust in an external partner, making strategic information, internal data and specific knowledge regarding the outsourced product or function accessible is a characteristic feature of outsourcing cooperation, which is based on partnership.

IntroductionThe current business environment, characterized by high complexity and

turbulence, is a vital factor determining the necessity of implementing changes within business organizations. Contemporary managing tendencies as well as concepts based on them point to the growing importance of corporate governance focused on key competences, quality, processes, costs, time, cooperation and service provision. All of these concepts are aimed at the pursuit of business development, streamlining and organizing its internal structure, improving the competitive ability, while minimizing costs, improving the quality of products and services offered and focusing on customer’s needs.

One of such concepts, in response to rapidly changing environment conditions, is outsourcing. Outsourcing allows to eliminate the processes which are redundant or less significant for the core operation of an enterprise and contributes to redesign of its value chain. As a result, a simple and more efficient

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organization system comes into being1. While implementing vital changes within an organization, outsourcing not only changes an enterprise in the economic and organizational area, but also in a social one. It is an essential fact that people play a crucial role in every outsourcing process. They initiate these changes and become creators of innovations, but can also be the main source of resistance against them. Human capital determines the essence and success of outsourcing performance through a potential of creativity, capability, ability, motivation and knowledge. Knowledge, in this case, plays not only a role of one of the key intangible resources of each enterprise being engaged in the outsourcing process, but is also an essential factor of strategic decision making by these companies. Due to this, adequate and efficient knowledge management is crucial for both, the outsourcer and the outsourcing service provider.

The notion and essence of outsourcingOutsourcing stands for a great deal more than acquisition of raw materials

and standardized intermediate goods or services. Therefore, it is no surprise that this phenomenon is defined in various sources by management scholars and practitioners.

Generally, outsourcing can be defined as taking advantage of external resources. The definition is derived from the expression: „outside-resource-using”. The notion of outsourcing can therefore be determined as a company’s activities, preceded by an aware business decision2, where some functions within the organizational structure are separated and allocated to other entities. It is associated by virtue of a contractual agreement with a partial or whole transfer of human, tangible resources as well as managerial responsibilities to an external provider3.

A bit of clarity to outsourcing taxonomy was introduced by Gilley and Rasheed by classifying this phenomenon as a purchase of something, which was initially obtained from the internal source (vertical disintegration) or could be obtained internally regardless of the decision to take advantage of the external source (“make or buy” decision)4. The very same researchers assert that the organizations which have no alternative to acquire certain goods or services but to make use of the external source (e.g. due to lack of capital or professional know-how), acquire the goods or services not due to outsourcing cooperation but because internalisation of these actions would never be the option of their choice. In other words, since rejection of an internal source was not even an

1 J.A.F. Stoner, R.E. Freeman, D.R. Gilbert, Kierowanie, PWE, Warszawa 2001, p. 321.2 T.L. Elliott, D.E. Torkko, Word Class Outsourcing Strategies, “Telecommunications”, American Edition, Vol. 30, 1996, p. 47.3 J.P. Lendzion, A. Stankiewicz-Mróz, Wprowadzenie do organizacji i zarządzania, Oficyna Ekonomiczna, Kraków 2005, p. 19.4 K.M. Gilley, A. Rasheed, Making More by Doing Less: An Analysis of Outsourcing and its Effects on Firm’s Performance, “Journal of Management”, Vol. 26, No. 4, 2000, p. 763-790.

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alternative by these companies, thus the operations of these organizations, whose aim was to acquire goods and services from external providers cannot even be called outsourcing but procurement. A similar stance must be adopted in terms of enterprises commencing their activity. Since one of the principle aspects considered with relation to outsourcing is efficiency of specified activities performed by the organization internally before they are outsourced, in regard to new enterprises such scenario does not exist.

The above mentioned definitions of outsourcing, illustrating interpretive dissimilarity, which can be found in views of different authors, lead to the conclusion that the phenomenon of outsourcing is defined widely in literature, and can refer to almost every purchase of goods or services made by a company from an external entity. However, there are certain features, which play a significant role and determine the outsourcing nature of relations between an enterprise and its supplier in each definition of outsourcing. First of all, this relationship must be long-term. Moreover, it ought to be oriented towards outcome. It indicates that the service provider can freely determine function performance or the process, which is to be carried out. It is the free choice of receiving instructions from the ordering party regarding the manner of service performance, that distinguishes outsourcing from other relations between market participants,. The ordering party, being involved in outsourcing, expects to receive measurable, previously established results of collaboration, leaving the method of execution up to the service provider.

In economic practice outsourcing ventures are often confused with subcontracting. The subject sources making distinction between these two business tools mention, most of all, the term of contract as a key parameter which distinguishes the two definitions. In the event of subcontracting the term is shorter with relation to the length of period of outsourcing performance.

The outsourcing subject can be embraced by one of three areas of operation within an organization: individual, functional and procedural. Outsourcing of individual actions covers separation of independent work position from the organizational structure of the enterprise. The level of functional operations is associated with the organizational structure as functional cost centre, where each function requires professional knowledge and accountability. The processes lead to obtain particular outcomes and consist of actions related to each other. The classification of economic processes taking place within an organization covers the following categories5:

• strategic processes – which enable an organization to plan and future development, and the aims are a part of its mission, vision and intentions,

• operating processes – allow an organization to function and operate on daily basis,

• supporting processes – provide an efficient performance of strategic

5 J. Peppard, P. Rowland, Re-engineering, Gebethner i S-ka.,Warszawa 1997, p. 14-15.

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and operating processes; also, the following auxiliary processes can be included: procurement of technical equipment and materials or maintenance, as well as processes in the area of management, including human resources and IT management.

Since the strategic processes have a direct influence on results achieved by a company they should not be outsourced beyond the company and must be included in the subsystem of organization management6.

To be considered as a strategic choice, outsourcing must be a distinctive feature of specific firms in the industry. It must also concern on two types of activities that contribute substantially to enterprise’s added value: activities critical to performance (supporting the core businesses) and activities that create a competitive advantage7.

As Brown and Wilson point out, apart from strategic, there are two additional levels of outsourcing: tacital and transformational8. In terms of tacital (operating) an outsourcing venture is carried out within shorter periods than strategic horizon of an enterprise. It can be treated as a prompt tool of meeting certain needs, or to solve an existing issue within an organization. Transformational outsourcing is commonly used to redefine an enterprise. It allows a company to hold the position of the market leader, build up a competitive advantage and contribute to a bigger value for the organization.

Knowledge as intangible asset of an enterpriseOutsourcing process implementation is often associated with a transfer

of tangible and intangible resources. It also refers to a transfer of knowledge between the parties to outsourcing agreement and internally within each organization between specified persons, or group of employees.

Transmission and absorption make up the knowledge transfer. Transmission is connected with deriving knowledge from its base or other source, and then conveying it to the receiver. Next, acceptance of received knowledge takes place, as well as its assimilation and use. It’s worth paying attention, that knowledge must be derived from reliable source, to be absorbed appropriately9.

Knowledge is a resource of intellectual competences and practical skills (experience). According to literature, the basis for knowledge is data and

6 J. Czekaj, Zarządzanie procesami biznesowymi. Aspekt metodyczny, Wydawnictwo UEK, Kraków 2009, p. 31.7 B. Quelin, F. Duhamel, Bringing Together Strategic Outsourcing an Corporate Strategy: Outsourcing Motives and Risks, „European Management Journal”, Vol. 21, No. 5, 2003, p. 647-661.8 D. Brown, S. Wilson, The Black Book of Outsourcing – How to Manage the Changes, Challenges and Opportunities, Willey, Hoboken, NJ, 2005, p. 19-43.9 G. Probst, S. Raub, K. Romhart, Zarządzanie wiedzą w organizacji, Oficyna Ekonomiczna, Kraków 2002, p. 177.

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information, which become knowledge after their processing10. Data constitutes elements of information which are created by rough and non-processed facts, figures and occurrences. Currently, the most common method is to record and store them in the form of formalized documentation. They must be understood as a set of single facts about a particular occurrence. In terms of organizational context, data is a formalized documentation of transactions11.

Information stands for harmonized data and all crucial factors used to make a decision. Information is based on processed data and interpreted so that it can be useful for its receiver. The principle role of the information is to provide a new point of view in perceiving and interpreting occurrences or objects, how the receiver perceives certain issues and influence on its behaviour and judgement. Information can also be seen as a logical and substantive combination of data which allows to explain phenomena and to obtain a constructive feedback.

The academic literature defines knowledge in various ways. Galata proposes knowledge understanding as everything (facts, phenomena and relations between them), which was observed consciously and recorded and is possible to convey to others, according to the knowledge holder’s intentions, in particular conditions and situations to initiate specified behaviours12. The very same researcher claims that contrary to other resources, knowledge is expanded during the process of its use13.

According to Applehans, Globe and Laugero, knowledge constitutes information used to solve a particular problem or make a decision14. Also, it is considered that knowledge is a piece of information in a particular context, which allows an enterprise and its employees to operate efficiently. There is a clear distinction between the terms „information” and „knowledge”. Information is created at the system level and comprises a flow of commodities (meanings or messages) capable of yielding knowledge, affecting it by adding something, changing or restructuring it. Knowledge is created and ogranized at the process level by a very flow of information, anchored on the beliefs and commitments of its holder15. Creation of knowledge takes place not only internally, within an enterprise, but also in interaction processes with its customers, business partners or other stakeholders.

10 J. Brdulak, Zarządzanie wiedzą a proces innowacji produktu. Budowanie przewagi konkurencyjnej firmy, Szkoła Główna Handlowa, Warszawa 2005, p. 14.11 W.M. Grudzewski, I.K. Hejduk, Zarządzanie wiedzą w przedsiębiorstwach, Difin, Warszawa 2004, p. 75.12 S. Galata, Strategiczne zarządzanie organizacjami. Wiedza, intuicja, strategie, etyka, Difin, Warszawa 2004, p. 50.13 Ibidem, p. 58.14 W. Applehans, A. Globe, G. Laugero, Managing Knowledge. A Practical Web-Based Approach, Addison-Wesley Information Technology Series, Reading, MA, 1999, p. 18.15 F. Machlup, Semantic Quirks in Studies of Information, [in:] The study of Information, (eds.) F. Machlup, U. Mansfield, John Wiley&Sons, New York 1983, p. 641-671.

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The aforementioned definitions of knowledge indicate that it is strongly personified and directly associated with human factor and human action. Hence, one can assert that humans are the main carrier of knowledge, and not an enterprise. Personalized knowledge consists of explicit and tacit knowledge and can be held by individuals or collectively in groups. Degree of use of personified knowledge depends on a human and its intellectual abilities16. Apart from personalized knowledge, an organisation holds also codified and grounded knowledge which is within an organization regardless of human’s presence17.

Attributes play a crucial role in terms of knowledge significance in the portfolio of resources within an organization. Due to these attributes knowledge is:

• relativized, which means it has a different dimension with relation to particular actions,

• relativized and contributes to a new configuration of management,• collectivised by creating a network of relations and becomming available

for others,• socialized (tacit to tacit), by transmitting through observation, imitation

and practice from one individual to another18,• consciously expressed by knowledge holders.

Knowledge is an intangible capital of an enterprise, which should be skillfully managed, similarly to other resources. Knowledge capital determines an economic value of potential and intellectual level of a human, creative abilities and practical skills, which can be possessed by management, owners and employees of an enterprise. It’s worth mentioning that in current economic conditions there is a strong relation between increased knowledge capital and enterprises’ productivity, and capability to their development and survival.

Knowledge and knowledge management in the outsourcing processSignificance of knowledge management is on the increase in numerous

organizations, since managers have come to the conclusion that effective knowledge management is a source of market competitiveness of enterprises. Appropriate management of knowledge is particularly important in the outsourcing process, since it is one of the key factors for its successful implementation and performance. Knowledge management in the outsourcing process is a set of measures which enable to unblock, create, disseminate, transfer and make use of knowledge in pursuit of outsourcing objectives. It is relevant to

16 B. Mikuła, Organizacje oparte na wiedzy, Wydawnictwo Akademii Ekonomicznej w Krakowie, Kraków 2006, p. 115.17 B. Mikuła, Geneza, przesłanki i istota zarządzania wiedzą, [in:] Zarządzanie wiedzą w przedsiębiorstwie, (ed.) K. Perechuda, Wydawnictwo Naukowe PWN, Warszawa 2005, p. 15-16.18 I. Nonaka, H. Takeuchi, The Knowledge-Creating Company. How Japanese Companies Create the Dynamics of Innovation, Oxford University Press, Oxford 1995, p. 284.

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both parties of the outsourcing agreement, outsourcer and its provider, because outsourcing is causing the organizational knowledge landscape to change.

While making a decision to collaborate with an outsourcing service provider, outsourcers face new challenges. Outsourcing leads to a knowledge gap in their systems, which means loosing processes, personel and knowledge (including peripheral knowledge) associated with the outsourced activities. To make outsourcing successful outsourcing organizations have to share their know-how with external firms, often very strategic knowledge regarding their business activity. Moreover, as it was mentioned previously, knowledge creation, its transfer and integration are actions of social nature. When outsourcing occurs, attentive care relationships and social interactions between outsourcer’s employees are subject to change, as their positions might be liquidated, for example, they might be made redundant or transferred to other departments. Loosing a key employee may contribute to a loss of knowledge and experience, and sometimes even some strategic customers.

Critical to a successful outsourcing process is knowledge transfer from an outsourcer to an external service provider. This knowledge transfer should start in the outsourcing firm with conveying and diffusing knowledge throughout its different departments. It will allow to leverage the ways that knowledge can be utilized to solve problems and strengthen outsourcing implementation process performance. Transferring of explicit knowledge into an outsourcing process is easy, even without the knowing subjects (employees). On the contrary, tacit knowledge transfer is a huge challenge due to its nature. Since tacit knowledge is intuitive, unarticulated and personally contextual, it cannot be transferred by outsourcing activities without engagement of the tacit knowledge holder. The only way to effectively manage the transfer of tacit knowledge and to realize its full potential is internal motivation of knowing subjects, which results in their close involvement, cooperation and loyalty towards the outsourcing firm. It must be supported by design or creation of proper environments, processes and systems that provide the willingness and means for it to take place.

Apart from the knowledge transfer, outsourcing leads to a new knowledge creation. Some researchers do not treat this issue as part of knowledge management since it borders and overlaps with innovation management19. Nevertheless, taking under consideration a broader knowledge management definition it can be regarded as a part of the process. The process of knowledge creating which takes place in outsourcing relationship is a dynamic spiral that shifts from individual employee to organization and further to across-organization dimensions and must be supported by relevant information and data which can improve decision and serve as building blocks in the creation of new knowledge. In the outsourcing process creation of new knowledge does not take place exclusively with the supply side. However, in the outsourcing

19 J.L. Wellman, Organizational Learning: How Companies and Institutions Manage and Apply Knowledge, Palgrave Macmillian, New York 2009, p. 34.

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relationship an external service provider is the one who has more challenges and opportunities to create the new knowledge.

Bearing in mind these obstacles, outsources should carry out an audit of outsourced actions so as to make sure that the employees’ tacit knowledge is codified in the form of hard copy and/ or recorded in an electronic database, allowing to have an easy access, if necessary. Carrying out the knowledge audit allows to make an inventory of outsourcer’s intellectual capital resources, establishes a range of knowledge currently possessed and used, helps to find out where and in what form knowledge necessary for outsourcing exists and what knowledge is lacking for that purpose. Based on knowledge audit, an outsourcer can properly plan, as well as adjust its existing knowledge management system to a situation, when an external supplier takes control over outsourced functions. In addition, the knowledge audit provides the outsourcer with updated information, both on knowledge of its employees and the one codified in processes and acquired technologies.

The issue of knowledge transfer and its management varies widely depending on the type of outsourcing. Partly, it can be found in the event of outsourcing of secondary functions such as transport services (internal transportation, storage, 3PL, 4PL), cleaning, security. Both individual’s and group’s tacit knowledge is of slight significance then. It is because all information and knowledge necessary to carry out appropriate functions are well codified, and a tool to obtain, transfer and record knowledge is computer technology, the knowledge management system is based on. In this case, attention is drawn to knowledge in the form of procedures, regulations, process descriptions, chart creation, reports and databases, hence, the knowledge may be easily made accessible for its users. Moreover, risk of inappropriate use of the outsourcer’s strategic information is very unlikely since the service provider has a limited direct access to it. Certainly, we may take into account that the logistics provider can gather information about the outsourcer’s production output potential based on the transported loads or having access to the list of the outsourcer’s customers, pass it on to a third party. However, such general information has low strategic value.

The outsourcing process of secondary functions creates no new knowledge and as a result enterprises engaged in outsourcing should apply a technical approach to build their systems of knowledge management.

A risk of confidential data exposure as well as the outsourcer’s confidentiality occurs when an organization outsources its production functions. It often transfers knowledge about a core product in its activity, technological solutions, patents, know-how and specific knowledge. Therefore, an outsourcer should adopt a strategy of limited knowledge protection. It is impossible not to disclose the whole knowledge to the outsourcing partner for the purpose of service provision, simultaneously, the outsources should take certain actions in order to minimize the risk of inappropriate knowledge use by the provider. It can be done by reassigning a trustworthy employee or a team of employees

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to work at the outsourcing project at the provider’s premises. During the process of outsourcing production activities, the parties to the outsourcing agreement often put in place a strategy of knowledge management where knowledge creation is based on cooperation. As a result, new and innovative knowledge comes into being, usually codified and formal. However, during the performance of outsourcing service, employees of the external supplier also acquire tacit knowledge. Transformation of tacit knowledge into knowledge, which is formalized and generally available also for the outsourcer (e.g. in the form of technical drawings, specifications, quality control reports, descriptions of technological changes), is a very important management element in outsourcing process of production functions.

In business practice there are also outsourcing types where the quality of formal knowledge becomes an issue, which is to be transferred to an external provider. Procurement outsourcing can be an example here. It’s worth paying attention that the issue slightly occurs in the event of outsourcing of production materials, since a thorough specification of acquired goods, their quantity and purchase sources are known. This knowledge is transferred to the provider in a codified form. During cooperation a strategy of knowledge availability is applied, by both transferring knowledge to outsourcing partner, and knowledge absorption from him.

Different situation takes place in case of technical procurement outsourcing, due to low quality of data and information, which are transferred to the provider. Technical procurement specification makes purchase of various materials and spare parts non-repeatable, where goods are entered into databases by procurement employees in an unreliable and simplified way. Most frequently, outsourcer’s database of technical materials do not consist precise descriptions of goods purchased, manufacturer’s order or catalog numbers and product names, which are necessary to identify these goods correctly in the event of repurchasing. The incomplete information causes a huge problem for the both parties to the outsourcing agreement, both at the stage of submitting offers, outsourcing implementation, and during its performance. Therefore, a significant role is played by tacit knowledge held by outsourcer’s employees working at procurement and maintenance departments, which they most often do not want to share with the service provider. Unwillingness to share knowledge results from decreased level of trust towards the external servicing firm, is engendered by fear of losing an advantage of holding tacit knowledge and fear to lose a job. This issue gets even bigger when the employees possess wider knowledge and skills to perform better work than the provider’s staff. A social approach is appropriate in this situation as well as applying a strategy of building a system of knowledge management. It is characterized by establishment of relations between the outsourcer and service provider’s employees, ability to support communication processes, where the knowledge is made common and new. A chief business practice in this respect is to relocate outsourcer’s procurement staff to an external contractor. As a result, the tacit

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knowledge related to the outsourced activities can be successfully kept and outsourced, with functions being performed more effectively from the very beginning.

Literature:1. Applehans W., Globe A., Laugero G., Managing Knowledge. A Practical Web-

Based Approach, Addison-Wesley Information Technology Series, Reading, MA, 1999.

2. Brdulak J., Zarządzanie wiedzą a proces innowacji produktu. Budowanie przewagi konkurencyjnej firmy, Szkoła Główna Handlowa, Warszawa 2005.

3. Brown D., Wilson S., The Black Book of Outsourcing – How to Manage the Changes, Challenges and Opportunities, Willey, Hoboken, NJ, 2005.

4. Czekaj J., Zarządzanie procesami biznesowymi. Aspekt metodyczny, Wydawnictwo UEK, Kraków 2009.

5. Elliott T.L., Torkko D.E., Word Class Outsourcing Strategies, “Telecommunications”, American Edition, Vol. 30, 1996.

6. Galata S., Strategiczne zarządzanie organizacjami. Wiedza, intuicja, strategie, etyka, Difin, Warszawa 2004.

7. Gilley K.M., Rasheed A., Making More by Doing Less: An Analysis of Outsourcing and its Effects on Firm’s Performance, “Journal of Management”, Vol. 26, No. 4, 2000.

8. Grudzewski W.M., Hejduk I.K., Zarządzanie wiedzą w przedsiębiorstwach, Difin, Warszawa 2004.

9. Lendzion J.P., Stankiewicz-Mróz A., Wprowadzenie do organizacji i zarządzania, Oficyna Ekonomiczna, Kraków 2005.

10. Machlup F., Semantic Quirks in Studies of Information, [in:] The study of Information, (eds.) F. Machlup, U. Mansfield, John Wiley&Sons, New York 1983.

11. Mikuła B., Geneza, przesłanki i istota zarządzania wiedzą, [in:] Zarządzanie wiedzą w przedsiębiorstwie, (ed.) K. Perechuda, Wydawnictwo Naukowe PWN, Warszawa 2005.

12. Mikuła B., Organizacje oparte na wiedzy, Wydawnictwo Akademii Ekonomicznej w Krakowie, Kraków 2006.

13. Nonaka I., Takeuchi H., The Knowledge-Creating Company. How Japanese Companies Create the Dynamics of Innovation, Oxford University Press, Oxford 1995.

14. Peppard J., Rowland P., Re-engineering, Gebethner i S-ka.,Warszawa 1997.15. Probst G., Raub S., Romhart K., Zarządzanie wiedzą w organizacji, Oficyna

Ekonomiczna, Kraków 2002.16. Quelin B., Duhamel F., Bringing Together Strategic Outsourcing an Corporate

Strategy: Outsourcing Motives and Risks, „European Management Journal”, Vol. 21, No. 5, 2003.

17. Stoner J.A.F., Freeman R.E., Gilbert D.R., Kierowanie, PWE, Warszawa 2001.

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18. Wellman J.L., Organizational Learning: How Companies and Institutions Manage and Apply Knowledge, Palgrave Macmillian, New York 2009.

Maciej Jan MalarskiPhD, Department of Management, Faculty of Management, University of Lodz, Poland

COMPETENCIES REQUIREMENTS FOR SALES PEOPLE AS GUIDELINES FOR EDUCATION

Keywords:competencies, sales processes, sales positions, education

SummaryModern organizations need new forms of acting in sales processes.

Customers’ requirements and needs are changing rapidly and the pressure from competition is coming even more compelling. Companies are trying to introduce new forms of sales based on building close relations with customers. New ways of organizing the sales processes impose new forms of human behaviour and tough requirements from salespeople. The article presents the results of broad research made among various companies which employ people for sales processes. The research was conducted using the analysis of a great number of recruitment advertisements for sales positions and numerous job descriptions from the sales area. The analysis was based on competencies methodology when studying the requirements for sales people. The most typical requirements were grouped according to division into general and technical competencies needed on different types of sales positions. The main conclusions are concentrated on the changes in sales processes and its influence on personal competencies development of salespeople. The results of the research can be used by educational organizations which participate in preparing people for these kinds of profession.

IntroductionIn today’s changing labour market conditions, traders are often sought

after by employers in terms of adapting sales activities to market needs. Large transformations in the broad trade took place among other things by a constant search for a new way of building relationships between the parties of the purchase-sale process, and by growth of the strategic role of these relationships in building competitive advantage. In connection with these changes, the people working in the areas of trade face new challenges. Vendors need to learn not

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only to use different sales models, but also to develop their skills so that they could be successful in the new market realities.

This article attempts to identify the needs of the market and outline the required set of characteristics and key competencies for pursuing the profession of seller. To this end, it analyzes the literature in this field and presents the research related to the analysis of vacancies on the sales positions and job descriptions. Understanding the characteristics and competencies required by employers from candidates to work in the retail sector can provide guidance on the changes in the educational system of such persons in order to improve their future functioning on the labour market.

Modern approach to building relationships in the process of sellingMost of the authors of literature related to the sale argue that this is an area

subject to constant change. According to Rackham and DeVincentis1, in recent years there has been a change in thinking and approach to sales, mainly due to the continuous acquisition of new knowledge about the relationship between the parties to the purchase-sales process and due to an increase of the strategic role of purchasing in large enterprises. As a result of these changes i.a. the vision of sales was reshaped and the goals – previously set before the sales teams – redefined. These transformations led to unprecedented redefinition of sales of the business-to-business type. Rackham and DeVincentis point out that in the last 20–30 years the sale has been influenced by new forces, which has resulted in its change in every respect2. The authors emphasize that in recent decades aggressive transactional sales has been abandoned for teamwork and the broad consultancy. According to Sandler each trader should first “master the art of professional sales”, because the best results are ensured by sales based on applications, i.e. advisory sales (also called strategic), additionally based on a coherent sequential system3.

The concept of competencies and their importance in the management of sales staff The concept of competence and competence systems is relatively recently

introduced into the realm of organizational management. One of the forerunners of this concept was McClelland who describing the process of

1 N. Rackham, D. DeVincentis, Zespoły sprzedaży w obliczu zmian – jak na nowo zdefiniować sprzedaż, aby stworzyć wartość dla klientów, Oficyna Wolters Kluwer Business, Warszawa 2010, p. 37-38.2 Ibidem, p. 14.3 D. Sandler, Nie nauczysz dziecka jazdy na rowerze podczas prelekcji – siedem kroków innowacyjnej sprzedaży według systemu Sandlera, Oficyna Wolters Kluwer Business, Warszawa 2014, p. 12.

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evaluating employees based on standardized criteria stated that competence is a better indicator of the success of the employee rather than knowledge or intelligence as measured by psychometric tests4. The concept of competence was also popularized by Boyatzis, who introduced the term of field of competence and the related division into the threshold competencies (specific for a given job position) and differentiating competencies (allowing for distinguishing between better and weaker workers)5.

In the literature there are different approaches to the competence of the traders and sellers. Majewska-Opiełka points out that, although currently the sellers and the company units responsible for the organization of training are aware of the need to develop competence of traders, they are still focused on two main areas: sales techniques and trainings that build attitudes that lead to these techniques. She also emphasizes, which is overlooked by many, the importance of elements such as the qualifications of character, emotional intelligence and mental attitude6.

Thierry and Sauret drew attention to all areas of competence that an employee should develop. According to them, the most important competencies in the profession of trader are: sales techniques, knowledge of the product, emotional competencies and interpersonal skills7. Similarly, in the view of Lake and Hinckley, there are three groups of features which employees who serve clients should have: knowledge (skills), personality traits (relationships with people, thinking styles, emotions), and intelligence IQ8. Lambert, Kerkhoff and Ohai, experts from the American Society of Training and Development, based on years of research and experience, as well as the expertise, developed a model showing the sales competencies. They identified four key sets of competences9:

• Partnership – effective building and maintaining relationships;• Focus on the client – collecting customer information, and using them

in an effective manner;• Recommending – selecting and recommending the customer the right

products in order to present to him a satisfactory solution;• Effectiveness – competencies in this area affect the development and

personal effectiveness.

4 B. Jamka, Czynniki ludzkie we współczesnym przedsiębiorstwie – zasób czy kapitał, Oficyna Wolters Kluwer Business, Warszawa 2011, p. 26 and p. 28.5 M. Sołtysińska, I. Kossowska, Szkolenia pracowników a rozwój organizacji, Oficyna Ekonomiczna, Kraków 2002, p. 36.6 I. Majewska-Opiełka, Sprzedaż i charakter – podręcznik dla handlowców i menedżerów zespołów sprzedażowych, Rebis, Poznań 2004, p. 55-70.7 D. Thierry, Ch. Sauret, Zatrudnienie i kompetencje w przedsiębiorstwie w procesach zmian, Poltext, Warszawa 1994, p. 90.8 N. Lake, K. Hickley, Podręcznik obsługi klienta – zdobądź zadowolonych i lojalnych klientów, OnePress Exclusive, Gliwice 2005, p. 85.9 B. Lambert, T. Ohai, E. Kerkhoff, World Class Selling – New Sales Competencies, American Society for Training & Development, Alexandria VA 2009, p. 56.

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It should be emphasized that the concept of competencies has been introduced in education system for all levels of teaching process. This means that all competencies requirements which are stem from business requirements can be adapted quite easily by schools on the all levels of education.

For the purpose of this article competences have been divided into two groups: general and technical.

Group of general competencies Among the general competencies that apply to all employees at different

work posts are the skills that affect the efficiency of the work, its effectiveness, which result not so much from strict knowledge, but rather from the ability of the people to respond and behave in a particular situation. Within this group of competencies often are abilities to build social relations, the ability to participate in group work and respond to a variety of problems of social nature or related to cultural differences. Typical competencies are communication, collaboration, adaptability, flexibility of reaction10. Among the general competences very important role nowadays is played by the concept of emotional intelligence, i.e. a set of skills regarding the command and use of our own emotions and the influence on the emotions of others. The most popular and most frequently quoted concept of emotional intelligence is the concept of Goleman, who defines emotional intelligence as the ability to recognize our own feelings and those of others11.

The classification of emotional competence, distinct from Goleman’s, is presented by Higgs and Dulewicz, who highlight such competencies as self-awareness, emotional flexibility, achievement motivation, empathy, and influence on others, decision making and personality integration12. Another concept of emotional intelligence EQ presented by Krokowski and Rydzewski who supported their conclusions by the studies conducted in companies operating in Poland13.

10 T. Czapla, Modelowanie kompetencji pracowniczych w organizacji, Wydawnictwo Uniwersytetu Łódzkiego, Łódź 2011; M. Armstrong, Zarządzanie zasobami ludzkimi, Oficyna Wolters Kluwer Business, Kraków 2007; M. Armstrong, Essential Human Resource Management Practice – a guide to people management, Kogan Page Limited, 2010; L. Spencer, S. Spencer, Competence at Work: Models for Superior Performance, Wiley1993.11 D. Goleman, Emotional Intelligence: Why It Can Matter More Than IQ, Bantam, New York 1997, p. 16.12 M. Higgs, V. Dulewicz, Making Sense of Emotional Intelligence, Nfer-Nelson, Darville House 1999, p. 17.13 M. Krokowski, P. Rydzewski, Zarządzanie emocjami – inteligencja emocjonalna – vademecum użytkownika, Imperia, Łódź 2002.

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Group of technical competenciesAmong the technical competences the largest part is taken by the knowledge

of the products sold, sales processes, techniques associated with the customer service (including computer programs to support customer relationships). Wendel and Gorman argue that product knowledge is more than just technical knowledge. In the authors’ opinion, product knowledge consists of elements such as the physical characteristics of the product, the method of delivery, price, installation, and training in the use, guarantees and after sales support14.

On the other hand, on the pages of The Queensland Government Business Development there is a list of information about the product, which the trader should be familiar with the purpose for which the product was made, how the product works and was created, how the quality of the product is tested, how the product is delivered and serviced, the life of the product, the price, comparison with the product offered by the competition15.

Research methodology The main objective of the study is to determine the needs of the market

related to the demand for sales staff and to identify the extent to which the technical and general competencies set new sales approach and can influence the educational programs. For this purpose, a survey has been conducted among employers in terms of required job candidates and job descriptions related to the sale. The information used for the conducting of the study came from online sources (websites of district labour offices, sites with job offers from the province of Lodz – Poland) and job descriptions obtained from companies in the Lodz region. The study was conducted in the period July – September of 2013. The study sample to carry out this analysis consisted of 1.451 job advertisements in trade and economic professions (these advertisements were available on the website the period considered) of 389 companies, and 143 job descriptions associated with the pursuit of a trader. These descriptions were from 49 companies (descriptions were obtained from the Internet or through interviews conducted in the companies). Both the offers and job descriptions came from companies of various sizes and industries.

The analysis was made in terms of formal requirements and competencies, which employers expect from employees in occupations associated with trade. Formal requirements were directly read from the analysed materials, whereas competences were analysed in two stages. At the beginning all entries regarding competencies that have emerged in the context of the analysed listings and descriptions were written down. This was followed by the categorization of

14 R. Wendel, W. Gorman, Selling – personal preparation, persuasion, strategy, Random House Business Division, New York 1988, p. 48.15 The Queensland Government Business Development, 2012, http://www.skills.business.qld.gov.au, [27.09.2014].

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all records and standardization of names to allow for statistical analysis. The analysis was made in respect of the following categories of job: trader/ sales representative, seller, customer advisor, leader/ manager, call centre seller, sales staff/ economist and purchase specialist.

The results of the studyMost surveyed listings (35,4%) were related to the position of the trader/

sales representative. Subsequently, employers sought sellers (20,7%), customer advisors (13,8%), leaders/ managers (11,5%), call centres sellers (11,0%), sales staff/economists (4,5%) and purchase specialists (3,1%). For purposes of presentation of the results, the analysis of the offers was named the first perspective. Among the studied job descriptions most were related to the trader/ sales representative (30,8%), followed by customer advisor (22,4%), seller (18,2%), manager (14,0%), call centres seller (8,4%) and the sales staff/ economists (6,3%). Among the examined descriptions purchase specialists positions were not analysed. For the purpose of presentation of the results, the analysis of the job descriptions was named the second perspective.

The results of the research were grouped according to the two groups of competencies – technical competence and general competence. Technical competencies include: computer skills, foreign language, negotiations skills, sales techniques, business approach, creating relationships with clients, presentations skills, identifications of client’s needs, sales processes knowledge. General competencies are divided into two groups. The first is the one that was seen in the analysis of both perspectives (offers and job descriptions). It included: communication skills, time management, leadership, teamwork, analytical thinking, creativity, stress tolerance, adaptability, and presence. The second group of general competencies are competencies that have been identified only in the first perspective and they include: self-motivation, availability, ambition, energy, savoir vivre, loyalty, emotional maturity, accuracy. The frequency of occurrence of individual competencies, for all the tested positions related to sales, in two perspectives (offers and job descriptions) is shown in the graphs below.

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Figure 1. Prevalence of technical competencies in the two research perspectives (n1 = 1.451, n2 = 143, results in percent)

Source: own research.

Figure 2. Prevalence of general competencies (the first group) in two research perspectives (n1 = 1.451, n2 = 143, results in percent)


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Figure 3. Prevalence of general competencies (second group) in the first perspective (n1 = 1.451 results in percentages)


First perspectiveAs it can be seen in the graphs of the distribution of competencies required

for positions related to sales, requirements related to the general competence occur more often. Two competences are prevalent – communications skills and time management in the first group (figure 1), and self-motivation in the second group (figure 2). Other competences rank definitely lower. It is worth noting the low prevalence of emotional maturity. Within the technical competences the spans are smaller; the most desirable competence is computer skills, and the next – foreign language. Quite surprising is the low position of the skills that are associated with recognizing customer needs, building customer relationships and knowledge of sales processes.

Second perspectiveAnalysing the job descriptions of sales positions, it can be noted that among

the technical competencies dominate computer skills and sales techniques (in the first perspective far lower). High on the index is foreign language and relationships with clients. Among the general competencies at the highest level there are communication skills, time management ranks the second (as in the first perspective). On the third and fourth places are teamwork and analytical thinking.

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The differences between the various positionsConsidering the differences in the distributions of competencies between

the different positions (treating the first and second perspective inclusively) it can be seen that the spans between the intensity of competence are quite large and are mainly due to the type of work performed at different positions. In the framework of technical competence in the highest degree dominate computer skills on specialist positions, a call centre seller (nearly 80%) and a seller (over 65%), in the second place there are language skills – to the greatest extent on the position of a specialist in the purchase department (nearly 90%) and a specialist in sales department (over 55%). Negotiations and sales techniques are in the highest degree on the position of leader/ manager, in the lowest – on the position of a seller and a call centre seller.

In the context of general competencies on the positions of trader/ sales representative, a call centre seller and a customer advisor required at the highest level were communications skills (above 70% in all cases), followed by time management (over 60%). The lowest rate of communications skills was on the positions of a leader/ manager (45%), and time management scored the lowest for the call centre seller position. Specialist positions were characterized by the highest level of competence of teamwork (above 35%) and analytical thinking (over 30%). Leadership competence was the most desirable on the position of a leader/ manager (above 60%) and, what is quite surprising, on the position of seller (nearly 40%). It is significant that the competence of creativity is quite low on all positions (the highest on customer advisor positions – nearly 20%).

Levels of competence and the sales process Analysing the results in terms of the implementation of the sales process

it should be noted that the occurrence of general and technical competencies to a small extent confirms the orientation of the surveyed enterprises on advisory sale related to recognizing customer needs, focus on the customer and recommending16. Among the wanted people for sales positions dominate traditional skills that are associated with the sheer fact of the effective communication with customers (communication skills), focus on the effective performance of the tasks (time management), individual work (self-motivation) and the use of information technology (computer skills). Low expectations are for capability of building deeper business relationships with customers and application of advanced sales techniques. A slightly different picture emerges from the analysis of job descriptions. The distribution of competence indicates the importance of sales techniques and building relationships with customers, but at a very low level there is the ability to identify customer needs. People working on sales positions should have very high communication skills, manage

16 B. Lambert, T. Ohai, E. Kerkhoff, World Class Selling – New Sales Competencies, American Society for Training & Development, Alexandria VA 2009.

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their time well. Also the teamwork skills and analytical thinking are required among sales people.

ConclusionsChanges in the sales processes appear to be imminent. The role of the client

in the process is changing clearly in the direction of its sophistication, wiser relationships between a sales person and a client, personalized approach to service, adapting the offer to his recognised and agreed needs. These changes affect the competency requirements in relation to the sales staff. However, a survey conducted among the businesses recruiting and employing sales staff does not suggest that entrepreneurs are definitely moving in this direction. The scheme of competencies rather suggests an attitude for the implementation of sales processes by classical methods which mainly focus on communication skills, with the use of sales techniques, and lesser focus on building relationships. Low skills are required, however, regarding the skills in business approach, recognizing customer needs and understanding of sales processes.

The further research should be provided in order to understand of the reasons for this situation. Undoubtedly, it is important to pose the following questions: whether companies by applying the competency requirements are successful in the market and are able to compete, if so, whether this is due to the immaturity of the customers market, lack of knowledge among the management of the company about other ways in which the sale is conducted, or the weak pressure from the competition.

Presented results should be regarded as a reference for educational institutions which offer specialized courses for sales people. It should be emphasized that business requirements are not far from traditional approach to processes of sales, however taking into account global changes in sales processes it is even more important to introduce new standards of educating people for sales positions and changing the mentality of sales managers. That should be an advantage and one of the most important goals for educational institutions.

Literature:1. Armstrong M., Essential Human Resource Management Practice – a guide to

people management, Kogan Page Limited, 2010.2. Armstrong M., Zarządzanie zasobami ludzkimi, Oficyna Wolters Kluwer

Business, Kraków 2007.3. Czapla T., Modelowanie kompetencji pracowniczych w organizacji,

Wydawnictwo Uniwersytetu Łódzkiego, Łódź 2011.4. Goleman D., Emotional Intelligence: Why It Can Matter More Than IQ,

Bantam, New York 1997.5. Higgs M., Dulewicz V., Making Sense of Emotional Intelligence, Nfer-Nelson,

Darville House 1999.

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6. Jamka B., Czynniki ludzkie we współczesnym przedsiębiorstwie – zasób czy kapitał, Oficyna Wolters Kluwer Business, Warszawa 2011.

7. Krokowski M., Rydzewski P., Zarządzanie emocjami – inteligencja emocjonalna – vademecum użytkownika, Imperia, Łódź 2002.

8. Lake N., Hickley K., Podręcznik obsługi klienta – zdobądź zadowolonych i lojalnych klientów, OnePress Exclusive, Gliwice 2005.

9. Lambert B., Ohai T., Kerkhoff E., World Class Selling – New Sales Competencies, American Society for Training & Development, Alexandria VA 2009.

10. Majewska-Opiełka I., Sprzedaż i charakter – podręcznik dla handlowców i menedżerów zespołów sprzedażowych, Rebis, Poznań 2004.

11. Rackham N., DeVincentis D., Zespoły sprzedaży w obliczu zmian – jak na nowo zdefiniować sprzedaż, aby stworzyć wartość dla klientów, Oficyna Wolters Kluwer Business, Warszawa 2010.

12. Salovey P., Sluyter M., Emotional Development and Emotional Intelligence, BasicBooks, New York 1997.

13. Sandler D., Nie nauczysz dziecka jazdy na rowerze podczas prelekcji – siedem kroków innowacyjnej sprzedaży według systemu Sandlera, Oficyna Wolters Kluwer Business, Warszawa 2014.

14. Sołtysińska M., Kossowska I., Szkolenia pracowników a rozwój organizacji, Oficyna Ekonomiczna, Kraków 2002.

15. Spencer L., Spencer S., Competence at Work: Models for Superior Performance, Wiley 1993.

16. The Queensland Government Business Development, 2012, http://www.skills.business.qld.gov.au, [27.09.2014].

17. Thierry D., Sauret Ch., Zatrudnienie i kompetencje w przedsiębiorstwie w procesach zmian, Poltext, Warszawa 1994.

18. Wendel R., Gorman W., Selling – personal preparation, persuasion, strategy, Random House Business Division, New York 1988.

Grażyna StańczakMSc Eng., owner of EUROPOINT, a training and consulting company

THE CHANGE IN MARKETING TECHNIQUES IN THE ECONOMY OF THE DIGITAL AGE

Keywords:marketing, managing clients, marketing analysis, client capital, relation intelligence

SummaryThe publication is an analysis of factors that have an impact on the

optimal form of modern marketing and directly contribute to an organization’s success. Proposals of marketing actions and solutions used by more successful companies are also discussed.

The author talks about the increased importance of long-term relationships companies have with their clients, indicates how the computing revolution and new technologies enable perfecting relation intelligence, and the roles and functions that the marketing of a modern organization must have to connect clients with the company.

IntroductionThe last decade has brought significant changes in the ways that companies

attract clients. Tools and strategies that were considered innovative are today seen as antiquated, and are being replaced by new ones. It can be said that marketing is another field, besides computing, that has evolved so quickly. However, many modern organizations do not change their marketing departments, which are most often a separate organizational body, as it was popularized in the previous era1.

When marketing began to develop, it was focused mostly on building brands, promoting sales and impersonal transactions, which were based on one directional mass marketing, focused on selling the product or service to broad markets. The focus was on the product and brand, and marketing departments were built as separate bodies. Today, however, because of the digital revolution, marketing is forced to use different tools and methods to connect customers

1 M. de Swaan Arons, F. van den Driest, K. Weed, Nowa machina marketingowa, “Harvard Business Review”, November 2014, p. 40.

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with the company. It should be concentrated on building long, positive relations with clients and be able to take advantage of the fact that today, clients need and seek deep relations with companies and with each other, and that they want to have an impact on the final shape of the offered products or services. Companies should form two directional communication with individual clients or narrow segments and build long relations promoting the products that the client values the most in specific periods of life. Now this is possible because we have technologies that allow for direct interactions with clients, collecting and analyzing information about them and adjusting the offer to their needs2.

This article analyzes the most important factors that have an impact on the optimal shape of modern marketing, its role in organization and the suggested tools that should be used by modern marketing people. Proposals of marketing actions and solutions used by market leading companies will also be presented.

The client in the center of attentionA simple definition of marketing says that it is a process of building positive

(profitable) relations with clients through creating value for clients and in return, receiving certain specific values from them3.

According to this, the center of attention of every company should be the client and the process of building long-term relationships with them. Companies that can build good relations with their clients in the right time, and effectively manage these relations, will achieve decisive, competitive dominance4. Thus, it seems that the most important role in the marketing of every company should be focusing on the client and that the product or service be created for their needs. To achieve this, marketing people should learn and understand the needs of their clients before the company offers anything. Only a perfect understanding of the client’s needs can allow companies to offer products or services that will interest the client. In extreme cases, the power of sales become useless. The client will be looking for the perfect product, not the other way around. Thus, the new rule of any company is put the client in the center of attention and precisely defining their needs, and only then the product will be adjusted for these needs. Customer service and the price-quality ratio come as a later priority.

The success of brands like Amazon, Google or Dell were largely based on understanding the customer and placing their needs in the center of attention. Many of those companies no longer simply ask “what does the customer need?”, but try to predict the future, asking “what will the customer need in a year, two years or even 10 years?”5.

2 R.T. Rust, C. Moorman, G. Bhalla, Zmiana podejścia do marketingu, “Harvard Business Review”, December 2010-January 2011, p. 62-71.3 G. Amstrong, P. Kotler, Marketing. Wprowadzenie, 10th Edition, Warszawa 2015, p. 70.4 V. Kumar, Zarządzanie wartością klienta, Warszawa 2010, p. 80.5 M. Staniszewski, Klient na pierwszym miejscu, „Harvard Business Review”, July-August 2014, p. 122-123.

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Also, besides asking “what else can we produce?”, today companies ask: “what else can we do for our clients?”. Factories and products are no longer the basis of business- they are currently the customer and the market.

The client will pick the offer that will provide them the most benefits. Companies put much effort into looking for technological innovations, because they believe that creating new products will give them the edge in the market. The competition will be won by the company that offers innovations that let the customer reduce costs and risks in the entire life cycle of the product, from its purchase, through its consumption and utilization. This is why companies should focus more on post-production innovations rather than just technological innovations.

For example – Hyundai successfully implemented a post-production innovation by introducing “Hyundai Assurance”, an option of selling their cars during the peak of the 2008–2009 recession. Not willing to cut prices like their competitors, Hyundai asked its customers: “why aren’t you buying?”. Of course, the most frequent answer was the fear of losing your job during the financial crisis. Because of this, Hyundai guaranteed its customers that should they lose their job within a year from their purchase, they will be able to return the car without any impact on their credit rating. In the first month after introducing the post-production innovation, sales were almost doubled, while the rest of the industry was dealing with severe losses.

In reality, innovative technologies are sometimes perceived as the greatest threat of competitive dominance. It isn’t necessary to worry about the release of every product of rival companies and every new feature they bring. The only ones that are dangerous are those which are an attempt to take control of purchase criteria of customers and cause a change in the market which disrupts the post-production competitive dominance. A high indicator of failure of new products in many industries proves that companies still invest too much in product innovation, but cannot modify the purchase criteria of customers. Technology is necessary, but isn’t enough to cause markets to evolve. Post-productive action, however, convinces customers to evolutionary, generational and revolutionary changes6.

Marketing that focuses on communicating with customersIn order for an organization to focus on the customer, it must create an

intelligent relation, which many companies lack. They do not understand, for example, how many different types of relations customers can have with a company; they also don’t know how to modify and strengthen these bonds. People expect nowadays that the company knows, what kind of relations they want and expect, so that the companies may fulfill their part of the contract. Unfortunately, many brands do not meet those expectations.

6 N. Dawar, Kiedy marketing jest strategią, “Harvard Business Review”, July-August 2014, p. 113-123.

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Although companies pay huge costs for CRM programs (Customer Relationship Management), some of them don’t really know what good relations with customers are about, and don’t know how to use them to achieve success. Data collected in CRM, like gender, age, income and education are then associated with purchase information, which allows dividing clients into profitability levels. Using only such constructed templates can lead to many mistakes, like losing the chance to build a good relation. For example, someone who wants to become a “friend” of the brand, share their observations about improving certain solutions, can be treated as a part of a normal transaction, which wastes the opportunity to create a proper relation with them.

To better understand relations with customers, companies must improve the relation intelligence of CRM systems. Currently, many companies deal with a huge influx of data, like e-mails, instant messaging or phone calls, many of which contain signals about relations. Because this information is often scattered, these companies cannot properly deal with collecting and analyzing it. These signals indicate what kind of relations customers expect, and in what direction these connections may evolve.

The biggest effort is required when collecting internet data. Web searching technology that uses robots can be useful in this- special programs that support search engines (web crawling) and data mining technology to collect signals from social media websites7.

“Radian6” is an example of such a program, which gives companies a platform that is able to listen to and interact with the clients, post its own comments, collect information and engage customers from a whole web of social media. “Radian6” (web dashboard) allows real-time monitoring of every situation, in which the customer mentions the given company, brand and touches on important matters for the businessman, including monitoring information about competition. The system searches through millions of blog posts, including comments and reviews on forums or social media8.

The new shape of marketingFocusing on the customer must not be only the domain of the marketing

department in a company. The development of information technology has made it possible for every department of the company to interact through clients, especially through electronic communication. This means that today it is no longer possible to relay the task of understanding the customer just to the marketing department. In the old way of thinking, the needs of the customer were handled only by marketing, sales and customer service. The new way of thinking is based on the idea that no matter what department the employee

7 S. Fournier, J. Wittenbraker, Odkryj tajemnice relacji z klientami, “Harvard Business Review”, November 2014, p. 60-71.8 G. Amstrong, P. Kotler, Marketing. Wprowadzenie, 10th Edition, Warszawa 2015, p. 172.

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works for and what their role in the company is, they must understand the rules of marketing and focus on the client. David Packard, the deceased founder of Hewlett-Packard once said: “Marketing is too important to give it only to the marketing department”9.

Today, companies that want to successfully compete must give up the idea of selling specific products, and build long term relationships with their customers. To make this possible, it seems necessary to transform the marketing department, which should take control over some functions that have contact with customers, e.g. CRM, customer service, or expanding its influence on the research and development area, or even the financial or legal departments.

In order for a marketing director to effectively manage such a department, he or she must have a strong operational position and report to the president of the company. Thanks to this, he or she becomes the person responsible for designing and realizing the company’s strategy of forming relationships with the customers and overseeing all departments that have contact with them10.

An optimal approach is based on organizing the marketing department around relations with the customers, creating positions tied to relations and expanding the competence of that area. From the relations that a company has, the marketing department must isolate both the positive and profitable bonds, as well as the negative and less profitable ones. Next, a strategy must be selected – it can be maintaining positive relations, moving clients in their direction, or a different change of mechanisms. In order for a strategy to be effectively executed, marketing specialists should train the personnel, modify recruitment procedures, introduce the right motivational elements and prepare processes to care for relations.

To make this emphasis on relations truly effective, it should extend far beyond marketing related departments. Relation intelligence should be a part of every department that has contact with clients, or an impact on them. This concerns two functions especially: information technology and customer service, which are unfortunately often outsourced.

The companies computer systems should be capable of collecting and analyzing specific types of data about nuanced relations, which are hidden in consumer activity through direct contact with the company, as well as social media. An optimal solution is for the director to oversee a team of programmers responsible for CRM, and hire personnel to analyze the contents by hiring psychologists, for example. These people are better prepared to reach conclusions from data analysis than analysts who specialize in computing, who are usually given the task of managing data about relations with customers.

9 G. Amstrong, P. Kotler, Marketing. Wprowadzenie, 10th Edition, Warszawa 2015, p. 55-56.10 R.T. Rust, C. Moorman, G. Bhalla, Zmiana podejścia do marketingu, “Harvard Business Review”, December 2010-January 2011, p. 62-71.

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Another very important function of the company which has a big impact on relations is customer service. Often, this is given to third party companies who usually underpay their employees; this causes companies to standardize and write in large compilations the answers that should be given when talking to customers. This approach does not serve building long term relationships with clients. To implement the correct approach, companies must teach customer service representatives the value of relations and tell them what relations people maintain or want to maintain with the company. This is why marketing should have an impact on managing customer service.

Marketing should also have a direct impact on research and development. It is more important to include clients in the designing process, so that decisions that concern products would be made based on the clients' actual needs. Introducing inventive technology without deeply investigating needs can cause severe losses.

The marketing department should be able to share knowledge concerning clients with all other departments that maintain contacts with them – PR, sales, web designers or even the financial and legal departments11.

Decisive processes and marketing cooperation with other departmentsConsidering the above mentioned issues it is possible to conclude that

marketing people in the current, unstable environment must play new, very important new roles and must cooperate with other departments. The value and effectiveness of marketing actions is greater in companies that emphasize on cooperation in the structures of that department. Cooperation effectiveness can be improved by using simple tools that strengthen the decision-making process, like: creating unambiguous roles, precisely formulating decisive criteria and properly defined procedures.

An important matter is to determine the fragile points where marketing collides with other departments, and improve the decision making processes in those areas (e.g. the business strategy, sales, information technology, analysis, price policy or finances).

No company is able to take care of these areas at the same time, especially since in every marketing organization certain colliding areas between organizational bodies are more important than others. Organizations that are able to isolate the most important decisions and improve their effectiveness will build better and stronger marketing departments12.

11 S. Fournier, J. Wittenbraker, Odkryj tajemnice relacji z klientami, “Harvard Business Review”, November 2014, p. 60-71.12 A. Joshi, E. Gimenez, Jak procesy decyzyjne usprawniają marketing, “Harvard Business Review”, November 2014, p. 51-59.

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The impact of the development of computing technology on marketingNew challenges in marketing have caused marketing bosses to be more

important in the ranks of their company. They have joined the elite of most organizations that consists of financial directors, operational directors and sales directors.

A marketing director should be well oriented in a changing business environment and trends that appear in the market, starting with the development of mobile devices and new channels of marketing communication, new formats of advertisements and methods of grading their effectiveness.

It can be said that computing technology now plays a main role in marketing. It has mostly brought the ability to measure the effectiveness of funds spent on marketing. The times when it was sarcastically said that half of the marketing budget is wasted are now the past, and marketing departments feel more pressure from managers and company owners to increase sales. No one wants to make a mistake and it is a common goal to increase income and gain new customers because that is hard evidence that a modern marketing organization should listen to.

To increase IT knowledge and use new and innovative tools, marketing people are forced by the dynamic growth of the internet and mobile channels of communicating with people. New trends in technology and contact points with clients cause old strategies not to work. As observers of these trends, marketing people are often the most advanced in the organization in using these new tools.

This is why the most sought out skills among marketing directors are mobile marketing and marketing analysis. Content creation and managing innovation are also extremely important13.

Marketing is quickly becoming one of the most technology dependant business functions, which is why in the near future marketing directors might be spending more money on technology than is currently spent by computing directors. And it isn’t just about increasing the budget for digitization because of moving funds from traditional media to electronic media. Companies spend more marketing funds on technology and expenses for things associated with technology, as well as service providers whose offers are associated with technology. Effective management of all of these resources is not an easy task. There are over 1000 providers of marketing programming in the world that offer a wide variety of products: CRM platforms, Content Management Systems (CMS) and applications that enable direct interactions with clients14.

New technologies are thus strategically important for the shape of modern marketing and strengthening its position in a company. Because of this, many

13 M. Jankowska, Rosnąca rola dyrektorów marketingu, “Harvard Business Review”, July-August 2014, p. 24-25.14 S. Brinker, L. McLellan, Między technologią informacyjną a marketingiem, “Harvard Business Review”, November 2014, p. 73-79.

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companies have a marketing technology director who combines both of these functions.

New measures in marketingThe most important value of any company is not just gaining new customers,

but also keeping them and increasing their base. One marketing consultant put it this way: “The only value that your company can create is the value coming from the customers – the ones you have, and the ones who you will have in the future. Without customers, there is no profit”15.

This perception of values requires methods of evaluating results oriented on the client – not only gaining and keeping a client, but also long term value, or client capital. Thanks to these measures it is possible to determine both current and future marketing results, which are a result of a better relation with customers. Gary Armstrong and Philip Kotler indicate in their book that the result of marketing investments is the higher value and satisfaction for the client that have an impact on gaining and keeping customers. This in turn increases the long term value of individual customers and the client capital of the company as a whole. A greater client capital tied with marketing investment costs makes it possible to determine the return from marketing investments16.

As it was indicated in previous parts of this elaboration, companies should focus more on relations with their customers than product marketing. To measure the effectiveness of the selected strategy, companies should consider these matters:

• Lesser emphasis should be placed on product profitability; greater emphasis should be placed on client profitability. Some products can, for example, be sold below costs only to improve relations with customers;

• Companies should concentrate less on sales, and more on the life value of the customer. This is because current sales tell us only about the current situation of the company; it is possible that a company with high sales income also has bad prospects and can be qualified as declining. The life value parameter of the customer allows determining future profits from relations with a specific client, considering the discount value to represent the value of money in time. Thanks to this approach the company must be interested in its own condition in a longer perspective;

• Instead of brand capital (its value), companies should focus more on customer capital (the sum of the life value of customers);

• Companies should in a lesser degree focus on current market share; greater emphasis should be put on the combined capital of customers (the value of the customer base of the company divided by the global

15 G. Amstrong, P. Kotler, Marketing. Wprowadzenie, 10th Edition, Warszawa 2015, p. 58.16 Ibidem, p. 109.

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customer value in the market). Market share shows the sales value of the company compared to its competition in the current moment, while global customer capital share is a long term measure of the companies competitiveness considering profitability levels17.

Marketing of the most effective companiesThe analysis of decisive factors when it comes to achieving dominance by

certain companies over others was conducted in the “Marketing 2020” project. According to the organizers of the project it is the most versatile analysis of the best marketing structures. The project was conducted by EffectiveBrands (with a number of partners: Association of National Advertisers, the World Federation of Advertisers, Forbes, Spencer Stuard, MetrixLab, and Adobe). Detailed interviews with over 350 company presidents, marketing directors and advertisers were conducted, as well as a number of round tables for marketing directors from many cities in the world. Questionnaires, containing over 80 questions about the skills of marketing workers in data analysis, brand strategy, cooperation with other departments, and training, were conducted. Conclusions were drawn on the basis of about 10 000 questionnaires conducted in 92 countries18.

As part of the project, companies were divided into two groups, based on their achieved results. Three year income in relation to the achievements of competitors was used as the deciding criteria. The first group was composed of companies with above average results, and the other with below average results.

Strategies, organizational structures and skill of these groups were compared. Based on research, elements necessary to achieve above average results, as well as the character of companies that achieve such results, were determined.

The first common feature that ensures a competitive advantage is possessing large databases that contain detailed observations concerning consumers. The best companies are distinguished by combining data concerning what their consumers do with data about why they do it.

Currently, marketing people are equipped with huge databases about consumers, however, they usually use them in a limited spectrum – e.g. only to improve the direction of communication. The most effective companies go a lot farther – they use their databases to get information about motives called “the universal truths about people” which their consumers really listen to.

The creators of the project give the example of Nike+, a company that has a deep understanding of the motives that guide athletes. Shoes produced by the company are equipped with sensors; they also come with devices connected to

17 R.T. Rust, C. Moorman, G. Bhalla, Zmiana podejścia do marketingu, “Harvard Business Review”, December 2010-January 2011, p. 62-71.18 M. de Swaan Arons, F. van den Driest, K. Weed, Nowa machina marketingowa, “Harvard Business Review”, November 2014, p. 40.

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the internet. Thanks to this, Nike+ not only registers the time of each run, but also gives the user vital information, allows them to communicate with friends, other enthusiasts, or trainers. Users are awarded for good results – they can share them with their friends, compare them with other members of the Nike+ community, and receive useful tips.

Another common characteristics of the most effective companies is a convincing and clear purpose of the brands existence. These organizations care about all three purposes of the existence of the brand – functional benefits (effects that the customer will receive thanks to the brand), emotional benefits (ways of satisfying the emotional needs of the customer) and social benefits (care for balanced development). A convincing and clear reason for the brands existence binds clients with the company and ensures consistent messages in all interactions with the client. For example, a Starbucks coffee is refreshing, provides an occasion to spend time together, and the company purchases coffee while adhering to the rules of fair trade.

Another good example is the Dulux brand of AkzoNobel, which has formulated a common motive for all departments in all countries: “the colors of the environment have a big impact on emotions”. Based on this, the company has created a marketing campaign called “let’s color the world” and gives away paint to volunteers (about 80% of them are employees of the company), who renovate run-down districts of many cities in the world.

This approach has brought together the actions of a once decentralized company and cause an increase in market share of the brand.

Another characteristics deemed as valuable by the organizers of the “Marketing 2020” project is “participating in the customers experience”. The authors of the project have concluded that soon it might be the most important measure. As an example they use the company McCornik – a producer of spices and food aromas, which promises “to promote the art of taste, knowledge about taste and a love for taste”. It is shown in many of the companies actions – for example, McCornik publishes sponsored publications that resemble cookbooks; FlowerPrint, a website, has also been established, which, thanks to advanced technology, is able to recognize and learn the preferences of customers and generate recipes for specific clients. The used algorithms analyze every recipe considering the unique flavor profile which is then associated with the flavor preferences of an individual user. The service is able to generate personalized e-mails, shopping lists and recipes sent to tablets and mobile devices.

The project distinguishes give motors of organizational effectiveness: integration with the business strategy, inspiring, focusing employees on priorities, creating interdisciplinary teams and developing internal skills.

Effective marketing is integrated with the business strategy – direct links between marketing and a general managing unit are created, tight relations with the president of the company are built and marketing is integrated with other departments. The leaders of marketing departments of the most effective companies not only integrate their department with the marketing strategy,

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but also actively participate in its creation. Thanks to this, marketing is much more integrated with other functions of the company, which is necessary to achieve success. Another way of boosting relations with other functions is a common leader responsible for both marketing and another department. For example, at Motorola, the senior vice-president of marketing is also responsible for computing technology, at Visa the marketing director also directs human resources, and Unilever has given both marketing and communication and balanced development to one person.

Leaders of these companies emphasize on inspiring. This is one of the most neglected aspects that drives marketing, as well as one of the most powerful, which connects all organizational levels with the purpose of the brand and increases engagement, thanks to which all employees are motivated by the same mission. The key to inspiring employees is creating thrilling messages and programs that drive the entire team to action. At Dulux, this was giving paint and brushes to thousands of employees and sending them to many different districts in the whole world.

An important element is also concentrating the attention of employees on priorities. In the most effective companies both local, as well as central marketing employees understand the strategy in the same way, thanks to which the internal cohesiveness of the company is maintained.

Leaders of highly effective companies organize operative and flexible interdisciplinary teams, whose members are characterized by flexible roles and fluid responsibility. These organizations use less strict procedures of approving projects, thanks to which teams can react quickly.

“Marketing 2020” also reveals tendencies in the needs for new marketing positions. Because of the expansion of social and digital marketing, next to specialists with a general understanding of marketing terms many new specialties have arisen, e.g. an analyst for privacy protection in digital communication. The organizers of the project have concluded that it is worth classifying these marketing professions according to wide categories of their functions. It is thus possible to divide marketing people devoted to “thinking”– using analytic skills to acquiring and analyzing data, and selecting appropriate media for marketing campaigns, “action” marketing people who create content, design campaigns and realize them, and “feeling” marketing people who focus on relations with the customer engaging in different roles – from customer service, through social media, ending on internet communities.

The project indicates that both the most effective and less effective companies differ considerably in the intensity and quality of training. Marketing personnel must have professional knowledge at least about traditional actions in marketing and communication like market studying, gaining information about competitors, planning media presence, etc. The best marketing structures invest even in creating special internal marketing academies. For managers who are members of the company’s board of directors, advanced courses concerning

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strategic matters can be useful. For these leaders training concerning digital technologies and social media can also be educating19.

ConclusionsThe goal of this elaboration was to analyze factors that determine the

shape and roles of marketing in modern organizations that achieve market success. From the presented thoughts it can be said that modern marketing should be focused on the customers, building appropriate, long-term relations with them, and developing a deep understanding of their needs. When creating an offer, companies should focus in a greater degree on post-production innovations – giving the customer the greatest benefits, reducing their costs and minimizing the risk taken by the customer in the entire lifecycle of the product. This approach is possible in companies where the marketing department not only has an impact but also actively participates in creating the business strategy, has greater privileges and control over other departments that have contact with the customer.

Over the last few years more companies have changed their approach from managing brands to managing customers; this has forced a redevelopment of marketing departments, increasing their privileges and impact on the organizations activity. Thanks to rapid growth of technology it is now possible to correctly and effectively manage relations with clients.

Modern marketing should focus on perfecting relation intelligence with clients, developing and expanding new IT competencies, analyzing collected data about customers and a constant use of new and innovative tools, but it should especially have a strong position in the company and have an impact on the entire organization.

Literature:1. Amstrong G., Kotler P., Marketing. Wprowadzenie, 10th Edition, Warszawa

2015.2. Brinker S., McLellan L., Między technologią informacyjną a marketingiem,

“Harvard Business Review”, November 2014.3. Dawar N., Kiedy marketing jest strategią, “Harvard Business Review”, July-

August 2014.4. de Swaan Arons M., van den Driest F., Weed K., Nowa machina

marketingowa, “Harvard Business Review”, November 2014.5. Fournier S., Wittenbraker J., Odkryj tajemnice relacji z klientami, “Harvard

Business Review”, November 2014.6. Jankowska M., Rosnąca rola dyrektorów marketingu, “Harvard Business

19 M. de Swaan Arons, F. van den Driest, K. Weed, Nowa machina marketingowa, “Harvard Business Review”, November 2014, p. 40-49.

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Review”, July-August 2014.7. Joshi A., Gimenez E., Jak procesy decyzyjne usprawniają marketing, “Harvard

Business Review”, November 2014.8. Kumar V., Zarządzanie wartością klienta, Warszawa 2010.9. Rust R.T., Moorman C., Bhalla G., Zmiana podejścia do marketingu,

“Harvard Business Review”, December 2010-January 2011.10. Staniszewski M., Klient na pierwszym miejscu, „Harvard Business Review”,

July-August 2014.

PART II

THE ROLE OF INTANGIBLE ASSETS IN ORGANIZATIONAL

TRANSFORMATIONS

Snežana KneževićPhD, Аssociate Professor, Faculty of Organizational Sciences, University of Belgrade, Belgrade, Serbia

Aleksandra MitrovićMSc, Teaching Assistant, Faculty of Hotel Management and Tourism, University of Kragujevac, Serbia

THE ACCOUNTING TREATMENT OF INTERNALLY GENERATED INTANGIBLE ASSETS

Keywords:internally generated intangible assets, software, web site, the accounting treatment, cost model, the capitalization treatment

SummaryIntangible assets generally present the exclusive rights that provide

benefits to the owner. Despite their lack of physical existence, this property can be an extremely valuable resource for the enterprise. Intangible investment in recent times has an increasing importance in creating competitive strength of small and medium-sized enterprises. Global competition encourages enterprises to invest more in order to create or maintain competitive advantage. The successful positioning of small and medium-sized enterprises in the market can contribute largely intangible property. Intangible portfolio enterprises may also have an important role as collateral for a loan from the bank.

The research presented in this paper will be the accounting treatment of intangible assets that are internally generated – recognition and measurement of internally generated intangible assets. In this article, special attention will be given to the application of the cost model for internally generated intangible assets – software.

IntroductionCost accounting is a branch of management accounting focused on the

application of various techniques for monitoring and cost control. It is more

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suitable for applications in manufacturing companies. It is closely related with financial accounting as well.

The material is evaluated and balanced at purchase price and the unfinished production and final products in the amount of consumption of fixed assets and materials calculated at purchase prices and expenditures in cash due to the costs of processing, which together form the cost price, while expenditures of sold products are measured by the cost price. Thus, for the evaluation of tangibles and expenditures the purchase price is important or cost price that are a consequence of expenditure in previous periods, which is why they are called historical cost of money or expenditure.

The main reasons for accepting the principles of the real cost lie in the fact that the actual cost is easy to control, that it presents a realistic fact, that it is eligible for the calculation of expenditures and financial results, that it accomplishes the functions of accounting documentation, which assumes the recording of the actual transactions. Actual cash expenditures on the basis of the purchase of assets and expenses and cash inflows from income enable control of business by means of money, which would not be the case if the daily prices as on the balance sheet date or reproduction price were used for the evaluation.

The costs are rather capitalized than included in expenditures, if they are expected to generate benefits beyond the current period.

The resources of companies are divided into tangible and intangible. Intangible assets comprise precisely intangible resources.

The first part will deal with the accounting aspects of including the costs and performances with a focus on cost price as a central element in the operational bookkeeping. After that, the second part is dedicated to the recognition and valuation of intangible assets. The third part is related to internally generated intangible assets. Within the fourth part, attention is paid to identifying the cost price of internally generated intangible assets with significant attention paid to the software as a form of intangible asset that can be internally generated or purchased. Recognition and measurement of intangible assets is considered under applicable accounting standards relating to this type of asset. This is followed by a conclusion and presentation of references.

Accounting coverage of costs and performancesCosts denote the value of the spent funds (factors, elements) of production

calculated on obtaining a product or achieving some service. The costs are the inputs, investment in manufacturing or business process; performances (products and services) are outputs or the consequences of a business process, expressed by material and by value. Among the costs and performances a correlation exists and a basic requirement of the economy is that the values of the performances (outputs) are greater than the costs (inputs) for their generation.

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The calculation of costs and performances is also known under other names, such as: cost accounting, cost calculation, internal accounting, and as an integral part of management accounting. The internal accounting is not subject to the legislation, except for the information provided by financial accounting and therefore the organization and content are largely subordinated to the internal needs of enterprise management at different levels of the management structure1.

The organizational financial and operational bookkeeping can form a unique accounting of the enterprise, in which individual classes and groups of accounts serve the needs of both accounting, which is based on the process (calculation) chart of accounts and the method of calculating the company’s results according to the costs of sold performances. Another organizational form is common accounting in which the classes and groupings of accounts are strictly separated to those comprising the financial accounting (with balance sheets), which have their own balance in the general ledger and to accounts of internal accounting, which also have their balance in the general ledger. This second model is based on the accounts framework and calculation of the company’s results using the method of total costs.

In the system of calculating according to the actual costs the main purpose of including business costs by cost position is a more accurate allocation, transfer, schedule of overhead costs to cost holders, and thus obtaining as real as possible cost prices of products and services. The cost price, depending on the groups of costs it includes, can be:

• the cost price of production, including only the costs of the functional areas of production,

• commercial (full) cost price, including the total costs of all functional areas,

• the cost price by the variable costs2.

The cost price of production is the instrument of division of production areas costs to inventories of unfinished and finished goods and to the costs of sold products, the values of performances inventories (unfinished and finished products) at the end of the accounting period, without which it would not be possible to compose the balance sheet and income statement in financial accounting.

Another important area of using full (average) cost price of performance is in the assessment of profitability or the conduct of policy of performances sales price effects in the long term, because if in a longer period, the selling price cannot cover the full cost price (cost price of production plus the

1 See more: G. Ilić, K. Škarić-Jovanović, R. Radovanović, Accounting work book, Modern Administration, Belgrade 1980, p. 177-181.2 See more: D. Malinić, V. Milićević, N. Stevanović, Managerial Accounting, Faculty of Economics, Belgrade 2012, p. 243-250 and 254-257.

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associated costs of administration and sales), the performance flows should be eliminated from the production program. In the short term, and particularly with the existence of free (unused) production capacity, the authoritative cost price is according to the variable costs for assessing the cost-effectiveness or performance sales cost. The fixed costs are given for the embedded (practical) capacity and they do not change with the performance volume, and thus are not relevant to the pricing policy in the short term, therefore authoritative are marginal, differential and variable costs for the performances that are produced or are planned to be produced.

The third part in which necessary are the data on cost provided by the internal accounting are individual business decisions or the so called alternative decision-making in which only relevant are differential (additional) costs or revenue/ costs or costs, revenues and investments. It is about the decisions of whether to introduce a new product, exclude the existing one, to make changes in the product range, to buy or produce a semi-product, to accept the new order and a host of everyday decisions in the area of business, seeking co-measuring the costs and benefits (revenues). This type of calculation or planning we call project planning, because co-measured in it are the costs and revenues for the entire life of case being decided on, for example, to decision on selling the sell semi-finished product or further processing it, working in one, two or three shifts, and so on.

The fourth area or aim of internal accounting is to provide information for periodic planning and cost control, both at the company level and business functions, small organizational parts, such as plants, workshops, offices and the like. For this purpose in the internal accounting places are formed for costs, centers of sales, profit or investment centers. The cost centers are responsible for the amount of costs, revenue centers are responsible for revenues amount, profit centers for the amount of costs and revenues, and investment centers for the amount of costs, revenues and the volume of assets used for the acquisition of profit. This control is the calculated on improving the efficiency of operations in the places where there is a need for it, but also on incentive rewarding of responsible persons and executives that have contributed to boosting the results of operations.

All the aforementioned, as the aim of internal accounting, are in fact its contribution to the management goals of the company, because the accounting is a subsystem of management system of the company.

Intangible assets – recognition and evaluationIntangible assets are valued in accordance with IAS 38 and IFRS 3, as well as

other relevant standards (IAS 36 and other).The cost price of internally generated intangible assets represents the totality

of the expenses incurred from the moment it first met the recognition criteria. The re-disclosure of expenditure previously recognized as an expense is not allowed.

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For the recognition of intangible assets, it is necessary that the following requirements are met – the ability to identify, control over the asset and the probability of inflow of future economic benefits.

Internally generated intangible assets may be recognized only if it is resulting in the development stage and under precisely defined conditions. Newer methods relating to the evaluation of patents and pointed out are the Patent Value Predictor model and PRISM or Brand evaluation, such as Brand Assets Valuator, Aaker model and other.

The objective of International Accounting Standard 38 – Intangible assets, is to prescribe the accounting treatment of intangible assets not specifically dealt with other accounting standards. This Standard requires an entity to recognize an intangible asset if, and only if, certain criteria are met. This standard also defines how to measure the bookkeeping value of intangible assets and requires certain disclosures about intangible assets.

The important issue is the accounting treatment of intangible assets. In this regard, it is important to note the following rules for the valuation of intangible assets:

• the initial measurement at purchase cost or fair value,• subsequent valuation – the model of purchase price or revaluation

model,• testing for impairment (IAS 36) – respecting the principle of prudence.

Another important issue that relates to intangible assets is the possibility of its evaluation and the methods that can be applied for this purpose. Classic quantitative methods that can be applied for this purpose are – cost based, market and income approach.

Internally generated intangible assets Sometimes it is difficult to assess whether internally generated intangible

asset meets the conditions for the recognition due to problems with:• identifying whether and when there are assets that can be identified that

will generate future economic benefits,• a reliable determination of the acquisition value (cost price). In some

cases, the cost price of internal generation of intangible assets cannot be distinguished from the cost of maintaining or improving the internally generated goodwill or performing daily activities of the entity.

To assess whether internally generated intangible asset meets the criteria for recognition, the entity classifies the generation of the assets in two following phases:

• research phase,• development phase.

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If an entity cannot distinguish the research phase and the development phase of an internal project to create an intangible asset, the entity treats the expenditure on the basis of that project as if they were incurred only in the research phase.

Intangible assets arising from research (or from the research phase of an internal project) are not recognized. Typical examples of such activities are those whose aim is to gain new knowledge, the search for alternatives for materials, devices, products, processes, and more.

The expenditure arising from research (or from the research phase of an internal project) is recognized as an expense when it is incurred.

For intangible assets resulting from the development phase it is valid to recognize it as assets if the company is able to demonstrate the technical feasibility of completing the intangible asset, its intention to use or sell the intangible assets after it completes it, the way the intangible assets will generate future economic benefits, the availability of adequate technical, financial and other resources, as well as its ability to definitively gauge the expenditure attributable to the intangible asset during its development.

Identifying the cost price of internally generated intangible assetsThe cost price of internally generated intangible assets includes all directly

attributable costs necessary to create, produce and prepare the asset for functioning in the way that leadership predicted. As the examples of directly attributable costs cited are the costs of materials and services used in generating the intangible asset, costs of employee benefits (as defined in IAS 19), the commission for registration of legal rights and amortization of patents and licenses used. In the cost price of internally generated intangible assets the following cannot be involved – expenses resulting from the sale, administration and other general overhead expenditure unless they are impossible to be directly attributed to preparing the asset for use, identifying the inefficiencies and initial operating losses incurred before the assets realized the planned performance and expenses relating to the training of employees for the usage of such asset3.

Further in the paper, attention was paid to the accounting treatment of software as a form of intangible assets. Companies can create certain intangible assets within the company as it is, for example, the software for the realization of a particular business process.

The software can be generated internally or purchased on the market. The software acquired through purchase on the market is recorded as any other intangible asset acquired through purchase.

3 I. Tatić, P. Petrović, R. Stojanović, S. Mitrović-Vučetić, V. Nešić, J. Čanak, The practical application of IFRS in the Republic of Serbia, Association of Accountants and Auditors of Serbia, Accounting Ltd., Belgrade 2008, p. 944.

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An important part of intangible assets represents software’s that increase business and economic performance of companies. Internet itself is largely the product of innovation in the software. The research by OECD (The Organisation for Economic Co-operation and Development) has shown that the use of the software provides a positive contribution to the growth and role in the evolution and development of the knowledge-based economy. The software also has other important roles, because among other things, it enables global commerce, facilitates and provides online transactions, telecommunications and the protection of privacy on the network.

By the beginning of this century, companies in the US have invested approximately the same amount in the software (intangible assets), as well as the material investments, given that today information technology is developing rapidly and companies must keep pace with these developments4. There is no doubt that the software is of limited lifespan, given that technological innovations have led to software losing the value5.

Among the common examples of items that are included in spending resources, or to create obligations for the acquisition, development, maintenance or improvement of intangible resources, are computer software and licenses. Some intangible assets may be contained in natural substances, such as a compact disc (in the case of computer software), legal documentation (license or patent) or a film. When determining whether a property which contains an element of both the immaterial and the material should be treated under IAS 16 – Property, plant and equipment or as an intangible asset under this standard, the entity uses judgment to assess which element is more significant. For example, computer software – for the machine tool which is controlled by a computer, which cannot operate without that specific software as an integral part associated with the hardware, and is thus treated as property, plant and equipment. The same applies for the computer operating system. When the software is not an integral part of hardware, computer software is treated as an intangible asset6. An example of software recording that are classified as tangible assets, as an integral part of the hardware is Windows Vista; while examples of software treated as intangible assets are various bookkeeping programs.

Below we present an example of internally generated software. Table 1 presents the costs of software production and costs in the initial phase of operation and functioning of software on the basis of an internal calculation of the company.

4 OECD Observer, Issue 285, Untangling intangible assets, 2011, p. 13.5 J. Friedman, B. Diskin, M. Benjet, Unit Valuation of Utilities: The Appropriate Classification and Appraisal Methodology for Computer Software as an Intangible Asset, “Journal of Properly Tax Assessment & Administration”, Vol. 3, Iss. 4, 2006, p. 13-22 and p. 14.6 International Accounting Standard 38 – Intangible Assets provides that for the purposes of the practice itself acquired business programs may be treated as assets if they were acquired as components of hardware and whose existence affects the operation of that hardware.

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Table 1. The costs of software production and costs in the initial phase of operation and functioning of software on the basis of an internal calculation of the company

Cost typePer

accounting report

Expense for the period

Capitalized

Planning of the program concept xxx xxx

Evaluation of possible solutions xxx xxx

Technology selection xxx xxx

Final choice xxx xxx

Software design xxx xxx

Software code development xxx xxx

Quality control tests xxx xxx

Data backup costs xxx xxx

Training personnel to work on software xxx xxx

Allocated general expenses xxx xxx

Costs of general management and administration xxx xxx

Current maintenance costs xxx xxx

Total: xxxxxxxx xxxxxxxxSource: I. Tatić, P. Petrović, R. Stojanović, S. Mitrović-Vučetić, V. Nešić, J. Čanak, The practical application of IFRS in the Republic of Serbia, Association of Accountants and Auditors of Serbia, Accounting Ltd., Belgrade 2008, p. 945.

Assuming that the tax paid and copyright protection, the expenditure that can be capitalized in creating the software for their own use, are as follows.

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Table 2. The expenditure that can be capitalized in creating the software for their own use

Cost type Amount

Software design xxx

Software code development xxx

Quality control tests xxx

The fee for copyright protection xxx

Total capitalized: xxxxxxxx

Source: I. Tatić, P. Petrović, R. Stojanović, S. Mitrović-Vučetić, V. Nešić, J. Čanak, The practical application of IFRS in the Republic of Serbia, Association of Accountants and Auditors of Serbia, Accounting Ltd., Belgrade 2008, p. 945-950.

In addition to alternative methods of calculating costs, a good financial manager will have to understand the basics of different theories or concepts of cost accounting. Intangible assets that are generated in the company due to its specific characteristics, requires special attention of financial accountants.

ConclusionsIn order to well understand corporate value, it is necessary to pay special

attention to intellectual capital management and reporting on it.Intangible assets created in the research phase is not recognized, but such

an expense is recorded as expense in the period, which is logical, since the company cannot prove the existence of intangible assets in the research phase of an internal project, nor probable future economic benefits. However, for intangible assets under development recognition is done in the form of the asset if specific conditions are met.

If the company has developed cost accounting it will be able to reliably valuate the costs attributable to the development of intangible assets. Otherwise, the recognition of an intangible asset will not be possible.

Software development is seen in the context of intellectual capital. Application software meet the criteria for recognition, and in that sense in the accounting they can be treated as an intangible asset in the balance sheet of the company which is the owner. Accounting recognition of software, is permitted in line with the requirements of IAS 38.

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Literature:1. Financial Reporting & Assurance Standards Canada, International

Accounting Standard 16 – Property, Plant and Equipment, http://www.frascanada.ca/international-financial-reporting-standards/resources/unaccompanied-ifrss/item45609.pdf, [20.05.2015].

2. Financial Reporting & Assurance Standards Canada, International Accounting Standard 19 –Employee Benefits, http://www.frascanada.ca/international-financial-reporting-standards/resources/unaccompanied-ifrss/item45615.pdf, [20.05.2015].

3. Financial Reporting & Assurance Standards Canada, International Accounting Standard 38 – Intangible Assets, http://www.frascanada.ca/international-financial-reporting-standards/resources/unaccompanied-ifrss/item45645.pdf, [20.05.2015].

4. Friedman J., Diskin B., Benjet M., Unit Valuation of Utilities: The Appropriate Classification and Appraisal Methodology for Computer Software as an Intangible Asset, “Journal of Properly Tax Assessment & Administration”, Vol. 3, Iss. 4, 2006.

5. Ilić G., Škarić-Jovanović K., Radovanović R., Accounting work book, Modern Administration, Belgrade 1980.

6. Malinić D., Milićević V., Stevanović N., Managerial Accounting, Faculty of Economics, Belgrade 2012.

7. OECD Observer, Issue 285, Untangling intangible assets, 2011.8. Tatić I., Petrović P., Stojanović R., Mitrović-Vučetić S., Nešić V., Čanak J.,

The practical application of IFRS in the Republic of Serbia, Association of Accountants and Auditors of Serbia, Accounting Ltd., Belgrade 2008.

Anna Pietruszka-OrtylPhD, Assistant Professor, Department of Organizational Behaviour, Cracow University of Economics

SOCIAL CAPITAL AS COMPARED TO AN ORGANIZATION’S INTELLECTUAL CAPITAL AND INTANGIBLE RESOURCES

Keywords:organization’s intangible resources, intellectual capital, human capital, knowledge-based economy, social capital

SummaryStarting point of this paper is settlement terms of intangible resources,

intellectual capital and intangible assets and indication of its mutual relations. The main part of deliberations is dedicated to social capital of organization – its areas, dimensions and determinants – as the element of intellectual capital of enterprise. Those analysis are summed up in designation relations between formation of social capital and creation of intellectual capital.

IntroductionThe intensification of interest in “soft elements of an organization” took

place in the 1980s and no clear and explicit position in this respect has been developed so far, despite numerous studies and research projects in this area.

It may be noted that discourses are practically conducted separately at the level of an organization’s intangible resources, a company’s intellectual capital or particular subcapitals creating a company’s intellectual potential. Therefore, the purpose of the study is to determine mutual relations between these concepts and to identify connections typical of them, with particular focus on the role of social capital in shaping the level of an organization’s intellectual capital.

Intangible resources and intellectual capital – mutual relationsAccording to the generally binding position, resources include all tangible

and intangible elements necessary for the organization to pursue its objectives in

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Anna Pietruszka-Ortyl

an effective and efficient manner. Therefore, they are all assets a company uses in its processes and activities as well as will be understood as a set of available factors – visible and invisible – possessed and controlled by the company. As a consequence, they may be tangible (financial, material and human assets) or intangible (knowledge, organizational culture, reputation, brands, relations with the environment, intellectual property rights).

According to J. Barney, in order for the resources to constitute the basis for an effective strategy and contribute to building a permanent competitive advantage, they should be characterized by strategic value, difficulty in imitation, rarity of presence and lack of substitutes1 – these are the basic assumptions of the resource-based approach. In the case of organizations based on knowledge, these attributes are usually the features of a company’s intangible resources.

The concept of intangible resources itself is not used precisely, it is often used interchangeably with such concepts as intangible values or intangible assets. Furthermore, when numerous authors consider these issues they do not provide a formal or their own definition of intangible resources or present them very vaguely. They are most often described through a number of criteria differentiating them from tangible resources2.

Similarly, in the aspect of the classification of an organization’s intangible resources, there is also no single, commonly accepted position – numerous typologies were suggested at least several of which deserve special attention3.

The greatest doubt in the perspective of intangible resources results not so much from the definition of or arrangement of intangible resources but their connotation with intellectual capital. The fact that knowledge in this matter is not systematized still does not result in a single explicit resolution as to the compliance or separability of these concepts. Such concepts as: immeasurable values, intellectual assets, intellectual capital are often used interchangeably. The category “intangible values” is commonly used in accounting, the concept

1 J.B. Barney, Firm resources and sustained competitive advantage, “Journal of Management”, No. 17, 1991, p. 100.2 See: B.E. Becker, M.A. Huselid, D. Ulrich, Karta wyników zarządzania zasobami ludzkimi, Oficyna Ekonomiczna, Kraków 2002, p. 21; D.J. Teece, Managing Intellectual Capital. Organizational, Strategic, and Policy Dimensions, Oxford University Press, New York 2000, p. 15-16; A. Pietruszka-Ortyl, B. Mikuła, Studium zasobów niematrialnych organizacji, [in:] Zeszyty Naukowe Uniwersytetu Ekonomicznego w Krakowie, No. 820, Prace z zakresu zachowań organizacyjnych, Wydawnictwo Uniwersytetu Ekonomicznego w Krakowie, Kraków 2010, p. 31-46.3 See: R. Hall, A Framework Linking Intangible Resources And Capabilities To Sustainable Competitive Advantage, „Strategic Management Journal”, No. 14, 1993, p. 136-139; R. Hall, The Strategic Analysis Of Intangible Resources, “Strategic Management Journal”, No. 13, 1992, p. 608-610; T.A. Stewart, The Wealth of Knowledge. Intellectual Capital and the Twenty-First Century Organization, Nicholas Brealey Publishing, London 2001, p. X; M. Bratnicki, Podstawy współczesnego myślenia o zarządzaniu, Wydawnictwo „Triada”, Dąbrowa Górnicza 2000, p. 50-52; T. Dudycz, Zarządzanie wartością przedsiębiorstwa, PWE, Warszawa 2005, p. 221; M.J. Stankiewicz, Konkurencyjność przedsiębiorstwa. Budowanie konkurencyjności przedsiębiorstwa w warunkach globalizacji, Wydawnictwo „Dom Organizatora”, Toruń 2002, p. 105-109.

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“knowledge assets” is most often used by economists, and “intellectual capital” is the domain of specialists in management and managers.

In the case of estimating the value of intangible resources, the position of researchers seems to be already more clear because the majority of them refers rather to the measurement of a company’s intellectual capital. Therefore, it seems justified to attempt to specify the terminologies, set out the attributes of intangible resources and clear boundaries between their particular elements. They are the potential of creating a company’s value and, as a result, the future of competition.

The conducted conceptual analysis4 indicates significant differences in the perception of the concepts resources, assets, capital and suggests a certain logical sequence (figure 1) in interpreting concepts, with simultaneous indication of problematic issues5:

• the attribute of assets is the ability to generate future income – therefore they need to be measurable in money units, and the income needs to be definable,

• capital is abstract, aggregated and homogeneous, while resources are specific and heterogeneous,

• resources are usually exposed to depreciation, while the capital in them should multiply,

• capital needs to be and should be multiplied – this is its unquestionable and commonly accepted feature.

Figure 1. Relations between intangible resources, intellectual capital and intangible assets


4 See: Mała encyklopedia prakseologii i teorii organizacji, (ed.) T. Pszczołowski, Zakład Narodowy im. Ossolińskich – Wydawnictwo, Wrocław 1978, p. 293; Leksykon rachunkowości, (ed.) E. Nowak, PWN, Warszawa 1996, p. 9 and 75; R. Patterson, Kompendium terminów z zakresu rachunkowości i finansów po polsku i angielsku, Fundacja Rozwoju Rachunkowości w Polsce, Warszawa 2002, p. 7 and 138; D. Dobija, Pomiar i sprawozdawczość kapitału intelektualnego przedsiębiorstwa, Wydawnictwo Wyższej Szkoły Przedsiębiorczości i Zarządzania im. Leona Koźmińskiego, Warszawa 2003, p. 51.5 See: D. Andriessen, Making Sense of Intellectual Capital. Designing a Method for the Valuation of Intangibles, ELSEVIER Butterworth-Heinemann, Burlington 2004, p. 66-69; D. Dobija, Pomiar i sprawozdawczość kapitału intelektualnego przedsiębiorstwa, Wydawnictwo Wyższej Szkoły Przedsiębiorczości i Zarządzania im. Leona Koźmińskiego, Warszawa 2003, p. 26-27.

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In this convention, the concept intangible resources should be perceived as wide as possible – as non-cash elements that do not have a tangible form, but have the ability to generate future benefits for an organization6.

Intellectual capital will include these intangible resources that currently constitute the basis for a company’s market value. Intangible assets, on the other hand, are part of intellectual capital covered by reporting in financial statements.

However, it should be emphasized that according to the definition, capital is owned by a company, while part of intangible resources forming its value cannot be an organization’s property, as e.g. human resources or relations with a company’s stakeholders. In addition, the relation: assets – obligations = capital, when referring to intangible assets, should also determine issues regarding obligations of an intangible character, which is problematic. Therefore, it seems justified to use the concept intangible resources and, in justified cases, the concept intellectual capital.

As a consequence, 3 planes should be determined as part of intangible resources – the first level would include intangible resources belonging to an organization and that may be the subject of purchase, sales or exchange (e.g. patents, copyrights, trademarks), the second level would constitute intangible elements covered by a company’s control but not subject to separation and sales (e.g. research-development works in progress, reputation, trade secrets), and the third level – these intangible resources that may not be fully and completely controlled by a company (e.g. human resources or relational capital).

Intangible resources are these elements of an intangible character that are necessary for an organization to pursue its objectives in an effective and efficient manner. It is this base of resources that guarantees obtaining a permanent competitive advantage and a stable market position. Intellectual capital, on the other hand, is this part of intangible resources that remains at a company’s current disposal and currently substantially contributes to the creation of an organization’s value. Intellectual capital is thus a result of the base of a company’s intangible resources as well as its potential for creating new value based on these elements (figure 2).

6 D. Andriessen, Making Sense of Intellectual Capital. Designing a Mathod for the Valuation of Intangibles, ELSEVIER Butterworth-Heinemann, Burlington 2004, p. 18.

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Figure 2. Mutual relations between intellectual capital and intangible resources


Therefore, a company’s competitive position results from mutual interactions under the conditions of new economy:

• the size and quality of an organization’s base of intangible resources,• the efficient use of intellectual capital possessed by a company.

We may thus come to a conclusion that an organization’s intangible resources are responsible for the organization’s potential competitiveness, while intellectual capital is responsible for its current position. When examining intangible resources their components are identified, when estimating the level of intangible resources – intellectual capital is evaluated and when creating intellectual capital reports – an organization’s intangible assets are determined.

Social capital as a determinant of an organization’s intellectual capitalAccording to W.M. McElroy, the negligence of social capital in discussions

on an organization’s intellectual capital indeed means ignoring an organization’s basic ability to learn, create innovations and adapt to market changes7. Thus, the unquestionable need to determine the correlation between these values.

The concept social capital itself comes from sociology and political sciences, and presently it gained a micro- and macroeconomic dimension. It is perceived as “glue”, “binder” connecting people as part of relations resulting from the participation in a network of relations. It creates a context and is the result of mutual relations.

7 M.W. McElroy, Social Innovation Capital, 2001, http://www.macroinnovation.com/images/Social_Innovation_Capital.pdf, [10.05.2015].

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S. Walukiewicz quite clearly and disputably separates social capital from human capital, emphasizing the fact that human capital is always connected with a single human being, while social capital is generated where there is interaction in a positive (trust, solidarity, understanding, etc.) or negative (suspiciousness, hypocrisy, etc.) sense between at least two persons. To conclude, he defines social capital as all formal and/ or informal relations between at least two persons treated as independent human beings. The formula is specified by the characteristics that social capital is the supplementation of human capital in the sphere of intangible assets8. He thus ignores the context of social capital as an organization’s attribute, he also deviates from comparative discussion of social capitals of several companies which currently is a noticeable trend in the field of these problems.

It is believed that the concept social capital was specified as early as in 1916 by L.J. Hanifan who defined it as “intangible elements that count the most in the everyday life of people”9. The concept was successively developed by P. Bourdieu10, J. Coleman11 or R.D. Putnam12, P. Dasgupta13 and N. Lin14.

The definitions include the identification of social capital with benefits seized from relations and networks and/ or from standards, and sometimes it is connected with relations, networks and/ or standards themselves. It is perceived in three perspectives – social capital as concurrent standards and networks (Coleman, Putnam), social capital as standards (Fukuyama) and social capital as networks (Bourdieu, Dasgupta, Lin)15.

M. Paldam16 introduces another perspective for perceiving social capital – emphasizing the prism of trust. He claims that there are three basic concepts for

8 S. Walunkiewicz, Kapitał społeczny. Skrypt akademicki, Instytut Badań Systemowych Polskiej Akademii Nauk, Warszawa 2012, p. 26, 85, 97.9 L.J. Hanifan, The Rural School Community Center, “Annuals of the American Academy of Political and Social Science”, No. 67, 1916, p. 130-138; quot. after: B. Jamka, Czynnik ludzki we współczesnym przedsiębiorstwie: zasób czy kapitał? Od zarządzania kompetencjami do zarządzania różnorodnością, Oficyna Wolters Kulwer business, Warszawa 2011, p. 156.10 P. Bourdieu, The Forms of Capital, [in:] Handbook of Theory and Research for the Sociology of Education, (ed.) J.G. Richardson, Greenwood Press, New York 1986, p. 248.11 J.S. Coleman, Social Capital in the Creation of Human Capital, “The American Journal of Sociology”, No. 94, 1988, p. 95-120.12 R.D. Putnam, Bowling Alone. The Collapse and Revival of American Community, Simon and Schuster, New York 2000, p. 19.13 P. Dasgupta, The Economics of Social Capital. Working Paper, University of Cambridge, Cambridge 2005, p. 12-13.14 N. Lin, Social Capital: A Theory of Social Structure and Action, Cambridge University Press, Cambridge 2001, p. 25.15 B. Łopaciuk-Gonczaryk, Więzi społeczne, zaufanie i kapitał społeczny, [in:] Więzi społeczne i przemiany gospodarcze. Polska i inne kraje europejskie, (ed.) S. Golinowska, J. Wilkin, Instytut Pracy i Spraw Socjalnych, Warszawa 2009, p. 37.16 M. Paldam, Social Capital: One or Many? Definition and Measurement, “Journal of Economic Surveys”, No. 14(5), 2000, p. 629.

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defining social capital. The first refers to trust, the second to cooperation and the third to social networks17.

Elements most often found in the definitions of social capital thus include18:• the participation in networks of relations (contact network),• the access and use of resources (in particular, intangible resources –

knowledge and competences),• shared standards and values,• trust,• generating specific benefits to pursue objectives (social, political,

economic).

J. Coleman emphasizes the following attributes of this resource19:• as compared to other types of resources, it is most difficult to measure

because it is hidden in relations between people,• it is subject to constant changes that depend on the modification of

social relations,• the majority of forms it takes, is a by-product of other actions,• it may be used by all members of a given social structure through the

access to this structure, it is not necessary to bring any contribution in its establishment,

• it cannot be the property of a given unit, but is the effect of common projects,

• when it is not renewed or strengthened, it is consumed and disappears.

The concepts of social capital are most often referred to three areas of social life – the micro-social level in which social capital is presented as a certain resource of units, the meso-social level in which it is a resource of social groups such as a local government community or a company, and the macro-social level in which it is identified with the factor of social development.

In the levels referred to above it is a network of formal as well as informal relations between people that facilitate mutual cooperation and coordination of activities. These relations as part of the network may be characterized by bilateral trust, honesty or solidarity20, but we cannot forget that the quality of social capital is determined by the people’s capacity for mutual cooperation. This aspect is emphasized, in particular, by F. Fukuyama who defines social capital as the ability to cooperate through informal rules and standards

17 M. Bugdol, Wymiary i problemy zarządzania organizacją opartą na zaufaniu, Wydawnictwo Uniwersytetu Jagiellońskiego, Kraków 2010, p. 38.18 M. Marcinkowska, Kapitał społeczny przedsiębiorstwa – próba syntezy literatury przedmiotu, „Przegląd Organizacji”, No. 10, 2012, p. 20.19 M. Gajowiak, Kapitał społeczny. Przypadek Polski, PWE, Warszawa 2012, p. 19-20.20 Ibidem, p. 12.

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between people within a group or an organization in order to pursue the interests of its members21.

Corporate social capital also exists at an inter-organizational level of analysis consisting of resources controlled by members of the organization connected by numerous relations of exchange and cooperation. We may thus speak about internal and external social capital of a company. Internal social capital is created by internal stakeholders and takes into account the resources of a company (as well as the resources of these stakeholders – employees and management of the company). External social capital of an entity may be associated with its activities, widely understood environment or market (figure 3)22.

Figure 3. Components of a company’s social capital

Source: M. Marcinkowska, Kapitał społeczny przedsiębiorstwa – próba syntezy literatury przedmiotu, „Przegląd Organizacji”, No. 10, 2012, p. 20.

The following are thus responsible for the level of an organization’s internal social capital:

• human capital, corresponding to the thinking, creative part of intellectual capital and understood as knowledge, experience, skills,

21 F. Fukuyama, Zaufanie. Kapitał społeczny a droga do dobrobytu, PWN, Warszawa-Wrocław 1997, p. 4.22 M. Marcinkowska, Kapitał społeczny przedsiębiorstwa – próba syntezy literatury przedmiotu, „Przegląd Organizacji”, No. 10, 2012, p. 20-21.

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intellectual capacity and talents of an organization’s employees,• interpersonal relations prevailing in a company, including especially

relations and bonds between internal stakeholders of an organization.

As a consequence, it should be emphasized that the conscious use of social capital resources possessed by an organization is subject to creating appropriate conditions for the existence of relations between different forms of its intellectual capital – to the flow of knowledge between relevant components and, as a consequence – the flows of capitals. Internal social capital, as the sum of human capital and interpersonal relations in an organization, affects and is connected with all elements creating organizational capital, namely both with infrastructure, relational capital, innovative capital and corporate organizational culture. Its basis is human capital that shapes interpersonal relations in an organization, namely the dimension of organizational behaviours. These, in turn, determine relational capital, especially interactions with stakeholders or relations with clients, while relational capital is connected with infrastructure because it creates databases and results from strategies and systems of actions determining the selection of appropriate processes and methods for their management.

There is also strict correlation between social capital and a company’s organizational culture because these components of intellectual capital shape one another. Organizational culture itself affects relational capital and innovative capital. In combination with social capital and, in particular, with human capital, it determines an organization’s predispositions as to undertaking innovative projects. Innovative capital, on the other hand, decides on the strategy and organizational structure as well as co-creates intellectual property.

The concept of F. Fukuyama presenting social capital as a cultural resource of a long-term nature perfectly fits with this context. Social capital should then be treated as a permanent attribute of social structures that is of essential importance especially in the management of dispersed teams of office workers and affects the effectiveness of knowledge-based work.

The concept of the structure of social capital suggested by M. Bratnicki and J. Strużyna, according to which social capital is the sum of cognitive capital (common terminology, common language, common answers), the dimension of interpersonal relations (trust, standards, obligations, identification) as well as structural capital (links in the network, configuration of the network, an organization’s, responsibility) remains within this convention23.

Building social capital in order to achieve competitive advantage requires24:

23 Przedsiębiorczość i kapitał intelektualny, (eds.) M. Bratnicki, J. Strużyna, Wydawnictwo Akademii Ekonomicznej im. Karola Adamieckiego w Katowicach, Katowice 2012, p. 70-72.24 M. Marcinkowska, Kapitał społeczny przedsiębiorstwa – próba syntezy literatury przedmiotu, „Przegląd Organizacji”, No. 10, 2012, p. 21.

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• support for the development of practitioner communities, including the creation of informal groups of employees (as part of which they will share their knowledge and experience, solve problems together, etc.) as well as building the loyalty and commitment of employees,

• collecting experience building trust between employees as well as fostering the transparency of the work environment in which there are no reasons to show mistrust and in which trusting employees is a rule,

• supporting cooperation at all levels of the company (as well as in relations with the environment),

• developing common contexts of operation, interpretation, language, symbols, standards, principles etc. by employees,

• using a suitable technology making it possible to create and maintain the network of relations.

We should not forget that every company creates relations with its environment. It is social capital that helps make these relations permanent and advantageous for all participants. In addition, the indirect effect of connected social and relational capitals on companies’ operating and financial results is indicated. Social capital also facilitates the creation of human and relational capital. It may thus be a unique catalyst for building intellectual capital. Thanks to trust, loyalty and the commitment of the participants of the network of relations, sharing the same standards and values, social capital is built which, in turn, reinforces the existing human and relational capital and thus allows a company to more effectively use the intellectual capital25.

ConclusionsAssuming the concept26 and structure of intellectual capital, according to

L. Edvinsson and M.S. Malone, as the starting point and summing up the discussion on a company’s social capital, the following relations should be emphasized.

External social capital (coming from the environment and developed with an organization’s environment) is usually identified both at the micro, meso and macro level, while a company’s internal social capital – most often at the micro and meso level. Thus, internal social capital in the form of bonds and relations, skills of interaction, common standards and values as well as a specific level of trust between units, units and groups and between groups should be treated

25 Ibidem, p. 21-22.26 As proposed by the authors “intellectual capital means possessed knowledge, experience, organizational technology, relations with clients and professional skills that give Skandia competitive advantage on the market” – see: L. Edvinsson, M.S. Malone, Kapitał intelektualny, PWN, Warszawa 2001, p. 40.

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as an element of human capital, namely subcapital of a company’s intellectual capital (figure 4).

Client capital as a component of structural capital along with internal social capital shape on organization’s relational capital – again at the micro-, meso- and macro- level, that is developed in the context of and under the influence of external social capital which comprehensively and substantially affects and catalyzes the development of an organization’s intellectual capital.

When emphasizing the qualities of social capital as a factor substantially stimulating the development of an organization’s intellectual capital, it is worth emphasizing its other advantages:

• it helps employees find jobs, enriches the resources of potential candidates to work in companies, reduces the fluctuation of personnel,

• it affects the professional success as well as the level of the management’s remuneration,

• it supports innovative actions,• it increases the effectiveness of the functioning of employees,

teams of employees (especially in functional structures) and entire organizations,

• it develops entrepreneurship and helps create new business entities, reduces the number of bankrupt companies at the same time increasing the life and longevity of organizations,

• it improves relations with suppliers, fosters the creation of networks of partner relations and enables the flow of knowledge and learning from group members,

• it facilitates the transfer of knowledge which affects an improvement in the effectiveness of organizations and their results,

• it facilitates the exchange of resources between units as well as the acquisition of the best resources,

• it enables growth in the scale of activities, entering into new markets,• it helps reduce transaction costs,• it helps reduce organizational barriers,• it affects greater consistency and complexity of activities,• it facilitates risk management and results in greater stability of an

organization’s functioning.

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Figure 4. Social capital as well as intellectual and relational capital of an organization and their mutual relations


We should also not forget that social capital is presently perceived as the highest stage of development in a dynamically operating network27, which is of essential importance towards the binding paradigm of networking. Relations prevailing in the network may lead to the emergence of trust and willingness to cooperate which determines the creation of social capital – it may thus be the basis for certain common projects, and their success may lead to the reinforcement of social capital itself.

To sum up, the main factors of social capital as determinants of an organization’s intellectual capital include: trust, sense of community and affiliation, unlimited communication, democratic decision making, sense of common responsibility, social standards28.

Literature:1. Andriessen D., Making Sense of Intellectual Capital. Designing a Method

for the Valuation of Intangibles, ELSEVIER Butterworth-Heinemann, Burlington 2004.

2. Barney J.B., Firm resources and sustained competitive advantage, “Journal of Management”, No. 17, 1991.

3. Becker B.E., Huselid M.A., Ulrich D., Karta wyników zarządzania zasobami ludzkimi, Oficyna Ekonomiczna, Kraków 2002.

27 R. Praszkier, A. Nowak, Przedsiębiorczość społeczna. Teoria i praktyka, Oficyna Wolters Kluwer business, Warszawa 2012, p. 135.28 M. Bugdol, Wymiary i problemy zarządzania organizacją opartą na zaufaniu, Wydawnictwo Uniwersytetu Jagiellońskiego, Kraków 2010, p. 38.

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4. Bourdieu P., The Forms of Capital, [in:] Handbook of Theory and Research for the Sociology of Education, (ed.) J.G. Richardson, Greenwood Press, New York 1986.

5. Bratnicki M., Podstawy współczesnego myślenia o zarządzaniu, Wydawnictwo „Triada”, Dąbrowa Górnicza 2000.

6. Bugdol M., Wymiary i problemy zarządzania organizacją opartą na zaufaniu, Wydawnictwo Uniwersytetu Jagiellońskiego, Kraków 2010.

7. Coleman J.S., Social Capital in the Creation of Human Capital, “The American Journal of Sociology”, No. 94, 1988.

8. Dasgupta P., The Economics of Social Capital. Working Paper, University of Cambridge, Cambridge 2005.

9. Dobija D., Pomiar i sprawozdawczość kapitału intelektualnego przedsiębiorstwa, Wydawnictwo Wyższej Szkoły Przedsiębiorczości i Zarządzania im. Leona Koźmińskiego, Warszawa 2003.

10. Dudycz T., Zarządzanie wartością przedsiębiorstwa, PWE, Warszawa 2005.11. Edvinsson L., Malone M.S., Kapitał intelektualny, PWN, Warszawa 2001.12. Fukuyama F., Zaufanie. Kapitał społeczny a droga do dobrobytu, PWN,

Warszawa-Wrocław 1997.13. Gajowiak M., Kapitał społeczny. Przypadek Polski, PWE, Warszawa 2012.14. Hall R., A Framework Linking Intangible Resources And Capabilities To

Sustainable Competitive Advantage, „Strategic Management Journal”, No. 14, 1993.

15. Hall R., The Strategic Analysis Of Intangible Resources, “Strategic Management Journal”, No. 13, 1992.

16. Hanifan L.J., The Rural School Community Center, “Annuals of the American Academy of Political and Social Science”, No. 67, 1916.

17. Jamka B., Czynnik ludzki we współczesnym przedsiębiorstwie: zasób czy kapitał? Od zarządzania kompetencjami do zarządzania różnorodnością, Oficyna Wolters Kulwer business, Warszawa 2011.

18. Leksykon rachunkowości, (ed.) E. Nowak, PWN, Warszawa 1996.19. Lin N., Social Capital: A Theory of Social Structure and Action, Cambridge

University Press, Cambridge 2001.20. Łopaciuk-Gonczaryk B., Więzi społeczne, zaufanie i kapitał społeczny, [in:]

Więzi społeczne i przemiany gospodarcze. Polska i inne kraje europejskie, (ed.) S. Golinowska, J. Wilkin, Instytut Pracy i Spraw Socjalnych, Warszawa 2009.

21. Mała encyklopedia prakseologii i teorii organizacji, (ed.) T. Pszczołowski, Zakład Narodowy im. Ossolińskich – Wydawnictwo, Wrocław 1978.

22. Marcinkowska M., Kapitał społeczny przedsiębiorstwa – próba syntezy literatury przedmiotu, „Przegląd Organizacji”, No. 10, 2012.

23. McElroy M.W., Social Innovation Capital, 2001, http://www.macroinnovation.com/images/Social_Innovation_Capital.pdf, [10.05.2015].

24. Paldam M., Social Capital: One or Many? Definition and Measurement, “Journal of Economic Surveys”, No. 14(5), 2000.

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25. Patterson R., Kompendium terminów z zakresu rachunkowości i finansów po polsku i angielsku, Fundacja Rozwoju Rachunkowości w Polsce, Warszawa 2002.

26. Pietruszka-Ortyl A., Mikuła B., Studium zasobów niematrialnych organizacji, [in:] Zeszyty Naukowe Uniwersytetu Ekonomicznego w Krakowie, No. 820, Prace z zakresu zachowań organizacyjnych, Wydawnictwo Uniwersytetu Ekonomicznego w Krakowie, Kraków 2010.

27. Praszkier R., Nowak A., Przedsiębiorczość społeczna. Teoria i praktyka, Oficyna Wolters Kluwer business, Warszawa 2012.

28. Przedsiębiorczość i kapitał intelektualny, (eds.) M. Bratnicki, J. Strużyna, Wydawnictwo Akademii Ekonomicznej im. Karola Adamieckiego w Katowicach, Katowice, 2012.

29. Putnam R.D., Bowling Alone. The Collapse and Revival of American Community, Simon and Schuster, New York 2000.

30. Stankiewicz M.J., Konkurencyjność przedsiębiorstwa. Budowanie konkurencyjności przedsiębiorstwa w warunkach globalizacji, Wydawnictwo „Dom Organizatora”, Toruń 2002.

31. Stewart T.A., The Wealth of Knowledge. Intellectual Capital and the Twenty-First Century Organization, Nicholas Brealey Publishing, London 2001.

32. Teece D.J., Managing Intellectual Capital. Organizational, Strategic, and Policy Dimensions, Oxford University Press, New York 2000.

33. Walunkiewicz S., Kapitał społeczny. Skrypt akademicki, Instytut Badań Systemowych Polskiej Akademii Nauk, Warszawa 2012.

Aldona Wiktorska-ŚwięckaPhD, Associate Professor, University of Wroclaw

CREATING OF COMPANY’S SOCIAL INNOVATION POTENTIAL IN THE CONTEXT OF THE IDEA OF CORPORATE CITIZENSHIP

Keywords:innovations in management and governance, social innovations, business responsibility, non-material assets, corporate citizenship

SummaryWhile looking for new ways to control the processes taking place in the

business space, nowadays one increasingly recognizes the importance of social innovation, which is believed to be potential and ability to raise competitiveness. Taking issue of corporate citizenship becomes now therefore important, because the economy does not operate in a social vacuum, but determines the inevitability of a new perspective on issues related to socio-economic development. Forming of positive relationships with the local community in which they operates, allows companies to use the valuable and increasingly appreciated intangible forms of non-material assets that generate social innovations.

The purpose of this chapter is – beside of dissemination of the idea of corporate citizenship – paying particular attention to issues related to the generation of social innovation by the company and bringing examples of practices in their management through the use of selected tools of corporate citizenship.

IntroductionEven two decades ago, when one began to consider innovation as an

opportunity to increase the competitiveness of enterprises, the concept of social innovation was not commonly known and implemented into business practice. If the term appeared in the business context, mostly it was about „social” effect that organizational and/ or technological innovation exercised within the company and in its environment. Even today, the term „social innovation” remains ambiguously defined, which opens space for multiple approaches. Social innovations are interdisciplinary, cross-cutting, they

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cover different sectors and areas. Undoubtedly, this contributes to the variety of meanings and applications of this concept. The diversity of possible approaches stems from the fact that social innovation is firmly embedded in institutional practice. Ultimately, this practice determines specifics, aspects and perspectives on what social innovation is and/ or what it is not. In addition, social innovation is the issue in statu nascendi. Depending on i.a. the context, depth, breadth, scope, sector its essence and specificity changes. The term itself appears in several problem areas relating to: social transformation, social entrepreneurship, development of new products, services and programs, public governance model and management model of the organization. In this last aspect, it is important in view of the foregoing considerations conducted.

Drivers of social innovation are emerging knowledge society and knowledge-based economy, which enhance the mobility and activity of society, its level of expertise, scale and extent of globalization of cultures, markets and consumption. They are also favored by the growing culture of participation and inclusion of various groups of stakeholders/ users in the process of social innovation. In the contemporary public debate, including the scientific one, the principle is to dispute social innovation as these, which is one of the characteristics of a single economic system. In this context, it adds new meanings to concepts of management, particularly of both material and non-material assets of the organization, like human, social, cultural and knowledge capital. Freedom of access to information and the impact and influence of the media ensures that consumers are becoming more knowledgeable, which affects the perception of the company. It can be concluded that the factor distinguishing companies, which is becoming increasingly important, becomes its social commitment. That’s why the field of considerations of this chapter is the issue of corporate citizenship (CC), which goes beyond the rigid framework of business management as such, and focuses on the relationship and impact on the social environment. Corporate citizenship is a part of the concept of corporate social responsibility (CSR) and links with issues such as, among others, business ethics, diversity management, sustainable development, corporate governance, socially responsible investing, social investing. Since all of these areas relate to the social impact, they influence attitudes of people and organizations, connect with potential for social innovation that can be pushed when implementing them in the form of management concepts to the company’s business practices. The purpose of this chapter – beside of dissemination of the idea of corporate citizenship – is paying particular attention to issues related to the generation of social innovation by the company and bringing examples of practices in their management through the use of selected tools of corporate citizenship.

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Social innovation – definitions and basic assumptions of the conceptDefinitions of social innovation as a major differentiator recognize their

„new” nature of ideas and solutions. Such an approach should not be surprising in the context of the etymology of the word: „innovation” comes from the Latin „innovatis” and means „renewal”, „creating something new”. The factor of being „new” is therefore a common theme in the literature on innovation, which, however, stresses that this „newness” does not necessarily involve „new” in a strict sense. So says, among others, E.M. Rogers, who emphasizes that it does not matter whether the idea is objectively new or not. The perception of being „new” of one idea by the individual determines its reaction to it. If the entity believes that the idea is new, one has to deal with an innovation1. Moreover, for many authors, the „newness” does not necessarily mean completely new or unfamiliar, but rather „different” or „alternative” and/ or more efficient than the previous/ current practice2. Other researchers believe that social innovation defines primarily impact, not the characteristic, which is the „newness”, e.g. K. Gillwald argues that social innovation represents social achievements, which, compared with existing solutions, provides better ones. Thus, social innovation is determined to a lesser extent by its absolute novelty and more by its consequences3. Social innovation means therefore new solutions that function better than current practices and make a significant improvement in services.

In the scientific literature, there are three different ways of defining social innovations. The first one focuses on non-technical innovations in the organizational context, the second one takes into account the social innovation combined with technological innovation, and the third one examines the concept of social innovation as independent and new social practices4.

The first line in the literature in the field of social innovation can be analyzed through the prism of management. As noted by F. Moulaert et al., such an understanding was dominant in research on social innovation in the nineties of the twentieth century5. Under this line of discussing, social innovation relates to the improvement of social capital in order to increase organizational effectiveness and thus the ability of the organization to compete6. Examples of

1 E.M. Rogers, Diffusion of Innovations, Free Press, New York 1995.2 G. Mulgan, Social innovation. What it is, why it matters and how it can be accelerated, Young Foundation, London, 2007, p. 5.3 S. Neumeier, Why do Social Innovations in Rural Development Matter and Should They be Considered More Seriously in Rural Development Research? – Proposal for a Stronger Focus on Social Innovations in Rural Development Research, „Sociologia Ruralis”, Vol. 52, No. 1/2012, p. 50.4 J. Schmitt, Social Innovation for Business Success. Shared Value in the Apparel Industry, Berlin, Heidelberg, Wiesbaden 2014, p. 5-17.5 F. Moulaert, F. Martinelli, Towards alternative model(s) of local innovation, „Urban Studies”, Vol. 42, No. 11/2005, p. 1973.6 Ibidem, p. 1974.

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this kind of social innovation are: dynamic management, flexible organizations, developing skills and competencies, as well as networking among organizations7 and marketing innovations8.

The second stream in the literature in the field of social innovation examines it in the context of coexistence with technological innovations. This trend is visible in the light of current research on innovation9. However, it refers to the protagonist in research on social innovation, F.W. Ogburn, who distinguishes technical and social innovation, and technology considers as a stimulator of social progress. Ogburn assumes that cultural development is lagging behind technological innovation. In order to maintain the pace of technological innovation, it is necessary, that the social innovation adjusts to it10. S. Roth relatives this position, while indicating that every innovation has a social dimension, which is necessary for new products heading for the market success. Social innovation is therefore key factor for the success of technological innovation11. The purpose of this line of analysis in the literature is to explore the concept of social innovation as „a pre-condition, compensating products and consequences of technological change”12.

The third trend presents social innovation as an autonomous concept and means social practice. Social innovations are detached from technological innovation and should be treated as an independent object of studies. W. Zapf ’s work can be considered as a starting point for theoretical school of social innovation in this line. The researcher defines this concept as new ways to reach the objectives, in particular new organizational forms, new rules, new lifestyles which change the direction of social transformation and ways of solving problems better than earlier practices. They should, therefore, be worth imitating and institutionalized13.

All this three approaches to the major characteristics of defining social innovation include common features. According to them social innovation:

• is cross-sectoral: social innovation often occurs between different sectors and engages in the joint action people working in different sectors,

7 F. Pot, F. Vaas, Social innovation, the new challenge for Europe, „International Journal of Productivity and Performance Management”, Vol. 57, No. 6/2008, p. 468.8 A. Kesselring, M. Leitner, Soziale Innovationen in Unternehmen, Study compiled by order of the Unruhe Stiftung, Vienna 2008, http://www.zsi.at/attach/Soziale_Innovation_in_Unterne hmen_ENDBERICHT.pdf, p. 9, [07.07, 2015].9 J. Howalt, M. Schwarz, Social innovation: concepts, research fields and international trends, Dortmund: Sozialforschungsstelle, Dortmund 2010, p. 51.10 F.W. Ogburn, Kultur und sozialer Wandel. Ausgewählte Schriften, Neuwied, Berlin 1969, p. 169.11 S. Roth, Neu für wen? Erste Aufnahmen aus der Sozialdimension der Innovationen, Bern: Fachhochschule, Bern 2009, p. 232.12 J. Howalt, M. Schwarz, Social innovation: concepts, research fields and international trends, Dortmund: Sozialforschungsstelle, Dortmund 2010, p. 28.13 W. Zapf, Über soziale Innovationen, „Soziale Welt”, Vol. 40, No. 1-2/1989, p. 177.

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• is open and collaborative: social innovation often involves and engages a large number of people and organizations,

• has both grassroots and bottom-up basis: social innovation is often bottom-up and means local actions,

• means pro-sumption and co-production: more often the line between producer and consumer obliterates: users become producers (prosumers), and recipients of services social policy – active creators of this policy (co-producers),

• bases on mutualism: that is the belief that individual and collective well-being can be achieved only by mutual dependence, mutual aid,

• creates new roles and relationships: social innovation is related „with” and developed „by” users, not delivered „to” and „for” them,

• means better use of assets and resources: social innovation often recognizes, exploits and coordinates assets and resources which would otherwise be wasted, under-used or not used at all; in some cases, these assets and resources can be latent, intangible and/ or physical,

• develops assets and capabilities: many social innovations explicitly aim to develop the capabilities of beneficiaries enabling them to meet their needs over the longer term; this capability approach highlights human agency and advocates participation; it conceptualizes people as active, creative, and able to act on behalf of their aspirations14.

Since its formation, one has accepted, in a common use, that the term „social innovation” can be applied to a model of a management of the organization. It may relate to, among others, building business strategies which involve changes in human, institutional and social capital, which lead to improvement of organizational efficiency and competitiveness, organizational restructuring and modernization of industrial relations and human resource management. That’s the nature of social innovation considered in the context of the concept of corporate citizenship and its implementation into business practices15.

Assumptions of the corporate citizenship conceptThe concept of corporate citizenship means a new way of doing business,

which assumes that the company is a citizen and considers the social and environmental responsibility to the communities in which it operates, together with its economic and financial responsibility to its shareholders and

14 J. Caulier-Grice, A. Davies, R. Patrick, W. Norman, Defining Social Innovation. A deliverable of the project: The theoretical, empirical and policy foundations for building social innovation in Europe, (TEPSIE), European Commission, DG Research, Brussels 2012, p. 18-20.15 A. Wiktorska-Święcka, Zarządzanie kapitałem społecznym w przedsiębiorstwie w kontekście założeń koncepcji Corporate Citizenship, [in:] Kapitał ludzki i społeczny. Kreowanie i zarządzanie, (ed.) D. Moroń, Wydawnictwo Uniwersytetu Wrocławskiego, Wrocław 2012, p. 139-154.

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other stakeholders. CC defines the role of the company in the community and its civic attitude is integrated with the development strategy of the company. Corporate citizenship is an essential – from the business ethics point of view – aspect of the company’s involvement in efforts to solve social problems by launching its own resources. The company establishes and cultivates contacts and relations with the local community, while becoming a partner, participating in joint projects or creating their own programs implementing own resources in the civic responsibilities16. Like the citizens – individuals, companies – being institutional citizens, care about their own interests, while seeking ways to reconcile those interests with the common good. Therefore, they try to coordinate their own strategies to increase profits with the aspirations of the prosperity of the entire society and try to manage all its units in such a way that they also pursue social goals17. Therefore, referring to the perception of the company as a „collective citizen”, which is governed by law, in the literature it was awarded by the opportunity to apply for certain rights and privileges arising from citizenship status, for example the right to freedom, including the freedom of expression and to participate in public life18. The concept of corporate citizenship means the link of all social activities of companies that go beyond activities directly related to the economic activities that are subordinate general corporate purposes19.

Despite a lively debate on the issue of corporate citizenship in the last few dozen years, the term has been still recognized in the broad framework and not clear enough, which often leads to controversies. A. Westebbe and D. Logan concluded that „CC is an activity generally beyond the joint-stock, made up by the complex commitment of the company to solve social problems. In this regard, there should be activated all kinds of enterprise resources with particular emphasis on their specific skills. An important element of CC is a conscious and intentional communication about social commitment addressed to the most numerous target groups”20. B. Seitz defines the CC from an economic perspective as „an active pursuit of the wide use of the social and natural environment, while building on the belief that profit maximization requires investment and better shape of social interaction. Thus, CC means an active look for investment opportunities in society with the use of appropriate

16 J. Moon, A. Crane, D. Matten, Can corporations be citizens? Corporate citizenship as a metaphor for business participation in society, „Business Ethics Quarterly”, Vol. 15, No. 3/2005, p. 427-451.17 C. Smith, Nowy model filantropii przedsiębiorstw, [in:] Społeczna Odpowiedzialność Przedsiębiorstw, „Harvard Business Review”, No. 2/2007, p. 172.18 F. Green, Corporations as Persons, Citizens, and Possessors of Liberty, University of Pennsylvania Law Review, Vol. 94, No. 2, 2014, p. 202-237.19 F. Dresewski, Corporate Citizenship. Ein Leitfaden für das soziale Engagement mittelständischer Unternehmen, „Unternehmen: Partner der Jugend“, Berlin 2004.20 A. Westebbe, D. Logan, Corporate Citizenship? Unternehmen im gesellschaftlichen Dialog, Gabler, Wiesbaden 1995.

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methods”21. D. Matten and A. Crane, while defining the concept of corporate citizenship , have identified its three dimensions:

• a narrow one, which means the company’s philanthropic activities for the local community where being a „good citizen” is implemented by transferring the money to a variety of important social goals,

• equivalent to the concept of corporate social responsibility, which refers to the „four corporate citizenship responsibilities”: economic, legal, ethical and philanthropic,

• a wide one, where the concept of corporate citizenship refers to the political aspects, such as civil rights and the involvement of companies in multi-level governance issues (global governance)22.

A. Habisch noted that corporate citizenship recommends taking measures to help companies invest in their social environment and take responsibility. These activities contribute to build structures and cross-sectoral cooperation to generate social capital through contacts with local partners from other sectors (NGOs, politics, other companies etc.) in order to solve specific problems. To projects in the field of corporate citizenship companies bring not only money, but also other resources such as the involvement of employees, professional know-how and organizational skills and information23. Habisch classifies the company’s social commitment on the basis of two dimensional matrix: on one axis there is investment time horizon, and on the other the depth of commitment to the social environment. Depending on the degree of social commitment, the company acts as a sponsor, a partner or a citizen. On the first level in the role of the sponsor, the company’s cooperation with an external partner is „sub-product-like” and is a kind of introduction to the interaction in the future. Due to the infrequency and weak ties of the relationship, this kind of commitment does not affect the fundamental modification of ethical standards and corporate culture, which is essential to full civic engagement of the company. On the second, higher level, the company as a partner, together with partner organizations, develops specific models to address common challenges, both local and sectoral, and participates in their implementation. Interacting with partners contributes to the generation of social capital, which is even more produced on the third level of social commitment of the company, which is compliance with the role of the company as a citizen, which may affect the sustained and effective structural changes in society through the company’s participation in public space. This last aspect is crucial in the context of social innovations. A feature of the process of social innovation is primarily a commitment of a complex network of formal

21 B. Seitz, Corporate Citizenship, Rechte und Pflichten der Unternehmung im Zeitalter der Globalität, Gabler, Wiesbaden 2002.22 D. Matten, A. Crane, Corporate citizenship: towards an extended theoretical conceptualization, „Academy of Management Review”, Vol. 30, No. 1/2005, p. 166-179.23 A. Habisch, Corporate Citizenship. Gesellschaftliches Engagement von Unternehmen in Deutschland, Springer, Berlin, Heidelberg 2003, p. 59.

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and/ or non-formal and/ or informal partnerships between various actors. In most cases, successful innovation relies on the participation and involvement of many different interest groups – users and beneficiaries of innovation, as well as manufacturers and suppliers24. Among the numerous participants (beneficiaries, donors, public institutions, volunteers etc.) of the process of social innovation, beneficiaries play a key role. According to G. Mulgan, some of the most effective methods of implementation of social innovation begins at the moment of realization that people (thus also those who participate within a company) are competent interpreters of their lives and are able to competently solve their own problems25.

Examples of social innovation in the practice of implementation of corporate citizenshipReferring to the three dimensions of corporate citizenship proposed by

Matten and Crane, it should be noted that action in the narrow dimension of the concept offers a wide spectrum of possibilities, especially:

• support for local actors such as financial, organizational, physical,• cooperation with local NGOs.

In the subject aspect, supporting of local actors can apply to both public, private and social partners and take the form of:

• financial subsidies (in the context of corporate giving),• donations,• company product donations,• organizational support.

The spectrum of possible actions in the implementation of corporate citizenship in the narrow dimension depends on the creativity of a particular company, the economic situation and the scope of its recognition and social hierarchy of needs in the local environment. In this regard helpful can be the cooperation of socially engaged companies with local governments, communities and NGOs.

Activities in the second dimension: equivalent to the concept of corporate social responsibility, reflect the fact that the spectrum of CSR applies to the environment (relationships with internal stakeholders of the company, employees , the relationship with the market, the external environment and the way of social reporting). The activities in the field of corporate citizenship identified with CSR offer the most possible actions in the areas of:

24 R. Murray, J. Caulier-Grice, The open book of social innovation, Social Innovator Series, NESTA, London 2010, p. 30.25 G. Mulgan, Social innovation. What it is, why it matters and how it can be accelerated, Young Foundation, London, 2007, p. 21.

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• corporate volunteering,• outsourcing to local social actors.

Corporate volunteering is a voluntary engagement of employees of companies in provision of different kinds of work to help and to support beneficiaries and to solve various problems of the local community. In the framework of voluntary activities employees often use their knowledge, skills and abilities, and the company as their employer supports those activities that are implement usually during working hours. This support can be financial, organizational, logistic one.

Socially committed company can also implement the CC while supporting local non-governmental organizations by entrusting them to perform certain types of work and jobs (outsourcing), depending on the economic profile of the entity. In case of systematic cooperation performed by a company and regular interaction with local players, it is advisable to establish permanent agreements and partnerships. This cooperation can apply to both public institutions (local government units, the labor agencies) and an NGOs.

In terms of the wide dimension of social engagement of a company, it may take actions which help to create management systems to strengthen democracy, e.g. by supporting participatory mechanisms in the enterprise (e.g. in the forms of social dialogue), as well as engagement in public activities (e.g. lobbying for improvement of the legislative process related to various social and environmental aspects). In terms of citizenship’s strengthening in the company, it organizes working time in such a way that employees have opportunity to take civic activities within the company, e.g. in a trade union or outside, e.g. in the form of volunteering. Another aspect of responsible citizenship is to minimize losses covered by society as a result of possession by the company a power in the territorial governance.

ConclusionsIn recent years, one can observe increasing interest of companies in

social innovation. In this regard, R. Neubauer lists four main motives of implementation of the CC by the company:

• perception of its role as part of a society,• as a form of guarantee for its long-term existence,• increasing its value,• direct, business-related advantages, such as improving of image, support

the local environment, the impact on local policies26.

26 R. Neubauer, Corporate Citizenship: Unternehmen in Deutschland – Freunde oder Feinde der BürgerInnengesellschaft, Freunde oder Feinde von Community Organizing?, http://www.fo-co.info/Neubauer_corporate_citizenship.htm, [07.07.2015].

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Implementation of social innovation by enterprises proves to be beneficial to them. Among the social benefits associated with implementing of the concept of CC to business practice one should mention i.a.:

• social learning of the company, raising standards of its functioning,• development of social identity and philosophy of the company,• formation of processes of social change, independent of the state,• stabilization in the social environment.

The direct economic benefits are also associated with the opening of new target groups and an increase in goodwill.

Implementation of social innovation, such as corporate citizenship, is also an important issue from the perspective of benefits of the social commitment of the company to the public sphere. Due to changes related to the modernization of social processes, traditionally perceived social state is at the limit of the guaranteed support of the citizens. Contemporary debate on the role of citizens in a society increasingly emphasizes the necessity to engage businesses in the social issues by recognizing that corporate citizenship contributes to the strengthening of civil society, which is based on „voluntary collective activity, not oriented to achieve profit. Self-organization, self-determination, civil rights are now the basis for the integration and participation of citizens in decision-making. Civic engagement generates social capital that contributes to the growth of social welfare and development, because – in an open process of continuous social learning process – uses continuously from the experience of everyday life of citizens. In this quality lies understanding of the nature of individual and collective citizenship that contributes to increasing social, political and economic cohesion”27.

Literature:1. Bürgerschaftliches Engagement: auf dem Weg in eine zukunftsfähige

Bürgergesellschaft. Bericht der Enquete-Kommission „Zukunft des bürgerschaftlichen Engagements“, Deutscher Bundestag, 14. Wahlperiode. Drucksache 14/8900, [03.06.2002].

2. Caulier-Grice J., Davies A., Patrick R., Norman W., Defining Social Innovation. A deliverable of the project: The theoretical, empirical and policy foundations for building social innovation in Europe, (TEPSIE), European Commission, DG Research, Brussels 2012.

3. Dresewski F., Corporate Citizenship. Ein Leitfaden für das soziale Engagement mittelständischer Unternehmen, „Unternehmen: Partner der Jugend“, Berlin 2004.

27 Bürgerschaftliches Engagement: auf dem Weg in eine zukunftsfähige Bürgergesellschaft. Bericht der Enquete-Kommission „Zukunft des bürgerschaftlichen Engagements“, Deutscher Bundestag, 14. Wahlperiode. Drucksache 14/8900, [03.06.2002].

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4. Green F., Corporations as Persons, Citizens, and Possessors of Liberty, University of Pennsylvania Law Review, Vol. 94, No. 2, 2014.

5. Habisch A., Corporate Citizenship. Gesellschaftliches Engagement von Unternehmen in Deutschland, Springer, Berlin, Heidelberg 2003.

6. Howalt J., Schwarz M., Social innovation: concepts, research fields and international trends, Dortmund: Sozialforschungsstelle, Dortmund 2010.

7. Kesselring A., Leitner M., Soziale Innovationen in Unternehmen, Study compiled by order of the Unruhe Stiftung, Vienna 2008, http://www.zsi.at/attach/Soziale_Innovation_in_Unterne hmen_ENDBERICHT.pdf, p. 9, [07.07. 2015].

8. Matten D., Crane A., Corporate citizenship: towards an extended theoretical conceptualization, „Academy of Management Review”, Vol. 30, No. 1/2005.

9. Moon J., Crane A., Matten D., Can corporations be citizens? Corporate citizenship as a metaphor for business participation in society, „Business Ethics Quarterly”, Vol. 15, No. 3/2005.

10. Moulaert F., Martinelli F., Towards alternative model(s) of local innovation, „Urban Studies”, Vol. 42, No. 11/2005.

11. Mulgan G., Social innovation. What it is, why it matters and how it can be accelerated, Young Foundation, London, 2007.

12. Murray R., Caulier-Grice J., The open book of social innovation, Social Innovator Series, NESTA, London 2010.

13. Neubauer R., Corporate Citizenship: Unternehmen in Deutschland – Freunde oder Feinde der BürgerInnengesellschaft, Freunde oder Feinde von Community Organizing?, http://www.fo-co.info/Neubauer_corporate_citizenship.htm, [07.07.2015].

14. Neumeier S., Why do Social Innovations in Rural Development Matter and Should They be Considered More Seriously in Rural Development Research? – Proposal for a Stronger Focus on Social Innovations in Rural Development Research, „Sociologia Ruralis”, Vol. 52, No. 1/2012.

15. Ogburn F.W., Kultur und sozialer Wandel. Ausgewählte Schriften, Neuwied, Berlin 1969.

16. Pot F., Vaas F., Social innovation, the new challenge for Europe, „International Journal of Productivity and Performance Management”, Vol. 57, No. 6/2008.

17. Rogers E.M., Diffusion of Innovations, Free Press, New York 1995.18. Roth S., Neu für wen? Erste Aufnahmen aus der Sozialdimension der

Innovationen, Bern: Fachhochschule, Bern 2009.19. Schmitt J., Social Innovation for Business Success. Shared Value in the Apparel

Industry, Berlin, Heidelberg, Wiesbaden 2014.20. Seitz B., Corporate Citizenship, Rechte und Pflichten der Unternehmung im

Zeitalter der Globalität, Gabler, Wiesbaden 2002.21. Smith C., Nowy model filantropii przedsiębiorstw, [in:] Społeczna

Odpowiedzialność Przedsiębiorstw, „Harvard Business Review”, No. 2/2007.22. Westebbe A., Logan D., Corporate Citizenship? Unternehmen im

gesellschaftlichen Dialog, Gabler, Wiesbaden 1995.

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23. Wiktorska-Święcka A., Zarządzanie kapitałem społecznym w przedsiębiorstwie w kontekście założeń koncepcji Corporate Citizenship, [in:] Kapitał ludzki i społeczny. Kreowanie i zarządzanie, (ed.) D. Moroń, Wydawnictwo Uniwersytetu Wrocławskiego, Wrocław 2012.

24. Zapf W., Über soziale Innovationen, „Soziale Welt”, Vol. 40, No. 1-2/1989.

PART III

INSTRUMENTS SUPPORTING THE DEVELOPMENT, TRANSFER

AND USE OF KNOWLEDGE IN ORGANIZATIONS

Mariusz MakowskiPhD, Assistant Professor, Cracow University of Economics

FROM THE ENTREPRENEURIAL TEACHER TO ENTREPRENEURIAL GRADUATE.CONCLUSIONS FROM PERSPECTIVE PROJECT DEVOTED TO CREATING NEW CURRICULA FOR TEACHERS

Keywords:entrepreneurship, teachers, curricula, competencies, training, school

SummaryThe school is seen as a natural learning environment in which it is

possible to develop the entrepreneurial mindset. It will be a sphere of effective education provided adequate preparation of teachers. Authors and researchers from the European „Perspective” project set the goal of training a selected group of teachers in order they would become a specific opinion leaders, and consequently, would have made changes in their professional environments. This was carried out by using the method of study circles, conducting seven training workshops in Poland in the first half of 2015. This paper presents a model of work with this method and the collected data on teachers’ professional experience in the context of entrepreneurship. Conclusions derived from a set of interviews made with teachers draw a picture of a numer of schools deficiencies in terms of entrepreneurial teaching possibilities. Nevertheless, there are also listed, in the text examples of good practices for the development of self-reliance, responsibility and creativity in young people.

„The Perspective”Author of this article is a member of the research team of EU educational

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project “Perspective”1. It is a project dedicated to improving the way teachers teach in the context of building the entrepreneurial spirit. The main „Perspective”`s coordinator is TUCEP – Italian organization located in Perugia2. There are eight – together with Poland – European Union countries involved: Italy, the Netherlands, Hungary, Belgium, Austria, Greece and Portugal in this project. The project was divided into three key activities:

• Implementation of contextual analysis on entrepreneurship in teachers` education in Europe, this analysis covered: the role of teachers in various European countries; national strategies, best practices, the pilot studies of teachers` experiences and stories of success, methodology used in teachers` education in the field of entrepreneurship, approaches and tools used in order to adopt the role of facilitator, core competencies in the fields of entrepreneurship, life-long professional development of teachers in the EU.

• Conducting workshops based on “study circles” methodology (peer learning) addressed to school teachers. It is aimed to develop a European curricula for teachers in primary and secondary schools supporting the development of their skills and methods used in teaching entrepreneurship within different subjects and in different contexts.

• Development of a Virtual Learning Environment (VLE), online application that includes training materials, guidelines for teachers, examples of good practices (in different areas for different levels and types of education). VLS`s objective is to provide interactive tools for teachers enabling them to share experiences, as well as to disseminate ideas and methods for entrepreneurship education3.

As a part of the contextual analysis on entrepreneurship teaching in Poland we have made a series of interviews with teachers4. The objective was to describe the determinants of entrepreneurship education in teachers` perspective. This article presents the collected data and conclusions from two sources: interviews

1 PERSPECTIVE – Experiences Entrepreneurial Spirit Challenge in School Education Project No. 540455-LLP-1-2013-1-IT-COMENIUS-CMP. The manager of the project was Marek Makowiec PhD, its coordinator was Tomasz Kusio PhD, and previous members of the team were Katarzyna Tarnawska PhD, and Małgorzata Wypych PhD. All mentioned researchers are working at Cracow University of Economics.2 Tiber Umbria Comett Education Programme, www.tucep.org.3 The webside: http://www.perspectiveproject.eu/pl is available also for Polish teachers – some content have been translated. There are all deliveries and contributions of all international partners as well as examples of best practices in enterpreneurship education (available in Virtual Learning Environment), [10.05.2015].4 Owing to shortage of place in this article, the full contex analysis (it`s co-author was Małgorzata Wypych PhD) has not been presented here. It is avaliable on project`s webside: http://www.perspectiveproject.eu/images/perspectve%20wp2%20final%20deliverable_poland.pdf, [10.05.2015].

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with teachers (2014) and the workshops implemented in the study circle formula. Study circle workshops were held in the first half of 2015 at the Cracow University of Economics.

Interviews with teachers – purpose of the studyThe object of the study was to assess the competencies needed to teach

entrepreneurship in school from the perspective of teachers. It concerned the factors related to their development, obstacles to their formation and prospects for change in the current situation.

MethodThe study was based on a qualitative content analysis of the structured

interviews. It utilised interpretative phenomenological analysis5. Teachers` statements were coded by two competent judges, then there were established the core expressions (key words), finally the frequency of their occurrence was detrmined. The comments listed below are the most representative opinions obtained from the responses to those questions.

Questions asked during interviews related to the competence of teachers to teach entrepreneurship as well as key competencies (essential for entrepreneurship) among pupils.

List of questions used in interviews are presented in table below6:How do you generally assess the situation of teaching entrepreneurship in Poland?What competencies are necessary for entrepreneurship education?Do teachers have the listed competencies?What factors limit the development of core competencies among teachers?Can you identify the obstacles during promotion of key competencies for pupils?What kind of training do you think would help teachers?What kind of activity would you recommend to implement more effective teaching of entrepreneurship?What other suggestions do you have about the training needs of teachers?

Group researchIn the period of May – June 2014 in the Municipality of Cracow there were

conducted 11 interviews engaging 11 teachers (8 women, 3 men). These were the people who responded to the earlier mailing, which presented the purpose of the

5 I. Pietkiewicz, J.A. Smith, Praktyczny przewodnik interpretacyjnej analizy fenomenologicznej w badaniach jakościowych w psychologii, „Czasopismo psychologiczne”, 18 (2), 2012, p. 361-369.6 The content of questions has been prepared by Perspective`s coordinator – a research team from the University of Piraeus and in a uniform manner (in the national languages) used in parallel research conducted in eight European countries participating in the project.

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study and encouraged to share teachers’ experiences7. Among these participants two of them worked in primary school, three in lower-secondary school, and the remaining six at a technical secondary school. The goal was to get feedback not only from teachers teaching the subject “Basics of Entrepreneurship”. Some of them have had these experiences, and the rest lectured in other subjects.

The results – the content of teachers` opinions after qualitative analysisThe opinions of the subjects are presented here in the following order: first

are shown opinions that appeared most frequently, the statements that were selected have had to appeare in statements of at least three teachers interviewed.

Opinions, put in tables (1 – 8) are listed below:How do you generally assess the situation of teaching entrepreneurship in

Poland?

The weakest area is the education of teachers – (in further points, opinions are an extension of this thread – how teachers are taught for future work).Academic staff not prepared to teach the practical aspects of entrepreneurship, lack of practitioners.Too little: psychological knowledge, knowledge of key competencies and competence how to build a sense of efficacy.Lack of appropriate programs and training courses in current curricula, not very current knowledge, teaching materials of poor quality.

What competencies are necessary for teaching entrepreneurship?

Having practical knowledge.Personal characteristics of teachers: authenticity, passion, being teacher as a profession of choice, not of necessity.

Do teachers have the listed competencies?

Teachers with a passion happen.What matters is individual motivation.Many teachers are characterized by low self-efficacy and the resulting anxiousness.Teachers are low in openness to knowledge, they are resistant to novelty.There could be observed a fear of confrontation with other teachers, educators, parents` knowledge.

7 The interviewed subjects accounted for 25% of the invited ones in the entire mailing list. After conducting direct talks, telephones and mailing, finally ¼ recruited teachers agreed to take part in the study.

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They are (teachers) missing practical knowledge, what is nowadays needed in life (business).

What factors limit the development of key competencies in teachers?

Lack of innovative, interesting materials.Resistance to learn new things, lack of cognitive openness.Low motivation.Boring trainings („all are the same”) – a need for better trainings, more tailored to individual needs (coaching).Organizational factors; too large classrooms, the bureaucracy, rigid programs, difficulties with access to the Internet, lack of computers in classrooms.

Can you identify obstacles to the promotion of key competencies in pupils?

Shortage of time (due to the programs` overload, rigidity in requirements).The resistance of pupils and lack of parental support.Immature pupils, their intellectual and emotional problems and poor social development.Lack of trainings on creativity for teachers, the school as a system that limits creativity („school kills creativity”).

What would You propose to promote these competences?

It would be valuable for teachers to meet with consultants.Coaching for teachers.Courses on developmental psychology; how to deal with unwanted child`s behavior, how to motivate.Training for teachers in personal, general development needed: work-life balance, relaxation.

What activity would you recommend for implementation of more effective teaching of entrepreneurship?

Lessons based on case studies, solving problems with an emphasis on cooperation.Introducting board games, virtual games, workshops of creativity, survival games.Visiting companies, conducting virtual businesses.

Do you have other suggestions for the training needs of teachers?

It is recommended to improve openness of teachers for knowledge in other fields.More trainings in developmental and social psychology.Providing knowledge of how to build self-esteem, and a sense of efficacy.

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Delivering knowledge for teachers how to properly evaluate children achievements and how to build their motivation.No more trainings; instead – provide more useful materials.

Conclusions – ApplicationsFrom the material gathered in the interviews the picture can be drawn in

which we can accentuate a number of elements. In teachers` perspective the main area of difficulties and barriers in teaching entrepreneurship – as well as learning in an entrepreneurial way – is the way teachers are educated. Future teachers are trained by people lacking their own entrepreneurial background. The quality of these practices leaves much to be desired. There is a dominance of theoretical content of economic nature in the curricula and classes, not much psychological issues – associated with the social practice8.

The importance of motivational factor was raised. In the respondents` opinions it was suggested that many teachers have low motivation in terms of running entrepreneurship classes, as well as taking efforts to train themselves in this area. Nevertheless, those teachers who care – running reasonable and valuable entrepreneurship classes – precisely formulated their training needs.

In conversations with teachers appeared a thread of educational services recipients: the pupils. There were pointed weaknesses in teaching entrepreneurship also on this side of the school scene, the receivers. According to some teachers` opinions, a number of their pupils are not mature enough to learn about entrepreneurship or these children have deficits (of developmental, intellectual, social or family origins) what makes teaching them inefficient.

The author realizes that the collected material based on a small sample of teachers is just a pilot study. Therefore he encourages other researchers to undertake research on the perception of professional challenges – related to learning entrepreneurship. It is important to collect data how do these

8 The curriculum of the 3 semesters (350 hours) entrepreneurship postgraduate studies has been published by the Ministry of Education in the „Podstawy przedsiębiorczości” (Basis of Entrepreneurship) on 23.12.2012. The studies include a series of courses: Macroeconomy Basics, Individual Entrepreneurship, Small Business Basics, Tax Law, Labor Market and Labor Law, Business Law, Business Processes and Interpersonal Communication, Vocational Guidance, Methodology of Entrepreneurship, IT. It also contains courses on psychology and developmental psychology, psychology of interpersonal differences, teacher’s modern and alternative work methods. These courses target skills essential for business and entrepreneurship, however unique didactic method of entrepreneurship education are only marginally present in studies’ program.

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challenges look in the eyes of teachers9. Although the education environment is hermetic and people are quite reluctant to admit they have some own deficits or mental barriers and ignorance as well, it is worthwhile to take such attempts. Without full diagnosis of the situation – though sometimes painful – it is difficult to establish a reasonable strategy aimed at healing the system in which future teachers are trained. It should also be noted that this study was not an independent, separate research activity, but it was part of a broader project, with a clear hierarchical order. It stands as a prerequisite for further phases of the Perspective project.

Summary of results and proposal for changesWith regard to the outlined picture of the situation, the former contextual

analysis and interviews with teachers, we can raise a number of recommendations to improve the status quo. These are – as follow – the recommendations:

• Increasing the knowledge of teachers in the field of: psychological determinants of entrepreneurship, contemporary theories of motivation, methods of rewarding and increasing the motivation of teachers to change their attitudes.

• Broadening the skills of teachers in conducting initial individual assessment of the level of key competencies as well as possibility of development of these talents – we assume that not everyone is able to be a leader, not everyone has predispositions of being an entrepreneur.

• Making real pupils` attitudes. Entrepreneurship can be developed in a different area than running his own business.

• Changing attitudes of teachers applying to: supporting pupils’ independent thinking, openness to the views of pupils, the ability to conduct discussions without defending their own opinion.

• Building autonomy and intrinsic motivation of pupils.• Developing the skills of leading motivational interviews.• Introducing changes into the study curricula for teachers; both

postgraduate pedagogical studies and these on entrepreneurship require to adopt the program of building such abilities as: assessing team work dynamics, building a sense of efficacy, taking risk, taking responsibility. In curricula there should be significantly changed the ratio between the economic content and psychological and developmental content, favoring the last ones.

9 The presentation of this report has met with affirmative adoption at the International Conference “Role of entrepreneurship in socio-economic development of spatial systems”, the 11th International Scientific Conference (The Role of Entrepreneurship in Socio-Economic Development of Spatial Systems), combined with the 7th National Congress of Teachers of Entrepreneurship, which held in Cracow, 6–7th of October 2014. Teachers and researchers collected there noticed a great need of such grass-roots exploration of their environment.

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• Implementing programs of individual port-folios for pupils to increase their self-efficacy, highlighting the skills of their own competencies. All that favors optimistic thinking and willingness to risk taking, based on their earlier successes and achievements.

Study circlesStudy circles are the workshops` formula with specific rules. Their

methodology has been developed in Sweden in the`70’s., and training with the use of this formula have gained great popularity in the Nordic countries10. Workshops, study circles as a methodology of work has been selected for the Perspective project by its main coordinator and responsible body – Italian organization TUCEP. The main features of this method are:

• Equal status of all participants;• Assumption that the learning proces flows in all directions: teachers

learn from facilitator, facilitators learn from teachers, teachers learn from each other;

• The facilitator is rather a moderator of discussion than a mentor or lecturer;

• Stimulating activity of all participants;• Repeatable meetings. The concept of peer learning11 is the process of

learning from each other; at both participants as well as between the group and a leader.

The study circles workshops which consisted of 7 meetings were conducted by the author in the period from January to April 2015. Each of them lasted 6 hours, with the exception of the last – gathering all participants together – final workshop which lasted 2 hours. Trainings took place at the University of Economics in Cracow and in The W. Jagiełło High School in Niepołomice. They were attended by 30 teachers of all levels of teaching, from primary schools, lower-secondary and secondary schools. Apprentices in secondary schools of economics were also present. The aim of the study circles with teachers, was twofold: to assess the current challenges of teaching – developing entrepreneurial attitudes (diagnosis) as well as collecting good practices in this field (knowledge and tools). At the same time a leader conducting meetings (facilitator) presented the participants with his own proposals to enrich the activities that develop transversal competencies, which are the foundation for growth an enterprising attitude. Particular workshops, according to education levels have had the following topics:

10 More: S. Larsson, H. Nordvall, Study Circles in Sweden: An Overview with a Bibliography of International Literature, Linköping University Electronic Press, Linköping 2010.11 M.A. O’Donnell, A. King, Cognitive perspectives on peer learning, Mahwah, Lawrence Erlbaum, NJ 1999.

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• Addressed to primary school teachers: Training in development of communication skills and creativity with pupils;

• Addressed to lower-secondary school teachers: Entrepreneurship education joined with elements of coaching;

• Addressed to secondary school junior-teachers: Playing improvising games as a tool for building an entrepreneurial habits.

These topics – proposed by the author – were the consequence of teachers` needs analysis and their suggestions recorded during the prior phases of the project – interviews with teachers.

The results of the workshop were recommendations for improving the education system in the context of developing entrepreneurial attitudes. It consisted of identifying neglected areas, diagnosis of poor functioning the school and widely looking – education system, as well as examples of good practice worth disseminating. Below, there are recommendations for proposed changes in teacher training systems collected during 6 workshops in the study circles formula12.

Study circle I – attendees: primary school teachersTopic: Training in development of communication skills and creativity

with pupilsThe main recommendation of this group of teachers was to introduce classes

on creativity and motivation. The second recommendation was a postulate to introduce psychological training block, devoted to how to deal with a „difficult” pupil in the classroom, so that other children could take full advantage of what teacher offers. Participants argued that the teacher must have a basic sense of comfort and security in his work so as to implement new, experimental methods and approaches. It is so because their application requires a big cognitive-emotional commitment. Another recommendation referred to delivering teachers methods and tools for developing the pupils` intrinsic motivation. It has been postulated to include it in the path of training for the teaching profession. Teachers should also inspire acting as a models, inspire pupils by their own enerpreneurial activity.

Study circle II – attendees: teachers of lower-secondary schools

Topic: Entrepreneurship education joined with elements of coachingThis workshop brought recommendations for planning teachers` training

system as well as the education system in general. They are, as follows:

12 In Poland within the project,six study circles workshops took place, two meetings for each group of teachers who were teaching in primary schools, lower-secondary schools, and junior teachers in secondary schools.

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• Developing system of vocational schools;• Reducing the rigidity of guidelines in education system – more freedom

and flexibility in the work of teacher;• Providing teachers with tools that would serve them reducing anxiety in

their pupils` functioning; to support children effectively and encourage to endeavour unconventional tasks, take some risk;

• Broader approach to learning based on the principles of improvisation, as well as the knowledge of improvisatorial techniques should be implemented in the curriculum for junior-teachers.

Study circle III – attendees: junior teachers (apprentices) – secondary school

Topic: Playing improvisatorial games as a tool for building entrepreneurial habits

Junior-teachers confirmed that it would be important for them to discover the talents of their pupils. They realize of the rigidity that characterises current educational system, which they will soon enter as teachers. They also doubted whether there would be any possibility of such individualized tutoring and changing school subjects prioritization within the framework of existing program13. Nevertheless, they declared being fully aware of the enormous potential of children, and would be eager to try making lessons in an experimental way, giving pupils the opportunity to choose activities and to improvise.

Below there are listed the recommendations derived from this workshop:• Creating the possibilities for teachers to customize the way they teach,

so that the curriculum was adapted to the talents and aptitudes of the child, not conversely;

• Individualized curriculum should get a place to studying, diagnosing and discovering talents and strengths of pupils. At the same time teachers should got created space for a certain amount of testing new ideas in teaching;

• Creating an area for pupils in which they could decide and participate in the learning process. Refocusing from the traditional “school shapes children” towards “a pupil has its share of influence on the shape of how the school is and will be in the future”;

• Introducing psychological competence of proper responding to pupils in a way that does not violate their self-esteem and, consequently, strengthens their belief of self-efficacy into the teachers curriculum. Learning skills of providing negative feedback, which is not a criticism

13 Within the workshop junior-teachers watched some modeling and inspiring materials. Here apprentices address to TED film by Ken Robinson „How schools kill creativity”, https://www.ted.com/talks/ken_robinson_says_schools_kill_creativity, [10.05.2015].

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of the person. Another recommendation concerned the application of improvisatory techniques in the training of teachers. This way they would become competent and reliable models for their students; wards could be modelled by really spontaneous and eager to take risk teachers.

The final meeting – which was common for all participants – summarized the study circles meetings. Researchers and entrepreneurs invited to this meeting were an added value. After presenting conclusions and recommendations from study circles, some of them received response from the invited entrepreneurs and managers. The purpose of such participants` selection was to confront the proposals of teachers with the knowledge and experience of people that are not directly related to education.

According to the first speaker14 of a meeting, in the curricula, starting from their earliest level, intellectual property issues should be implemented. Both focused on raising awareness what it is, as well as teaching how to make money on pupils` own ideas. It should be shown to the young people, on one hand, that their ideas have value, potential, on the other hand, there are people that can help developing them. The value of ideas should gain appropriate appreciation. Educational system should support these aims by application of methods of coaching and mentoring. Another speaker15, a coaching business leader, identified three main characteristics of graduates that are desirable from the employer`s point of view. They are: creativity, independent thinking and responsibility. She stressed the importance of preparing young man to undertake to work – in elementary meaning. In her experience of recruitment at times happen candidates who do not fully understand what does it mean: „to work”. A number of people applicating to the company seems to regard their presence there in terms of „attempt”, which does not necessarily oblige a series of self-limitations. She added that entrepreneurs need to contact and exchange of experiences with teachers, to let teachers know what is most needed from school practice for business practitioners (eg. recruitment needs). Many entrepreneurs would have a lot to offer if they are invited to such cooperation.

The teachers collected following recommendations. The systemic cooperation should be run between teachers (school) and parents. It is necessary to develop a common strategy for shaping the attitudes of children (among other – attitudes towards money). If it is not done, the effects of educational impact of these two different socialization areas will be prone to disturbance, interference and, in extreme cases, deleting each other. For example, it would be so in the confrontation of two core parents` beliefs: “you will have whatever you want from us” contrary to the school`s (teacher`s) message: “there is no free lunch” – “you should be independent, self-contained and earn for your living”.

14 Kamil Kipiel – innovation and technologies broker, President of Centrum Transferu Technologii Medycznych Park Technologiczny.15 Anna Zaroda-Dąbrowska PhD – counselling and coaching firm owner.

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Overprotective parents bring their children to schools and these children are – subconsciously awaiting that this type of care at school. In such a climate of forming beliefs and outlook, even the best curriculum aimed to stimulate entrepreneurship, in the eyes of a child sounds like “a fairy tale about the iron wolf ”, abstract message which has no anchor points in the experience gained at home. Teachers also highlighted importance of activating pupils` self-governance and the value of volunteering, so that children since early age could learn to be responsible, but also enable them real participation in the life of their school. Volunteering builds awareness of the need and value in engaging in various extracurricular activities, not expecting immediate gratification. These conclusions and recommendations, though themselves` valuable, constitute – including data from contextual analysis of entrepreneurship education curricula and data collected from interviews with teachers – cumulative material to work with in the subsequent phases of the Perspective program16.

ConclusionsIf one wanted to create a synthesis of what has been made in the

Perspective project he would collect accumulated herein conclusions and recommendations of teachers, and suggestions of entrepreneurs. Of course, this material is by no means exhaustive aggregation of data reflecting the situation of entrepreneurship education in Polish schools. It is at most a single, another portion of the contribution on research related to diagnosing and improving practice in teaching. Author – based on many hours spent with the teachers – made some observations that complement described here fragment of school reality.

The first thing worth mentioning is teachers` moderate interest in extracurricular, free forms of training. The response to calls for Perspective project was low. It is difficult to make teachers more entrepreneurial if they are not motivated to make such a minor effort. Here the question arises how – if possible at all – to wake up, develop teachers` motivation. The second important issue is a need to create safe conditions in an environment where a change is supposed to happen. If someone plans to introduce a change, a factor that raises the probability of its occurrence is supportive – predictable, cooperating, trustworthy – environment. This principle is known and applied in such areas as relationships` coaching, psychotherapy and education. Change – in itself – is a stressor, so it has the potential of distress reaction in a person who faces that change. For someone who has operated for many years in a stereotyped way, who is a conformist, passive, conservative and cautious person accompanied by anxiety, a proposal to adopt an enterprising attitude is a huge challenge.

16 The next stages of Perspective program consist of four focus groups and writing a 40 hour curriculum on training facilitators of enterpreneurship education which is targeted for junior teachers.

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The chances of its assimilation grow in an environment which delivers sense of security, which is stable (as a system) and in the social surrounding that offers support and assistance. Meanwhile, in the stories of teachers their work environment is perceived as distinctly stressfull. The pupils under their care, parents who visit school, the school authorities – all these sources, are potential source of troubles (conflicts, work overload) for some teachers. In other words, the image of the school they draw definitely does not fit the model mentioned herein: area of security and stability. Teachers often allude to lack of solidarity among them. School managers are also perceived as persons that care more about the interests of an institution than their subordinates. In this situation it is difficult to be surprised that a teacher is not willing to take risk, when in case of trouble he can not count on the support of school headmaster, or at least his loyalty. The third thing that should be payed attention creating new curricula is the future “client” of teachers. Even the most ample curriculum does not operate in a vacuum. It will be confronted with the “clients” of educational institutions: pupils and students. One ought to remember that these young people were formed (and still are) by their family environment. Interviewed teachers reported that most of their pupils grow up in families which are relatively prosperous. In these families a range of goods are available to the children, often without any effort on their part. It is accompanied by the upbringing model, which could be described as permissive – overprotective. For such children the entrepreneurial attitude, and promotion of actions under entrepreneurial spirit would appear as completely weird and unnecessary concept. According to the principle: „why should I change anything when I’m well”. Recalling a classic scheme of the communication process – where there are such elements as sender, message, channel, possible noise and a receiver – in this project, much space was devoted to characteristics of the sender (teacher, facilitator, person – model) and to message and channel (curriculum). It seems that the receiver – a pupil with his background, where he comes from (family), and goes for (beliefs, life aims, mentality) in mentioned communication process of new attitudes (entrepreneurship) remains slightly poorly understood and underestimated subject.

Literature:1. http://www.perspectiveproject.eu/images/perspectve%20wp2%20final%20

deliverable_poland.pdf, [10.05.2015].2. http://www.perspectiveproject.eu/pl, [10.05.2015].3. https://www.ted.com/talks/ken_robinson_says_schools_kill_creativity,

[10.05.2015].4. Larsson S., Nordvall H., Study Circles in Sweden: An Overview with

a Bibliography of International Literature, Linköping University Electronic Press, Linköping 2010.

5. O’Donnell A.M., King A., Cognitive perspectives on peer learning, Mahwah,

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Lawrence Erlbaum, NJ 1999.6. Pietkiewicz I., Smith J.A., Praktyczny przewodnik interpretacyjnej analizy

fenomenologicznej w badaniach jakościowych w psychologii, „Czasopismo psychologiczne”, No. 18 (2), 2012.

Paweł ŁukasikPhD, Assistant Professor, Department of Organizational Behaviour, Cracow University of Economics

COMMUNICATION METHODS SUPPORTING ORGANIZATIONAL LEARNING PROCESS

Keywords:communication, organizational learning, communication methods

SummaryThe paper presents research results on the use of communication methods

in the use of organizational learning methods and its influence on innovation. The first part of the elaboration contains data about the percentage of surveyed organizations using particular communication methods and organizational learning methods. The second part of this paper is the presentation of the research results on communication methods functions in the realization of the organizational leaning methods.

IntroductionCurrent economy is more often called the knowledge economy so

an organizational learning became important process for organization development. There were published a lot of books and articles about the organizational learning, but there is the lack of papers, in which authors join together the issue of the organizational learning and communication. This elaboration is the filling of the gap existing in the literature. The research is based on methodological aspects of the organizational learning and communication. The main assumption is that organizational learning is based on methods which are typical for this process and also business communication is composed of methods. The relation between the organizational learning and communication relies on the use of communication methods as supportive tools in the use of the organizational learning methods. Therefore this chapter contains of presentation of research results concerning the frequency of communication and organizational learning methods use and some functions of communication methods use in the organizational learning methods realization.

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Communication methods useCommunication method is the way of information providing, used

intentionally with the use of particular channels and on the basis of the set of specified rules and procedures1. There are lots of communication methods. For example: A. Potocki, R. Winkler, A. Żbikowska (2011)2 describe about thirty communication methods. Therefore there is necessity of classification making. Every classification needs criteria to create separated sets of elements. Four criteria were selected in this paper:

• Degree of method complexity – This criteria of communication methods division allows to give answer for question if organizational learning process realization needs complex communication methods like meetings or maybe simple communication methods like interviews can play important role in the organizational learning.

• Degree of the interactivity – The nature of the organizational learning process shows for two-side character of communication process between employees. But there are some of the organizational learning methods which need some of the discretion like collecting information about product or technologies used by competitors. In these cases, the best method will be the short survey or interview with customers.

• The goal of the communication method – The purpose is the most important element of every method, including communication methods. Complex communication methods like meeting can be usually used to realize more purposes than simple communication methods. But meeting or conferences are costly and time-consuming and simple communication methods take less time. Therefore fitting communication method goals to organizational learning methods plays important role. It seems that, from the point of view of organizational learning literature, communication methods directed for problem solving should be more often used in the use of the organizational learning methods.

• The communication form – The communication form is the simplest and the most unequivocal criteria of the communication methods selection. In the recent years an attention was being put to group communication and it plays an important role in the organizational learning, but one should remember about the role of interpersonal communication, which less attention is devoting. In the frame of communication form criteria it is standing out interpersonal communication methods, group communication methods, mass/organizational communication methods. This classification is agreeable from the McQuail’s communication levels theory, who dived communication activities of

1 A. Potocki, R. Winkler, A. Żbikowska, Komunikowanie w organizacjach gospodarczych, Difin, Warszawa 2011, p. 15.2 Ibidem, p. 16-18.

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people into mass communication, group/ institutional communication, intergroup communication, group communication, interpersonal communication, and intrapersonal communication3.

This paper takes into account thirty seven communication methods classified with the use of above four criteria. This research includes seven interpersonal communication methods like information gathering interview, counselling interview, orientation interview, performance appraisal interview, grievance interview, correctional interview, negotiation. There have been taken into account thirteen group communication methods: meetings, briefings, Lessons Learned method, moderation, Quality Audit Meeting, conferences/ video conferences, informal groups meetings in the form of Quality Circles or Communities of Practice and other, Group/ Team-Ware, Open Space Technology, and presentations. The Mass or organizational communication methods were also the subjects of this research and there were: letters, instructions and manuals, reports, statements, protocols, electronic mail, Intranet, Internet, films, poster, leaflets, surveys, newsletter, radio broadcasting, internal TV, Internet forums, box of ideas.

The communication methods taken into account in this research were described i.a. by R.B. Adler4 (1989), D. Fisher5 (1993), A. Potocki, R. Winkler, A. Żbikowska6 (2011), D. Sharman7 (2003), C Collinson i G. Parcel8 (2005), G. Łasiński9 (2007), R. Winkler10 (2006), R. Rostek, W. Kurda11 (2005), P. Łukasik12 (2014) and others. On account of empirical character of this paper communication methods will be not described in details, but research results on the use of the communication methods in organizational learning will be

3 B. Dobek-Ostowska, Komunikowanie polityczne i publiczne: podręcznik akademicki, Wydawnictwo Naukowe PWN, Warszawa 2006, p. 71.4 R.B. Adler, Communicating at work, McGraw-Hill, Inc., New York 1989, p. 124.5 D. Fisher, Communication in organizations, West Publishing Company, St. Paul 1993, p. 463.6 A. Potocki, R. Winkler, A. Żbikowska, Komunikowanie w organizacjach gospodarczych, Difin, Warszawa 2011, p. 170.7 D. Sharman, The Perfect meeting, Century Business An imprint of Random House UK Limited, London 1993, p. 8-9.8 As cited in: P. Carrillo, Lessons Learned practices in the engineering, procurement, construction sector, “Engineering, Construction and Architectural Management”, Vol. 12, No. 3, 2005, p. 239.9 G. Łasiński, Rozwiązywanie problemów w organizacji. Moderacje w praktyce, Polskie Wydawnictwo Ekonomiczne, Warszawa 2007, p. 123-161.10 R. Winkler, Wystąpienie jako forma komunikowania, Zeszyty Naukowe Akademii Ekonomicznej w Krakowie No. 715, Wydawnictwo Akademii Ekonomicznej w Krakowie, Kraków 2006, p. 54-55.11 R. Rostek, W. Kurda, Dobrze poinformowany osiąga lepsze wyniki. Narzędzia komunikacji wewnątrzfirmowej wspomagające budowanie zaangażowania pracowników – według badań GFMP Management Consultants, „Personel”, No. 2, 2005, p. 30.12 P. Łukasik, Communication method use in the marketing activities directed for organizational learning and innovation, Zeszyty Naukowe Uniwersytetu Przyrodniczo-Humanistycznego w Siedlcach, No. 103, Seria: Administracja i Zarządzanie, No. (30)2014, Siedlce 2014, p. 219.

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presented and short information about main purpose of several method will be provided. The research was conducted in 2013 by survey research and case study research. There were used 207 correctly filled surveys. The frequency of the use of several communication methods will be described in this part of the monograph’s chapter.

The counseling interview and information gathering interview enjoy the most popularity amongst surveyed organizations. Even 98% surveyed organizations use them. This result should not be surprise because these methods are cheap and relatively quick and help to reach the most common goals in every organization i.e. information gathering and problem solving. Among interpersonal communication methods only orientation interviews, serving knowledge transfer to new employees are even frequently used (91% of surveyed respondents confirm the use of this method). But also other interpersonal communication methods are used by the majority of organizations: performance appraisal interview is used by 85% organizations, grievance interview (method used to gain relevant information from employee, who has problem with something or somebody in company and want to talk about this with his/ her superior) is used by 82% organizations, correctional interview (method in which superior tries to change subordinate’s behavior) is used by 86% organizations, and negotiations are used in 85% organizations.

Meeting is the most frequently used method among group communication methods. Different types of meeting use 90% organizations. Briefings similar to meetings are regularly used by 86% organizations. Project management includes special communication method which calls Lessons Learned and is dedicated to project teams which have to gain an experience from finished projects. This method is becoming more and more popular in organizations which is also confirmed by this research – 84% of surveyed organizations confirm the use of this method. Group communication methods especially directed for problem solving include:

• Moderation (used in 80% organizations) – communication method dedicated to wide range problem solving including different techniques and special process of problem analyzing;

• Quality Audit Meeting (used in 79% organizations) – communication method dedicated to quality problem solving;

• Informal groups meetings e.g. Quality Circles or Communities of Practice (used in 69% organizations) – they are based on informal communication and support knowledge sharing;

• Open Space Technology (used in 43% organizations) – the type of conference in which the rule of voluntariness plays special role and is the source of creativity.

Effective use of every form mentioned above group communication methods requires transmission of information to all people of those present in the meeting, therefore presentation can be classified as group communication

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method. Conducted research shows that 59% organizations use it. The most seldom group communication methods used are conferences and video conferences, accordingly 58% and 30% organizations use it.

The third group of communication methods – mass/ organizational communication methods – covers the widest range of different techniques, which the main purpose is providing information. The percentage of organizations using each of them is differentiated. The use of mass/ organizational communication methods is as follows (the percentage of organizations using each of communication methods was given in parenthesis): letters (81%), instructions/ manuals (85%), reports (89%), statements (79%), protocols (68%), e-mail (95%), Intranet (84%), Internet (95%), film (41%), poster (64%), leaflets (55%), surveys (55%), newsletter (65%), radio broadcasting (12%), internal TV (14%), Internet forums (41%), box of ideas (29%).

Research results which were presented above refer to the general use of the communication methods in organization mainly located in the South Poland. The main issue of this chapter is the use of communication methods in the use of organizational learning methods. It requires the presentation of at least one organization learning definition from the wide range of them described in the literature and short description of the organizational learning methods taken into account in this research.

The use of organizational learning methodsThere are lots of definitions of the organizational learning concept, but

there is one given by B. Mikuła13 (2006) which refers to knowledge management and therefore is especially current. He defines organizational learning as: “the process with the use of information and knowledge, which leads to the change in knowledge resources and may affect on human behaviors, may enhance adaptability of the organization, leading organization to the condition of high adaptability and proactivity”14. He also created the classification of the organizational learning methods, in which organization analyzing level and organizational learning type was the criteria of division. Criteria of the organization’s analyzing level refers to the way of organization study in which researcher learns organizational behaviors which are typical for single person, group and the whole organization. In turn criteria of the organizational learning type derivates from the theory of the logical sequence of the organizational learning processes, created also by B. Mikuła15 (2006). He supposed that there are three main organizational learning processes and they have to be used in the particular sequence. He called these processes as: traditional learning,

13 B. Mikuła, Organizacje oparte na wiedzy, Wydawnictwo Akademii Ekonomicznej w Krakowie, Kraków 2006, p. 48.14 Ibidem, p. 48.15 B. Mikuła, Organizacje oparte na wiedzy, Wydawnictwo Akademii Ekonomicznej w Krakowie, Kraków 2006, p. 165.

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which relies on information gathering and making sense to them; empirical learning which relies on the implementation of the learning by doing cycle, including planning, action and reflection; cybernetic learning, which relies on reveal by people in organizations their mental models, which decide about their behaviors. The logical sequence of the organizational learning processes starts from the traditional learning, leads through empirical learning to cybernetic learning. Empirical learning should be followed by traditional learning, because every process of learning from experience needs some basic knowledge, which is needed to understand the way of doing something. Also cybernetic learning should be followed by traditional and empirical learning, because the challenge of the mental models being the underlying reason of the specific activities of the people in organization can be unnecessary or even harmful for organization. For example workers who do not know their job can reject the rules, which are worked out by other employees thorough long time and make the work effectively16.

Only a few organizational learning methods described in management literature were selected to this research, because of the complexity of researched questions. The research includes following organizational learning methods (the percentage of organizations using each of organizational learning methods was given in parenthesis): materials analyzing (87%), trainings (72%), team building (69%), knowledge sharing (81%), e-learning (26%), job’s observation (79%), customers remarks analyzing (76%), successes and failures analyzing (64%), informing about requirements regarding performed tasks (77%), breakthrough products and technologies seeking (29%), questioning of the purposefulness of taken actions (33%), collecting information about competitors (61%), striving for the excess of ideas during problem solving (17%), implementation actions planning (45%), knowledge dissemination about changes in organization (48%), sharing the knowledge about sector (59%), workers attitudes shaping (64%).

The use of above mentioned organizational learning methods requires the use of communication methods. The research showed that simple communication methods, which do not require a long time preparation are the most often used in the use of the organizational learning methods. The majority of communication methods used in the realization of the organizational learning methods is based on the rule of the feedback between interlocutors. Communication methods directed for problem solving are used in lots of organizational learning methods. Interpersonal communication methods and group communication methods are more often used in the organizational learning methods realization than mass/ organization communication methods. Therefore the most often used communication methods in the realization of the organizational learning methods are: orientation interviews, information gathering interviews, counseling interviews, performance appraisal interviews, meetings, briefings, Lessons Learned sessions, e-mails.

16 Ibidem, p. 161-167.

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The farther part of this chapter presents research results concerning communication methods functions in the realization of the organizational learning methods with the special regard of these functions which are connected with innovation leading.

Communicational support of the organizational learning and innovationsThere are lots of definitions of innovation similar to the organizational

learning concept. In this research innovation is understood as new products, methods, processes, ideas, concepts, what is in consistent with definition of J.A. Schumpeter17, J.A. Allen18, Ph. Kotler19, E.M. Rogers20, or Białoń21. This understanding of innovation is reflected in the interpretation of the communication methods functions in organizational learning methods realization as leading to innovations. For example the use of communication methods in the documents analyzing supports creation of new ideas what confirms 70% of respondents using this organizational learning method. The use of communication methods in trainings also enhance the propensity of people, who participate in it to create new ideas and plan actions based on the knowledge acquired during trainings, what confirms respectively 70% and 69% respondents, who took part in trainings in organizations they worked for. Also 80% respondents who share knowledge with colleagues in work confirms that the use of communication methods leads to the enrichment existing knowledge with new ideas. Even so simple organizational learning method as job observation can be the tool of finding the rationalization of job thanks to the use of communication methods, what confirms 78% respondents using job observation as the organizational learning method. According to 54% respondents support of the collecting and analyzing of the customers remarks by communication methods leads to incorporation of the customers into process of the new products creation. Communication methods implementation in the successes and failures analyzing leads to preparation of the guidelines which allow to avoid the problems in the future and making the success recurrent, what confirms 86% respondents using this organizational learning method.

17 As cited in: M. Dworczyk, R. Szlasa, Zarządzanie innowacjami: wpływ innowacji na wzrost konkurencyjności przedsiębiorstw, Oficyna Wydawnicza Politechniki Warszawskiej, Warszawa 2001, p. 74.18 As cited in: A.H. Jasiński, Innowacje i transfer techniki w procesie transformacji, Difin, Warszawa 2006, p. 9.19 As cited in: ibidem, p. 9.20 As cited in: ibidem, p. 9.21 As cited in: M. Dworczyk, R. Szlasa, Zarządzanie innowacjami: wpływ innowacji na wzrost konkurencyjności przedsiębiorstw, Oficyna Wydawnicza Politechniki Warszawskiej, Warszawa 2001, p. 74.

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Breakthroughs seeking plays important role in contemporary organizations because of still changing business environment. And according to 80% respondents using communication methods, during breakthroughs seeking, runs imagination and allows breaking away from the existing ways of thinking, what leads to innovations. Striving for the excess of ideas during problem solving is not very popular method, but the use of communication methods during the realization of this organizational learning method leads to innovations in many ways. For example the use of communication methods leads to:

• collection of ideas from the wide range of employees (86% – the percentage of respondents who use striving for the excess of ideas during problem solving and confirm given communication methods function in it will be given in parenthesis),

• creating the climate of creativity (80%),• connection of different knowledge resources (71%),• taking into account the wide range of information needed for problem

solving (77%),• finding solutions which did not occur in other organizations (77%),• finding solutions which were the modification of existing products,

technologies and methods (86%),• creating more realistic ideas and therefore easier to implement (89%).

Good idea is only the first step to innovation, in which special role plays implementation. The most of respondents using the planning of the implementation activities stated that the use of communication methods in the planning of the implementation actions leads to:

• preparation more realistic plans of changes (72% – the percentage of respondents who use implementation actions planning and confirms given communication methods function in it will be given in parenthesis),

• enhance the awareness of workers of implemented changes (86%),• collection of the knowledge which is needed to changes implementation

(82%),• increase the motivation to the realization of implementation actions

(73%),• the use of the most of ideas given by employees (57%).

Learning the new technologies and work methods is also supported by the use of communication methods, m. al. through: giving the possibility of asking questions about new technologies and methods what confirm 76% respondents using communication methods in the learning of new technologies and methods.

Research results presented above can be illustrated by the example of the company which used different communication methods in the realization some of the organizational learning methods. The case study research included

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conducting interviews in SMAY Sp. z o.o., which provides construction business with systems of pressure differentiation for high-rise buildings. Such a system enables safety evacuation of people during the fire. The work on flag product of the company began from analysis of the competitive products. SMAY’s engineers noted that the most of such systems offered by competition could have problems with working in Polish climate, so they decided to make research which was the part of R&D process. And communication methods played special role in this process, because they allowed making conclusions from received results and prototype a new product. The project team analyzed the results after each stage of R&D process and created ideas which made the product better. In this way small company from Poland created innovative product with the use of communication method – in this case Lessons Learned Sessions were used in organizational learning method which was analyzing the finished parts of the project. One more example of the use of organizational learning methods in the innovative activities was the use of trainings as element of the leading of CNC technology in production process. These trainings were supported by the use of presentations, manuals, instructional videos and counseling interviews during start-up of machinery under the guidance of instructors.

ConclusionsThis research shows the importance of the communication for contemporary

organizations. Especially if organizations use separate communication tools which can lead to the reach of separate purposes. The percentage of organizations using them seems to be optimistic but it should be remembered that this is only an opinion of respondents given in surveys. The real use of the communication methods can be smaller. But even these results show strong interest about this field of management science. This research confirms also with any doubts the thesis that: communication methods support organizational learning and lead to innovations. It is because they play crucial role in such organizational learning methods like breakthroughs seeking, striving for the excess of ideas during problem solving or implementation actions planning. Finely, the case of innovative company shows above statements.

Literature:1. Adler R.B., Communicating at work, McGraw-Hill, Inc., New York 1989.2. Carrillo P., Lessons Learned practices in the engineering, procurement,

construction sector, “Engineering, Construction and Architectural Management”, Vol. 12, No. 3, 2005.

3. Dobek-Ostowska B., Komunikowanie polityczne i publiczne: podręcznik akademicki, Wydawnictwo Naukowe PWN, Warszawa 2006.

4. Dworczyk M., Szlasa R., Zarządzanie innowacjami: wpływ innowacji na wzrost konkurencyjności przedsiębiorstw, Oficyna Wydawnicza Politechniki

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Warszawskiej, Warszawa 2001.5. Fisher D., Communication in organizations, West Publishing Company, St.

Paul 1993.6. Jasiński A.H., Innowacje i transfer techniki w procesie transformacji, Difin,

Warszawa 2006.7. Łasiński G., Rozwiązywanie problemów w organizacji. Moderacje w praktyce,

Polskie Wydawnictwo Ekonomiczne, Warszawa 2007.8. Łukasik P., Communication method use in the marketing activities directed

for organizational learning and innovation, Zeszyty Naukowe Uniwersytetu Przyrodniczo-Humanistycznego w Siedlcach, No. 103, Seria: Administracja i Zarządzanie, No. (30)2014, Siedlce 2014.

9. Mikuła B., Organizacje oparte na wiedzy, Wydawnictwo Akademii Ekonomicznej w Krakowie, Kraków 2006.

10. Potocki A, Winkler R., Żbikowska A., Komunikowanie w organizacjach gospodarczych, Difin, Warszawa 2011.

11. Rostek R., Kurda W., Dobrze poinformowany osiąga lepsze wyniki. Narzędzia komunikacji wewnątrzfirmowej wspomagające budowanie zaangażowania pracowników – według badań GFMP Management Consultants, „Personel”, No. 2, 2005.

12. Sharman D., The Perfect meeting, Century Business An imprint of Random House UK Limited, London 1993.

13. Winkler R., Wystąpienie jako forma komunikowania, Zeszyty Naukowe Akademii Ekonomicznej w Krakowie No. 715, Wydawnictwo Akademii Ekonomicznej w Krakowie, Kraków 2006.

Andrzej LisPhD, The Faculty of Economic Sciences and Management, Nicolaus Copernicus University, Toruń; Polish Armed Forces Doctrine and Training Center, Bydgoszcz

TEAM LEARNING THROUGH AFTER ACTION REVIEWS

Keywords:team learning, After Action Review, Lessons Learned

SummaryThe aim of the paper is to analyze the potential of After Action Review

as a team learning technique. First of all, the idea and assumptions of AAR are considered. Secondly, the AAR process is studied. Finally, the potential of AAR against the characteristics of effective team learning is assessed. The study is mainly focused on the case of After Action Reviews in the U.S. Army considered to be the originator and the leader in conducting After Action Reviews. Moreover, the analysis is enriched by findings and examples from business companies.

IntroductionSenge (1999) enumerates team learning among the disciplines of the

learning organization1. He defines team learning as “the process of aligning and developing the capacity of a team to create the results its members truly desire”2. Referring to Senge’s seminal work, Jashapara (2004) highlights three following characteristics of effective team learning: “ability to think insightfully about complex issues and bring together the collective intelligence of the team rather than the insight of the dominant individual; ability to provide innovative and coordinated actions (…); [and] ability to share practices and skills between teams in organizations”3. In order to achieve the aforementioned requirements team members are expected to practice and master the art of dialogue and

1 P.M. Senge, The Fifth Discipline: The Art and Practice of the Learning Organization, Random House, London 1999, p. 9-10.2 Ibidem, p. 236.3 A. Jashapara, Knowledge Management: An Integrated Approach, Prentice Hall, Harlow 2004, p. 62.

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discussion4. Dialogue and discussion enable teams to externalize tacit knowledge of their members. Knowledge externalization is achieved through face-to-face communication and team interaction (dialoguing Ba)5.

After Action Review (AAR) is a team learning technique developed by the U.S. Army. It is a multipurpose professional discussion supporting organizational learning in operations6, training7 and leader development. Originated in the military, AAR was imported to the practice of business organizations and the theory of management.

The aim of the paper is to analyze the potential of After Action Review as a team learning technique. Therefore, the following objectives are set:

• to identify the assumptions of AAR,• to analyze the model of the AAR process,• to assess the potential of AAR against the characteristics of effective

team learning.

The review of literature and military documents, unstructured interviews with military commanders conducting AARs and Knowledge Management and Lessons Learned experts, both in the military and the academia, were the research methods applied to achieve the aim and objectives of the paper. The literature review encompassed both military and civilian papers dealing with the studied issue. The analysis of documentation was focused on the publications of the U.S. Army recognized to be the originator and the leader in conducting AARs. The studied documents included doctrines, field manuals and handbooks. Unstructured interviews with the military experts from the U.S. Center for Army Lessons Learned and the Polish Armed Forces Doctrine and Training Center enabled the author to build up the thorough understanding of the AAR assumptions. Interviews with military officers conducting AARs during operations and training events provided practical insights from the field. Dialoguing and discussing with academics specialized in Knowledge Management helped to realize the potential of the AAR technique to be applied in business organizations. Moreover, the author’s experience in the area of Lessons Learned was an important enabler of the analysis. Certainly, due to unlimited distribution of the study findings, only unclassified data and information were used to analyze and discuss research problems.

The structure of the paper reflects its objectives. First of all, the idea and

4 P.M. Senge, The Fifth Discipline: The Art and Practice of the Learning Organization, Random House, London 1999, p. 237.5 I. Nonaka, R. Toyama, N. Konno, SECI, Ba and Leadership: A Unified Model of Dynamic Knowledge Creation, [in:] Managing Industrial Knowledge: Creation, Transfer and Utilization, (eds.) I. Nonaka, D.J. Teece, SAGE, London 2001, p. 25.6 FM 6-01.1, Knowledge Management Operations, Headquarters Department of the Army, Washington 2012, p. B.1-B.6.7 ADRP 7-0, Training Units and Developing Leaders, Headquarters Department of the Army, Washington 2012, p. 3.12.

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assumptions of AAR are considered. Secondly, the AAR process is studied. Finally, the potential of AAR against the characteristics of effective team learning is assessed.

AAR idea and assumptionsAfter Action Review (AAR) is a team learning technique developed by the

U.S. Army in the 1970s on the foundation of “interviews after combat” conducted during World War II in the Pacific theatre by S.L.A. Marshal. AAR differentiates both in form and content from the “performance critique” technique based on subjective judgment, which had been used earlier in the Army8.

The capability to generate and effectively transfer the real life knowledge seems to be crucial not only at the battlefield, but in the business environment, too. Therefore, After Action Review shows great potential to be employed beyond the military. Originated in the military, AAR was imported to business organizations by the Shell Oil company in the 1990s. AAR sessions are useful techniques supporting team learning from success and failure in such companies as: Colgate-Palmolive, DTE Energy, Harley-Davidson and J.M. Huber9. What is more, the procedure of military After Action Review was included in management research and theory. For instance, Garvin, Edmondson and Gino (2008) mention AAR as an example of specific learning processes and practices considered to be one of the building blocks in their model of the learning organization10. Davenport and Prusak (1998) highly appreciate the contribution of AAR to the development of “ground truth” understood as “knowing what really works and what doesn’t”11.

Morrison and Meliza (1999) underscore that the idea of After Action Review is based on the principles of behavioral sciences. In their study they identify the areas encompassing theoretical concepts and techniques incorporated into the After Action Review process including such categories as: information feedback, performance measurement, memory and cognition, group processes and dynamics, communication theory and techniques and instructional science12.

After Action Review is defined as “a verbal, professional discussion of a unit’s actions that typically occurs immediately after a training event, combat operation, or other mission that determines what should have happed, what

8 J.E. Morrison, L.L. Meliza, Foundations of the After Action Review Process, U.S. Army Research Institute for the Behavioral and Social Sciences, Alexandria 1999, p. 5-8.9 M. Darling, Ch. Perry, J. Moore, Learning in the Thick of it, „Harvard Business Review”, July-August, 2005, p. 86.10 D.A. Garvin, A.C. Edmondson, F. Gino, Is Yours a Learning Organization?, „Harvard Business Review”, March, 2008, p. 11.11 T.H. Davenport, L. Prusak, Working Knowledge: How Organizations Manage What They Know, Harvard Business School Press, Boston 1998, p. 8-9.12 J.E. Morrison, L.L. Meliza, Foundations of the After Action Review Process, U.S. Army Research Institute for the Behavioral and Social Sciences, Alexandria 1999, p. 23-56.

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actually happened, what worked, what did not work and why, and the key procedures a unit wants to sustain or improve”13. Besides mission debrief and lessons learned, AAR is listed among the techniques of learning after operations14. Nevertheless, After Action Review should be considered in a wider context of the organizational learning before, during, and after operations. In recent years, due to the AAR potential, Before Action Reviews and During Action Reviews have been developed as the modifications of the technique15. As Baird, Holland and Deacon (1999) highlight, AAR differentiates from other post-mortem techniques because its objective is to “understand why interim objectives were not accomplished, what lessons could be learned, and how those lessons could be quickly driven back into the performance process”16.

Referring to his practical experience in conducting After Action Reviews during the military career, Scheider (2011) observes some misconceptions about the AAR technique. First of all he points out that AAR is often considered as a stand-alone activity while it should be a continuous learning process. Secondly, the aim of After Action Reviews is not to criticize the others but to focus on own strengths, weaknesses and possible improvements. Thirdly, AAR should not be considered as a feedback provided by external experts but self-discovery reflection of team members. Fourthly, the way of conducting AAR should be adjusted to the differences in national cultures17 due to the fact that in some cultures showing constructive criticism may be difficult to accept18.

AAR processThe After Action Review process consists of four stages: planning,

preparation, execution and follow-up (using AAR outcomes). When planning AAR, the following elements should be taken into account: participants, information providers, AAR facilitators, issues/ aspects of the operation (action) to be discussed, location and time, aids and materials to be used. AAR preparation encompasses such activities as: the review of objectives,

13 Establishing a Lessons Learned Program: Observations, Insights and Lessons, Center for Army Lessons Learned, Fort Leavenworth 2011, p. 63.14 ADRP 7-0, Training Units and Developing Leaders, Headquarters Department of the Army, Washington 2012, p. 3.11-3.13.15 A. Lis, Knowledge Creation and Conversion in Military Organizations: How the SECI Model is Applied Within Armed Forces, „Journal of Entrepreneurship, Management and Innovation”, Vol. 10, Issue 1, 2014, p. 68.16 L. Baird, P. Holland, S. Deacon, Learning from Action: Embedding More Learning into the Performance Fast Enough to Make a Difference, “Organizational Dynamics”, Vol. 27, Issue 4, 1999, p. 22.17 E.g.: The case of the challenges to incorporate the AAR technique faced by Polish military troops participating in Afghan operation is analyzed by: A. Lis, How to Strengthen Positive Organizational Behaviors Fostering Experiential Learning?: The Case of Military Organizations, “Journal of Entrepreneurship, Management and Innovation”, Vol. 8, Issue 4, 2012, p. 29-30.18 R. Scheider, The After Action Review, „The Three Swords Magazine”, No. 19, 2011, p. 13-14.

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organization of the AAR session and finding the right place to conduct AAR. As regards the AAR agenda, it is usually based on the chronological order of events, the categorization of warfighting functions (functional areas in civilian organizations) or key events, themes and issues. While conducting AAR, leaders or facilitators remind its ground rules, they review objectives to be achieved and commander’s intent. They provide the short overview of the operation (action, project) summarizing key events. AAR participants are encouraged to participate in the discussion in order to bring to the team their perspectives, observations, insights and lessons. AAR is aimed at the identification of weaknesses to be improved and strengths to be sustained and developed. It should be highlighted that AAR is not a critique or an assessment19 Nevertheless, the U.S. Army doctrine points out the role of AAR to “assess performance, correct deficiencies, and sustain demonstrated task proficiency. These improvements will enhance unit performance in future operations”20. Similarly, the U.S. Army doctrine on the planning process (ADP 5-0, 2012) enumerates After Action Reviews among the assessment tools used to monitor the progress of an operation21.

Baird, Holland and Deacon (1999) make an attempt to identify the key success factors for effective After Action Review. According to their findings, the AAR session should be “focused on few critical issues; done immediately after the action, inclusive of the whole group; in accordance with a structured process, leading back to action quickly”22.

In the military, two types of AARs are distinguished: formal and informal. Formal AARs are usually conducted after the end of an operation/ training, when commanders and soldiers have enough time for such an event and all necessary resources are available. Formal AARs require selection and reconnaissance of the site as well as preparation of aids and materials such as terrain models and maps. They are conducted by nominated facilitators. Informal AARs are conducted by commanders during or immediately after an operation/ training or its phase. Informal AARs provide commanders and soldiers with conclusions and recommendations to be immediately implemented in order to increase the unit effectiveness and performance23.

19 FM 6-01.1, Knowledge Management Operations, Headquarters Department of the Army, Washington 2012, p. B.1-B.6.20 Ibidem, p. B.6.21 ADP 5-0, The Operations Process, Headquarters Department of the Army, Washington 2012, p. 14.22 L. Baird, P. Holland, S. Deacon, Learning from Action: Embedding More Learning into the Performance Fast Enough to Make a Difference, “Organizational Dynamics”, Vol. 27, Issue 4, 1999, p. 23.23 FM 6-01.1, Knowledge Management Operations, Headquarters Department of the Army, Washington 2012, p. B.1.

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AAR potential for team learning

Insightful collective thinkingAAR is a team learning technique which encourages learning processes

among all participating soldiers and commanders and which enables them to discuss thoroughly the issue from different perspectives. As a consequence, the variety of observations, insights and lessons are identified, studied and shared24. The AAR potential to externalize the opinions of teams members in order to develop their common understanding of accomplished actions was highlighted, in the interview conducted by Lis (2012) with the Deputy Director of the U.S. Center for Army Lessons Learned (CALL) who claimed that After Action Review “got units, Soldiers and particularly leaders accustomed to listening to each other’s experiences and appraisal of what actually occurred in operations and why things happened the way that they did”25. After Action Review is a technique of externalizing tacit knowledge in the process of dialogue and discussion. However, as observed by Lis (2014) in his study of the SECI knowledge conversion model in military organizations26:

Both socialization and internalization processes are embedded into After Action Reviews, too. Conducting of an analysis of what happened, what was effective and what still needs an improvement soldiers share their tacit knowledge (externalization). Simultaneously, thorough discussion and analysis of the military theory in the context of real life lessons from the battle or training, military personnel increase their understanding of explicit knowledge included in military doctrines, directives and manuals (internalization).

To be effective After Action Review is to stimulate free dialogue and discussion among team members. There is a need for combination of their observations, insights and expertise in order to reconsider thoroughly accomplished actions and their outcomes27. Discussing the After Action Review contribution to the success of the U.S. Army Lessons Learned system Lackey (2003) observes that28:

24 ADRP 7-0, Training Units and Developing Leaders, Headquarters Department of the Army, Washington 2012, p. 3.13.25 A. Lis, How to Strengthen Positive Organizational Behaviors Fostering Experiential Learning?: The Case of Military Organizations, “Journal of Entrepreneurship, Management and Innovation”, Vol. 8, Issue 4, 2012, p. 27.26 A. Lis, Knowledge Creation and Conversion in Military Organizations: How the SECI Model is Applied Within Armed Forces, „Journal of Entrepreneurship, Management and Innovation”, Vol. 10, Issue 1, 2014, p. 68.27 P.M. Senge, The Fifth Discipline: The Art and Practice of the Learning Organization, Random House, London 1999, p. 236.28 S.W. Lackey, Spreading the Gospel of Lessons Learned: From the PfP Lessons Learned Working Group to Advanced Distributed Learning, „Connections: The Quarterly Journal”, Vol. 2, No. 2, 2003, p. 80.

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Army behavioral scientists designed AAR to allow the participants in a training exercise or actual operation to discover for themselves what had happened and why, instead of having this told to them by external evaluators or their chain of command. Under the AAR system, exercise observers became “facilitators” guiding for the participants the process of discovering what the exercise revealed in terms of unit, leader and soldier performance. By encouraging free discussion the AAR permitted subordinates to offer constructive criticism of leader decisions in an open forum. The designers of the AAR and the Army leadership felt that by allowing subordinates to express their opinions openly, the AAR gave the commander the “ground truth” about the performance of the unit.

The “ability to think insightfully about complex issues and bring together the collective intelligence of the team rather than the insight of the dominant individual”29 is challenge in all types of organizations. Nevertheless, in hierarchical structures such as armed forces, it seems to be particularly difficult. Therefore, the role of After Action Review is of predominant importance for effective team learning in the military.

Innovative and coordinated actionAs stated in the U.S. Army Lesson Learned handbook, the After Action

Review is “a problem-solving process. The purpose of discussion is for participants to discover strengths and weaknesses, propose solutions, and adopt a course of action to correct problems”30. First and foremost, AAR focuses the attention on the accomplishment of the mission (effectiveness). The analysis of failure in meeting standards (efficiency) is conducted only when it was an antecedent of the failure to accomplish the task or caused unaccepted losses31. After Action Review aims to discuss the following issues: “what was supposed to happen?”, “what happened?”, “what was right or wrong with what happened?” and “how the task should be done differently next time?”32. As a matter of fact, finding solutions to the aforementioned questions means that AAR corresponds with the learning loop from an observation to a lesson identified33. Nevertheless, Baird, Holland and Deacon (1999) point out that the scope of After Action Review should be extended including the action phase when conclusions and

29 A. Jashapara, Knowledge Management: An Integrated Approach, Prentice Hall, Harlow 2004, p. 62.30 Establishing a Lessons Learned Program: Observations, Insights and Lessons, Center for Army Lessons Learned, Fort Leavenworth 2011, p. 63.31 ADRP 7-0, Training Units and Developing Leaders, Headquarters Department of the Army, Washington 2012, p. 3.13.32 FM 6-01.1, Knowledge Management Operations, Headquarters Department of the Army, Washington 2012, B.1.33 N. Milton, The Lessons Learned Handbook: Practical Approaches to Learning from Experience, Chandos Publishing, Oxford 2010, p. 16-17.

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recommendations are implemented in an organization and lesson dissemination phase34. Such an extended understanding of After Action Review encompasses a full lessons learned process35.

After Action Review is a learning technique oriented to action, improvements and innovations. Simultaneously, AAR builds up trust among team members which strengthens innovation, coordinated actions. As noticed by Senge (1999) “[o]utstanding teams in organizations develop the same sort of relationship – «an operational trust», where each team member remains conscious of other team members and can be counted on to act in ways that complement each other’s actions”36. As a matter of fact, initially the aim of introducing AAR into the U.S. Army was to restore the values of integrity and accountability which heavily suffered during the Vietnam War37.

Sharing practices between teamsAAR is considered to be one of the techniques of tacit knowledge transfer38.

In his study on knowledge conversion processes in military organizations, Lis (2014) lists After Action Review among the tools of knowledge externalization. As he observes “[t]he potential of the procedure to convert tacit knowledge into explicit knowledge is even more visible when externalized knowledge is codified as an After Action Report”39 i.e. “a written report that is typically submitted after a training, combat operation, or other mission that normally documents a unit’s action for historical purposes but also provides key observations and L[essons] L[earned]”40. Both After Action Review and After Action Report are the techniques of knowledge sharing. However, the former is oriented to knowledge personalization strategy (connecting people) while the latter implements knowledge codification strategy (collecting observations, insights and lessons).

Baird, Holland and Deacon (1999) analyze the After Action Review

34 L. Baird, P. Holland, S. Deacon, Learning from Action: Embedding More Learning into the Performance Fast Enough to Make a Difference, “Organizational Dynamics”, Vol. 27, Issue 4, 1999, p. 23-25.35 N. Milton, The Lessons Learned Handbook: Practical Approaches to Learning from Experience, Chandos Publishing, Oxford 2010, p. 16-20.36 P.M. Senge, The Fifth Discipline: The Art and Practice of the Learning Organization, Random House, London 1999, p. 236.37 T.H. Davenport, L. Prusak, Working Knowledge: How Organizations Manage What They Know, Harvard Business School Press, Boston 1998, p. 8-9.38 FM 6-01.1, Knowledge Management Operations, Headquarters Department of the Army, Washington 2012, p. 1.4.39 A. Lis, Knowledge Creation and Conversion in Military Organizations: How the SECI Model is Applied Within Armed Forces, „Journal of Entrepreneurship, Management and Innovation”, Vol. 10, Issue 1, 2014, p. 68.40 Establishing a Lessons Learned Program: Observations, Insights and Lessons, Center for Army Lessons Learned, Fort Leavenworth 2011, p. 63.

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implementation in Analog Devices company, British Petroleum and Chrysler and they identify four levels where the AAR procedure was integrated. First of all, AAR is found to improve performance and communication within product development teams. Secondly, AAR is used as the tool for semi quarterly business reviews and it contributes to adding value across teams by identifying problems, solving them and learning lessons. Thirdly, AAR strengthens company-customer relationships. Finally, it improves the product development process by promoting better coordination across department and functional areas41.

ConclusionsThe analysis of the AAR assumptions and lessons from its implementation

both in the military and business shows that After Action Review can be perceived as an effective technique of team learning. The study confirms that the AAR technique meets the characteristics of team learning processes i.e. it stimulates insightful, collective thinking of team members, organizes them around innovative, coordinated actions and facilitates knowledge sharing between teams in an organization.

Nevertheless, After Action Review should be considered as an element of the learning infrastructure of an organization rather than an isolated learning technique and the remedy to all organizational deficiencies. There are synergetic effects expected to emerge between After Action Reviews and learning lessons from failures, sharing best practices or developing communities of practice. Simultaneously, the focus should be given to the interconnectivity between After Action Review and positive mindset and leadership. On the one hand, After Action Review strengthens trust among team members and it fosters their attitudes to sharing knowledge and insights, but on the other hand positive leadership, organizational culture and climate are the prerequisites of effective dialogue and discussion within After Action Review sessions. The two aforementioned issues seem to be interesting fields of further exploration of team learning processes through After Action Reviews.

Literature:1. ADP 5-0, The Operations Process, Headquarters Department of the Army,

Washington 2012. Retrieved from: http://armypubs.army.mil/doctrine/DR_pubs/dr_a/pdf/adp5_0.pdf.

2. ADRP 7-0, Training Units and Developing Leaders, Headquarters

41 L. Baird, P. Holland, S. Deacon, Learning from Action: Embedding More Learning into the Performance Fast Enough to Make a Difference, “Organizational Dynamics”, Vol. 27, Issue 4, 1999, p. 26-27.

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Department of the Army, Washington 2012. Retrieved from: http://armypubs.army.mil/doctrine/DR_pubs/dr_a/pdf/adrp7_0.pdf.

3. Baird L., Holland P., Deacon S., Learning from Action: Embedding More Learning into the Performance Fast Enough to Make a Difference, “Organizational Dynamics”, Vol. 27, Issue 4, 1999.

4. Darling M., Perry Ch., Moore J., Learning in the Thick of it, „Harvard Business Review”, July-August, 2005.

5. Davenport T.H., Prusak L., Working Knowledge: How Organizations Manage What They Know, Harvard Business School Press, Boston 1998.

6. Establishing a Lessons Learned Program: Observations, Insights and Lessons, Center for Army Lessons Learned, Fort Leavenworth 2011. Retrieved from: http://usacac.army.mil/cac2/call/docs/11-33/11-33.pdf.

7. FM 6-01.1, Knowledge Management Operations, Headquarters Department of the Army, Washington 2012. Retrieved from: http://armypubs.army.mil/doctrine/DR_pubs/dr_a/pdf/fm6_01x1.pdf.

8. Garvin D.A., Edmondson A.C., Gino F., Is Yours a Learning Organization?, „Harvard Business Review”, March, 2008.

9. Jashapara A., Knowledge Management: An Integrated Approach, Prentice Hall, Harlow 2004.

10. Lackey S.W., Spreading the Gospel of Lessons Learned: From the PfP Lessons Learned Working Group to Advanced Distributed Learning, „Connections: The Quarterly Journal”, Vol. 2, No. 2, 2003. Retrieved from: http://connections-qj.org/node/2463.

11. Lis A., How to Strengthen Positive Organizational Behaviors Fostering Experiential Learning?: The Case of Military Organizations, “Journal of Entrepreneurship, Management and Innovation”, Vol. 8, Issue 4, 2012, doi: 10.7341/2012842.

12. Lis A., Knowledge Creation and Conversion in Military Organizations: How the SECI Model is Applied Within Armed Forces, „Journal of Entrepreneurship, Management and Innovation”, Vol. 10, Issue 1, 2014, doi: 10.7341/20141012.

13. Milton N., The Lessons Learned Handbook: Practical Approaches to Learning from Experience, Chandos Publishing, Oxford 2010.

14. Morrison J.E., Meliza L.L., Foundations of the After Action Review Process, U.S. Army Research Institute for the Behavioral and Social Sciences, Alexandria 1999. Retrieved from: http://www.dtic.mil/cgi-bin/GetTRDoc?Location=U2&doc=GetTRDoc.pdf&AD=ADA368651.

15. Nonaka I., Toyama R., Konno N., SECI, Ba and Leadership: A Unified Model of Dynamic Knowledge Creation, [in:] Managing Industrial Knowledge: Creation, Transfer and Utilization, (eds.) I. Nonaka, D.J. Teece, SAGE, London 2001.

16. Scheider R., The After Action Review, „The Three Swords Magazine”, No. 19, 2011. Retrieved from: http://www.jwc.nato.int/images/stories/threeswords/THREE_SWORDS_19.pdf.

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17. Senge P.M., The Fifth Discipline: The Art and Practice of the Learning Organization, Random House, London 1999.

Anna J. PiwowarczykMSc, PhD candidate at Cracow University of Economics

CULTURAL INTELLIGENCE OR ENTREPRENEURSHIP IN HIGHER EDUCATION LANGUAGE COURSES

Keywords:cultural intelligence, intercultural communication, multiculturalism, higher education

SummaryThe paper refers to the idea of shaping entrepreneurship approach in the

context of teaching foreign languages at higher education level. Developing entrepreneurship at university in a global multicultural society means e.g. teaching students active, adequate self-reliance and taking action in a foreign language environment, skill to adapt to changing cultural conditions, promotion of openness and trust towards strangers. The category that came into being as the effect of searching for the human feature enabling effective functioning on the border of cultures is cultural intelligence (CQ). The essence and components of cultural intelligence were presented as an important factor of entrepreneurship.

IntroductionGiven the dynamic socio-economic change, increasing globalization,

internationalization and multiculturalism it is worth asking the question of the identity of the educational process in higher education. Universities still remain a place where there is extensive secondary socialization, where a young person learns to communicate with others, adopt new social roles, which shape their attitudes towards other people. Student groups become increasingly eclectic – are created with students from different countries and continents. M. Makowiec emphasizes that communication is a process that underlies all processes in the organization, affecting their efficacy1. Thus, if communication is the foundation

1 M. Makowiec, Komunikacja wewnętrzna w przedsiębiorstwie opartym na wiedzy, [in:] Zachowania organizacyjne w kontekście zarządzania wiedzą, (ed.) B. Mikuła, UEK i Fundacja UEK, Kraków 2012, p. 91.

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of the existence of the community, this contemporary, to varying degrees internationalized universities are faced with a new challenge: how to teach and communicate in such a multicultural environment?

The article presents the thesis that the process of foreign language teaching in the university plays an important role in the development of students’ communicative competence in an intercultural environment, contributing in this way to develop their entrepreneurial attitudes.

The aim of this paper is therefore to present the essence of intercultural communication and the tools to facilitate its course, which is a model of cultural intelligence (CQ).

Establishment in the context of foreign language teaching will be understood as an active student learning, skilful to find and operate in a multicultural environment, the development of the ability to adapt to a changing cultural environment, promoting openness and trust in strangers, to support group work, which leads to innovation and the phenomenon of group synergies, mutual learning and inspiration.

To achieve the learning outcomes, the process of learning a foreign language at the university should be understood not only as a new system of education merely of the language, but as education and improvement of communication skills in a multicultural society2.

Determinants of the educational processForeign language education at universities in Poland is based on

international standards of teaching. Methodological basis for teaching is the European Framework of Reference for Languages3 (ESOKJ), determined by the Council of Europe. Another legal regulation is Polish Qualifications Framework4, an extension of the European Qualifications Framework. The formal character and shape of the purpose of language learning refers to the profile of the course syllabus and forms. Polish higher education system has also been adopted by the subject and the European Parliament in 2006 as European Framework of key competences for lifelong learning5.

Among the eight groups one can extract competence and soft skills. These are social skills that allow you to achieve the objective in a situation of social interaction. The competencies in this area include: the ability to communicate constructively in different social contexts, tolerance, ability to understand the

2 J. Stier, Internationalisation, intercultural communication and intercultural competence, “Journal of Intercultural Communication”, Issue 11, 2006, http://www.immi.se/intercultural/nr11/stier.pdf, [11.05.2015].3 Europejski System Opisu Kształcenia Językowego, CODN, Warszawa, 2003.4 http://www.kwalifikacje.edu.pl/images/download/Publikacje/Raport_referencyjny_PL_na_strone.pdf, [11.05.2015].5 Zalecenie Parlamentu Europejskiego i Rady nr 2006/962/WE z dnia 18 grudnia 2006 r. w sprawie kompetencji kluczowych w procesie uczenia się przez całe życie, [Dz.U. L 394, of 30.12.2006].

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different positions, the ability to empathize, negotiating skills and the ability to create a climate of trust6. These soft skills are important especially in the second and seventh key area of responsibility defined by the European Parliament and the Council – they are areas defined as communication in foreign languages and entrepreneurship.

As can be seen from the above issues, both the assumptions contained in the CEFR language teaching and ERK, KRK and other regulations of the EU, make a formal condition of intercultural communication competence development in the process of teaching foreign languages in high school7.

Openness of our country in the process of internationalization and intensive development of international exchange programs make a vital saturation of content classes intercultural communication issues. Modern school must answer the question, such as how to deal with differences? How to teach young people entrepreneurship in a foreign cultural environment and which is associated with openness to others, mutual understanding, tolerance, respect?

Studies show that many managers and a number of organizations underestimate the role of intercultural skills in their work8, hence the goal of contemporary college students should be aware who will staff multicultural businesses and the weight of cultural differences in today’s globalized society.

Intercultural CommunicationThe mere knowledge of foreign languages is important, but not sufficient

for satisfactory communication that is synthesizing procedure in relation to another person9. Language is merely one of the tools of communication10, often talking in a foreign language with representatives of the culture, people do not realize that they were in a different type of communication, only part of which is carried out by means of language, and whatever part of it11.

Therefore, an important element in developing the entrepreneurial mindset in the twenty-first century will be the development of communicative competence in intercultural environment, which in addition to linguistic competence12 includes an awareness of cultural factors, knowledge of the

6 Ibidem.7 A. Piwowarczyk, Rozwijanie kompetencji społecznych na lektoracie na uczelni wyższej, „E-mentor”, 2015, p. 12-21; A. Piwowarczyk, Social Competences and Cross-Cultural Differences from a Perspective of Glottodidactics, [in:] Knowledge-Economy-Society. Managing Organizations: Concepts and their applications, (ed.) A. Jaki, B. Mikuła, Cracow University of Economics, Cracow 2014, p. 247-253.8 B.W. Stening, Cultural Intelligence: Put it (High) on the Asian HRM Agenda, “Research and Practice in Human Resource Management”, No. 14(2), 2006, p. 74-84.9 M. Buber, Ja i Ty. Wybór pism filozoficznych, Instytut Wydawniczy Pax, Warszawa 1992, p. 214.10 A. Potocki, R. Winkler, A. Żbikowska, Komunikowanie w organizacjach gospodarczych, Difin, Warszawa 2011, p. 70.11 E.T. Hall, Bezgłośny język, PIW, Warszawa 1987, p. 31.12 Europejski System Opisu Kształcenia Językowego, CODN, Warszawa, 2003, p. 100-106.

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elements of the target culture, the right attitude towards diversity, i.e. tertiary socialisation13 and intercultural sensitivity14.

Intercultural communication is interdisciplinary, is the culmination of a comprehensive knowledge of man and culture. A thorough analysis of the concept of intercultural communication reveals a lot of questions, connected with the notion of even communication.

Is the communication a state of martial15, and thus a tool to limit the freedom of others, the exercise of power, influence and manipulation of others? Can a place of encounter with another human being, in which the unit has a chance to fully develop their humanity, as a person becoming I am in touch with you16. Or maybe it is just a dynamic two-way process of information17 whether undertaken in the specific context of verbal exchange, vocal and non-verbal signals in order to achieve a better level of interaction18 or maybe a place to know other people and creating communities19. Regardless of how you define the communication it is undoubtedly the basis of all social processes and the condition of the existence of societies. Intercultural communication is the act of understanding and being understood by the audience with a different culture20, takes place in a situation when the two units from the other cultural environment with the language and the other in the non-verbal means of expression directly (Face-to-Face) communicate with each other21. One of the principal tasks of the knowledge of intercultural communication is to bring content to the Initial Cultural awareness in order to facilitate the processes of communication between people from different cultures22. Cultural primary level (PPK) is closed, largely unrealized team rules of behavior, acquired in the process of socialization in a particular social environment and largely control human communication23. In conclusion it can therefore be stated that the key to express oneself via language is to identify what you think – in a broader

13 M. Byram, Teaching and Assessing Intercultural Communicative Competence, Multilingual Matters Ltd, Clevedon 1997, p. 34.14 M.J. Bennett, Becoming Interculturally Competent, [in:] Toward multiculturalism: A reader in multicultural education, (ed.) J.S. Wurzel, Newton, MA: Intercultural Resource Corporation, 2004, p. 62.15 W. Gromczyński, Egzystencjalizm Jean-Paul Sartre’a, [in:] Filozofia współczesna, (ed.) Z. Kuderowicz, Wiedza Powszechna, Warszawa 2002, p. 239-253.16 M. Buber, Ja i Ty. Wybór pism filozoficznych, Instytut Wydawniczy Pax, Warszawa 1992, p. 56.17 J. Stankiewicz, Komunikowanie się w organizacji, Astrun, Wrocław 1994, p. 44.18 Z. Nęcki, Komunikacja międzyludzka, WPSB, Kraków 1996, p. 109.19 J. Mikułowski-Pomorski, Jak narody porozumiewają się ze sobą w komunikacji międzykulturowej i komunikowaniu medialnym, UNIVERSITAS, Kraków 2012, p. 35-36.20 Ibidem, p. 78.21 A. Erll, M. Gymnich, Interkulturelle Kompetenzen. Erfolgreich kommunizieren zwischen den Kulturen, Klett, Stuttgart 2013, p. 77.22 J. Mikułowski-Pomorski, Jak narody porozumiewają się ze sobą w komunikacji międzykulturowej i komunikowaniu medialnym, UNIVERSITAS, Kraków 2012, p. 200.23 Ibidem, p. 199, 200.

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sense and basic – a man with his knowledge and culture that expresses a set of rules of conduct, perceived and accepted by the community24, so what G. Hofstede called the collective programming of the mind25 and E. T. Hall’s Original Cultural Level26.

By adopting the perspective of social communication it is important in the communication process not only the way in which the sender encodes their information, but also the ability to accurately decode the message coming from a different culture, so the communication partner who is the unit with a different programming of the mind. In this perspective important is an answer to the questions: Who are the participants of intercultural communication? What factors determine that they are disparate27?

As shown by the studies28 and observations of researchers29 working in this field often managers and people working at the crossroads of cultures, or in a foreign cultural environment have trouble finding and effectively function in a different cultural environment. The source of difficulty is called low intercultural sensitivity30. With its low level of association, unawareness of cultural differences in the proceedings, lack of identification of common symbols, rituals, facts and artifacts representing the identity of a nation, and even more lack of adequate skills and effective use of these when communicating with strangers. As a result of the search features of human functioning, responsible for skillful managers in a multicultural environment defined category of cultural intelligence (CQ).

Cultural Intelligence – the essence and componentsCultural intelligence seems to belong to the core competencies in a dynamic

multicultural society, but also on the European and global labor market. Leaders who want to effectively manage multicultural teams need to learn how to operate in an environment of various national cultures, ethnic, religious, organizational, professional, corporate disparities. Companies need leaders who have the know-how to quickly adjust it in dozens of different cultures on a daily

24 J. Szczepański, Elementarne pojęcia socjologii, PWN, Warszawa 1970, p. 78.25 G. Hofstede, G.J. Hofstede, Kultury i organizacje. Zaprogramowanie umysłu, PWE, Warszawa 2007.26 E.T. Hall, Bezgłośny język, PIW, Warszawa 1987.27 J. Mikułowski-Pomorski, Komunikacja międzykulturowa. Wprowadzenie, Wydawnictwo AE, Kraków 2003, p. 149.28 M.J. Morley, J.L. Cerdin, Intercultural competence in the international business arena,“Journal of Managerial Psychology”, No. 25(8), 2010, p. 805-809; J. Breidenbach, I. Zukrigl, Tanz der Kulturen: Kulturelle Identität in einer globalisierten Welt, Rowohlt, Hamburg 2000, p. 20.29 Ch. Earley, E. Mosakowski, Cultural Intelligence, “Harvard Business Review”, No. 10/2004.30 M.J. Bennett, Becoming Interculturally Competent, [in:] Toward multiculturalism: A reader in multicultural education, (ed.) J.S. Wurzel, Newton, MA: Intercultural Resource Corporation, 2004.

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basis. This is capability that can be developed by any would be manager31. Among many advantages of the CQ should be replaced even if that CQ plays a vital role in the cultural fit to expatriates, which is considered a major factor in the success of the foreign delegations32. It emerged as an important factor in effective performance and interaction among various inside and cultural environments33, affects intercultural negotiation process and its results34.

CQ is a multidimensional, highly interdependent structure of the different skills that will help you understand a foreign culture adopted standards and master the rules of conduct hitherto unknown, allows identifying and dealing with differences in a different cultural environment, is responsible for the adaptation in the new environment, and allows for the effective operation of the different situations or different cultural situations.

Precursors that researched CQ, Ch. Earley and S. Ang, CQ have defined it as the ability to adapt to different cultural realitie35. In 2004, Ch. Earley and E. Mosakowski published a slightly different definition: CQ is a seemingly innate ability of a person from the outside to read culturally foreign to themselves, and so seemingly incomprehensible gestures as do people raised in a given culture36. An award-definition, that gained in recent years the most attention of researchers and which is the subject of detailed analysis is that formulated by S. Ang and her team as the ability of the individual to effective operation and management of culturally diverse environments37.

As mentioned above, CQ is a structure composed of four areas: the incentive component, cognitive, and behavioral metacognitive. CQ model approach is shown in figure1.

31 D. Livermore, L. van Dyne, S. Ang, Cultural Intelligence: Why Every Leader Needs it …, “Intercultural Management Quarterly. Integrating Culture and Management in Global Organizations”, No. 2, Summer 2012, p. 21.32 M.G. Kittler, D. Rygl, T.D. Puce, Kulturelle Intelligenz, Distanz und Anpassung von Führungskräften im Ausland, „Zeitschrift für Management“, No. 4, 2009, p. 29-52.33 A. Amiri, S. Moghimi, M. Kazemi, Studying the Relationship between Cultural Intelligence and Employees’ Performance, “European Journal of Scientific Research”, Vol. 42, No. 3/2010, p. 432-441.34 L. Imai, M.J. Gelfand, The culturally intelligent negotiator: The impact of cultural intelligence (CQ) on negotiation sequences and outcomes, “Organizational Behavior and Human Decision Processes”, Vol. 112, No. 2, July 2010, p. 83-98.35 Ch. Earley, S. Ang, Cultural Intelligence: Individual Interactions Across Cultures, Stanford University Press, Stanford 2003, p. 53.36 Ch. Earley, E. Mosakowski, Cultural Intelligence, “Harvard Business Review”, No. 10/2004, p. 140.37 S. Ang, L. Van Dyne, Ch. Koh, K.Y. Ng, K.J. Templer, Ch. Tay, N.A. Chandrasekar, Cultural Intelligence: Its Measurement and Effects on Cultural Judgment and Decision Making,Cultural Adaptation and Task Performance, “Management and Organization Review”, Vol. 3, No. 3, October 2007, p. 337.

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Figure 1. The Sub-dimensions of the Four Factor Model of Cultural Intelligence

CulturalIntelligence

Motivational CQIntrinsicExtrinsic

Self-Efficacy

Cognitive CQCultural SystemCultural Norms

Values

Megacognitive CQAwarenesPlanningChecking

Behavioral CQVerbal

Non-VerbalSpeech Acts

Source: L. Van Dyne, S. Ang, The Sub-dimensions of the Four Factor Model of Cultural Intelligence. Technical Report. Cultural Intelligence Center, 2008, http://linnvandyne.com/papers/Van%20Dyne_Ang_Livermore%20CCL%20in%20press.pdf, [11.05.2015].

Below there are synthetically discussed the various sub-dimension CQ38.Motivational CQ refers to the ability of individuals to direct attention and

energy when adopting the new cultures. Includes internal motivation and self-efficacy in people to adopt to new cultures.

Cognitive CQ reflects the level of knowledge and orientation in the standards, practices, traditions and customs prevailing in different cultures.

Metacognitive CQ refers to the personal level of cultural awareness and the awareness of the intercultural interaction. It includes the planning, controlling, revising and reforming mental models regarding the cultural norms for the countries or groups of people.

Elements of behavioral CQ reflect skillful verbal and nonverbal behavior when interacting with people from different cultures. Associated with the change and their behavior to fit the cultural context.

Language classes can serve as an example of intercultural meeting, during which students develop CQ areas described above. This happens due to the acquisition of new knowledge, learning about proper behavior in a foreign culture, shaping the attitudes of openness and respect, and self-reflection. During the construction of the educational process there is the selection of relevant learning content, forms and methods of teaching, including, in

38 S. Ang, L. Van Dyne, Ch. Koh, K.Y. Ng, K.J. Templer, Ch. Tay, N.A. Chandrasekar, Cultural Intelligence: Its Measurement and Effects on Cultural Judgment and Decision Making, Cultural Adaptation and Task Performance, “Management and Organization Review”, Vol. 3, No. 3, October 2007, p. 338.

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particular, the use of activating methods, the attitude of a teacher who should be representative and interpreter at the same time of a foreign culture.

ConclusionsIn summary, it can be said that the process of foreign language teaching

in schools apart from learning a foreign language system, contributes to the development of entrepreneurial attitudes of students. During this intercultural meeting, four sub-dimension of cultural intelligence are formed. CQ is an important tool of communication in intercultural environment when a student group whose members are employees in a moment of international business sector, the public sector and the nonprofit sector. The study sought to show that the condition of entrepreneurship in the twenty-first century will be skilful, appropriate and effective communication in different social and cultural contexts. According to the Recommendation of the European Parliament and the Council on key competencies there are soft tolerance, the ability to express and understand the various positions, the ability to empathize, negotiating skills and creating a climate of trust. These attitudes are part of entrepreneurship that can also shape the foreign language classes in school and university bench.

Literature:1. Amiri A., Moghimi S., Kazemi M., Studying the Relationship between

Cultural Intelligence and Employees’ Performance, “European Journal of Scientific Research”, Vol. 42, No. 3/2010.

2. Ang S., Van Dyne L., Koh Ch., Ng K.Y., Templer K.J., Tay Ch., Chandrasekar N.A., Cultural Intelligence: Its Measurement and Effects on Cultural Judgment and Decision Making, Cultural Adaptation and Task Performance, “Management and Organization Review”, Vol. 3, No. 3, October 2007.

3. Bennett M.J., Becoming Interculturally Competent, [in:] Toward multiculturalism: A reader in multicultural education, (ed.) J.S. Wurzel, Newton, MA: Intercultural Resource Corporation, 2004.

4. Breidenbach J., Zukrigl I., Tanz der Kulturen: Kulturelle Identität in einer globalisierten Welt, Rowohlt, Hamburg 2000.

5. Buber M., Ja i Ty. Wybór pism filozoficznych, Instytut Wydawniczy Pax, Warszawa 1992.

6. Byram M., Teaching and Assessing Intercultural Communicative Competence, Multilingual Matters Ltd, Clevedon 1997.

7. Earley Ch., Ang S., Cultural Intelligence: Individual Interactions Across Cultures, Stanford University Press, Stanford 2003.

8. Earley Ch., Mosakowski E., Cultural Intelligence, “Harvard Business Review”, No. 10/2004.

9. Erll A., Gymnich M., Interkulturelle Kompetenzen. Erfolgreich kommunizieren zwischen den Kulturen, Klett, Stuttgart 2013.

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10. Europejski System Opisu Kształcenia Językowego, CODN, Warszawa, 2003.11. Gromczyński W., Egzystencjalizm Jean-Paul Sartre’a, [in:] Filozofia

współczesna, (ed.) Z. Kuderowicz, Wiedza Powszechna, Warszawa 2002.12. Hall E.T., Bezgłośny język, PIW, Warszawa 1987.13. Hofstede G., Hofstede G.J., Kultury i organizacje. Zaprogramowanie umysłu,

PWE, Warszawa 2007.14. http://www.kwalifikacje.edu.pl/images/download/Publikacje/Raport_

referencyjny_PL_na_strone.pdf, [11.05.2015].15. Imai L., Gelfand M.J., The culturally intelligent negotiator: The impact

of cultural intelligence (CQ) on negotiation sequences and outcomes, “Organizational Behavior and Human Decision Processes”, Vol. 112, No. 2, July 2010.

16. Kittler M.G., Rygl D., Puce T.D., Kulturelle Intelligenz, Distanz und Anpassung von Führungskräften im Ausland, „Zeitschrift für Management“, No. 4, 2009.

17. Livermore D., van Dyne L., Ang S., Cultural Intelligence: Why Every Leader Needs it …, “Intercultural Management Quarterly. Integrating Culture and Management in Global Organizations”, No. 2, Summer 2012.

18. Makowiec M., Komunikacja wewnętrzna w przedsiębiorstwie opartym na wiedzy, [in:] Zachowania organizacyjne w kontekście zarządzania wiedzą, (ed.) B. Mikuła, UEK i Fundacja UEK, Kraków 2012.

19. Mikułowski-Pomorski J., Jak narody porozumiewają się ze sobą w komunikacji międzykulturowej i komunikowaniu medialnym, UNIVERSITAS, Kraków 2012.

20. Mikułowski-Pomorski J., Komunikacja międzykulturowa. Wprowadzenie, Wydawnictwo AE, Kraków 2003.

21. Morley M.J., Cerdin J.L., Intercultural competence in the international business arena,“Journal of Managerial Psychology”, No. 25(8), 2010.

22. Nęcki Z., Komunikacja międzyludzka, WPSB, Kraków 1996.23. Piwowarczyk A., Rozwijanie kompetencji społecznych na lektoracie na uczelni

wyższej, „E-mentor”, 2015.24. Piwowarczyk A., Social Competences and Cross-Cultural Differences from

a Perspective of Glottodidactics, [in:] Knowledge-Economy-Society. Managing Organizations: Concepts and their applications, (ed.) A. Jaki, B. Mikuła, Cracow University of Economics, Cracow 2014.

25. Potocki A., Winkler R., Żbikowska A., Komunikowanie w organizacjach gospodarczych, Difin, Warszawa 2011.

26. Stankiewicz J., Komunikowanie się w organizacji, Astrun, Wrocław 1994.27. Stening B.W., Cultural Intelligence: Put it (High) on the Asian HRM Agenda,

“Research and Practice in Human Resource Management”, No. 14(2), 2006.28. Stier J., Internationalisation, intercultural communication and intercultural

competence, “Journal of Intercultural Communication”, Issue 11, 2006, http://www.immi.se/intercultural/nr11/stier.pdf, [11.05.2015].

29. Szczepański J., Elementarne pojęcia socjologii, PWN, Warszawa 1970.

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30. Van Dyne L., Ang S., The Sub-dimensions of the Four Factor Model of Cultural Intelligence. Technical Report. Cultural Intelligence Center, 2008, http://linnvandyne.com/papers/Van%20Dyne_Ang_Livermore%20CCL%20in%20press.pdf, [11.05.2015].

31. Zalecenie Parlamentu Europejskiego i Rady nr 2006/962/WE z dnia 18 grudnia 2006 r. w sprawie kompetencji kluczowych w procesie uczenia się przez całe życie, [Dz.U. L 394, of 30.12.2006].

PART IV

CHANGES AND TRENDS OCCURRING IN HUMAN RESOURCE MANAGEMENT

IN THE FACE OF NEW CHALLENGES

Ana Langović MilicevićPhD, Full Professor, Faculty of Tourism and Hotel Management, University of Kragujevac, Serbia

Tatjana CvetkovskiPhD, Full Professor, Graduate School of Business Studies Megatrend University, Belgrade, Serbia

Zlatko LangovićPhD, Associate Professor, Graduate School of Business Studies Megatrend University, Belgrade, Serbia

NEW DIRECTIONS IN HUMAN RESOURCE MANAGEMENT

Keywords:strategic management, human resource, competitive advantage, globalization

SummaryDemographic projections indicate that the world is becoming diverse

than ever before. The success of any system depends on how it responds to the challenges of diversity. Many sectors proactively respond to demographic developments which led to a number of educational efforts, through training and development organizations on how to better manage diversity in the workplace and in service provision. With increasing levels of multiculturalism, strategic management of business systems should be considered in light of the cultural factors that affect their usefulness. Many researchers in their entirety including the intercultural dimension in business in the last two decades. With a growing national diversity in today’s business culture is still an important dimension because there are still significant differences in the importance for managers from different cultures, which is a clear signal to corporations that inflexible human resources policy, which is not adapted to cultural specificities, will allow managers to successfully manage employees. Thus, studies prove that there are different values among different cultures and consequently every corporation should be aware of them. Different needs and expectations of employees in different countries requires a manager of human resources to implement a policy that is flexible enough to respond to local specificities and to higher-level personnel meet expectations. Thus, in

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terms of human resource management trends we see demographic changes, aging workforce and increasing global mobility. On the other hand, in the global economy if it is to ensure the development of business systems must invest in human resources. Investing in human capital (highly skilled and highly motivated workforce) creates the potential that can be a source of sustainable competitive advantage.

IntroductionMany theorists have argued that literature is becoming less and less relevant

to the education of young managers. They find that the right information is given to those who “work” since modern environment in which we are is imposing a global business that is changing the traditional approach to education that, the companies are trying to expand their operations abroad, manage “talent” more strategicly, and changing the traditional bureaucratic structures, business communications are becoming intercultural, virtual, horizontal.

The environment requires an innovative approach and a new way of thinking for the managers and employees. The modern enterprise is becoming a dynamic development system so universal organizational model of the company now belongs to the past. The age of the organizational structure with the prevailing bureaucratic and hierarchical relationships is slowly disappearing and such an organization, of course, has serious implications when it comes to human resources management. Models of modern management are a result of changes in the environment, as well as in the organization of the modern corporation. In this case these changes reflect primarily the valuation of the human factor. Human resources are becoming the most important factor in the job, where teamwork and cooperation take on increasing importance. Such importance of human resources in the enterprise indicates that the content of human resource management evolved. Therefore, human resources are becoming the basic premise of a successful enterprise management.

Globalization and preparing human capital for new demandsThe development of the Internet has greatly accelerated the process of

globalization. A great number of large companies has created international companies which perform new business ventures to secure a presence on the markets of other countries without establishing a separate branch. One of the biggest challenges that companies faced at the beginning of the XXI century is how to compete with foreign companies, both in national and international markets. Some companies cooperate with foreign companies on specific projects or dislocate production to other countries due to the reduction of trade barriers between developing countries. Intensifying the international trend of connecting companies around the world presents a significant challenge for human resource management functions in terms of creating a balance between

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the needs of single strategy and HRM policies at the level of the whole and the need to adapt to local regulations and customs. Therefore, in recent times, international human resource management is all the more important for a growing number of companies around the world.

Due to these changes the characteristics of the labor force are aimed at increasing the degree of diversification of the working age population in two dimensions. The primary dimension; including age, sex, race, nationality, physical ability, sexual orientation and secondary; such as education, previous work experience, parental status, marital status, religious beliefs, military experience, geographic location, income level. The most significant changes in the characteristics of the labor force are reflected in the increasing participation of women in the working age population and an increase in the average age of employees. This raises the challenge of management of human resources in terms of training and retraining of older employees in line with technological changes. On the other hand it can create youth employment opportunities for career advancement despite the large number of older colleagues in higher hierarchical positions.

Investing in education and training people is the most important element of the development policy of each country is crucial. This is because planning human resources and their education level is a key issue in every society, it is not a power but an investment for the future. Although it nowadays acts as a phrase it is most respected and the best-paid knowledge. The more knowledge a man has – the better he will be paid. Anyone who has knowledge feels safer because you always can easily find a new job and it is easier to deal with the problems of the existing businesses. Human resources with extensive knowledge is very difficult to find and that is why it is important to develop their knowledge and thus motivate them to stay.

Education in contemporary conditions must have permanent in character, because what you learn in youth, may not be enough in adulthood. It cannot be expected to have specialized staff which will be required in the future economy. Therefore it is necessary to continue their education through practice at work. There is no longer any age for that level of education. At any place and at any age it is possible to receive more education, which should facilitate the professional activity to takes place in the best possible way.

Globalization affects the development process, in general, it may be said to increase the importance of international trade in economic development, as well as national economic competitiveness. Hence national income has increasingly begun to rely on success in an ever-growing global market for goods and services. The increasing mobility of factors of production, including capital, labor, materials, technologies and know-how, globalization changes the economic conditions of comparative advantage.

The role of education in development is also significant changes in the process of globalization as it is associated with the trends above. As is usually claimed, knowledge and skills are becoming important for economic

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development and education and skills have become important for attracting foreign direct investment, which is one of the main drivers of growth in many countries1, 2. Equally important, the education and skills determine the extent to which knowledge and technology can be transferred and absorbed and thus the ability of the state to build its indigenous industry and to compete in the global market with their goods and services. That would of course respond to the new demands of globalization and created a world of intercultural dialogue; education must include knowledge of interculturalism.

New directions in human resources management: respect for cultureIn modern business conditions in the realization of the work outside the

home country socio-demographic, economic and cultural factors should be considered. Staff training is an important issue because continuing education in the field of intercultural diversity is essential. Education on cultural diversity is necessary in order to staff able to deal with current and future problems in the country because properly trained personnel is essential for the success of a system.

Empirical research conducted by Hofstede on national and corporate cultures contributed to the development of intercultural management in the field of management. Intercultural management differs from international management as intercultural management focuses on the behavior of organizational and human resources3. Intercultural management attempts to assess the impact of culture (national and organizational) on perceptions, interpretations and actions of managers. Culture can be defined by the collective programming of the mind which distinguishes the members of one community in relation to the other. This collective behavior is a system that is acquired during the socialization process. National culture, which is reflected in the values, thoughts and behavior in society, continues to play the role of primordial despite the process of globalization. In the area of governance, cultural system gives individuals cognitive abilities and specific approach to solving problems. Consequently, colleagues from other countries will probably find different solutions when faced with the same problems. Research conducted in intercultural management tends to focus on the study of the interaction of managers from different systems. Intercultural management plays an important role in international business activities, where business partners from several countries put in the situation of teamwork. However,

1 M. Carnoy, Globalisation and Educational Reforms: What Planners need to Know, UNESCO International Institute for Educational Planning, Paris, 1999.2 Educational Restructuring in the Context of Globalisation and National Policy, (ed.) H. Daun, Routledge/ Falmer, London, 2002.3 G. Hofstede, G.J. Hofstede, Cultures and organizations. Software of the mind, McGraw-Hill, New York 2005.

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today the expected team approach in the implementation of business activity, regardless of cultural background of managers, where due to incorrect interpretations of verbal and non-verbal communication may be conflicts and misunderstandings. This underestimation of the cultural factors are still present in the global business scene, even though the merger of companies, first of all, connect the different human beings. On the other hand, strategic approach based on the concept of divergence takes into account the cultural plurality and the stability of certain systems.

In a multicultural and dynamic environment challenge comes from the question of how to prioritize and how to adapt in order to respond to the specific values and needs of employees from different cultures, with different expectations. Despite the fact that most of the incentives is repeated in the results of the countries which have conducted research, there is still a significant difference in their importance for managers of different nationalities, which is a clear signal to international companies (or companies with international staff) that a fixed management policy human resources, which is not adapted to cultural specificities will not allow managers to successfully motivate each employee individually.

This indicates that in accordance with the new requirements of the environment needs to change the education system and involvement of intercultural learning that will create the adequate manpower and fairer society to “learn to live together”. The result of changes in the environment that is increasingly seeking workers who are multiqualified, flexible and educated with the new knowledge necessary for new business requirements regarding the use of new technologies and as a result of globalization and the knowledge of cultural diversity.

New directions in human resorces management in process of integration company – opportunity for competitive successThe process of integrating the company on a global level is a sensitive

process, especially when taking into account the different cultural background of the involved companies. The factor of culture is sometimes seen as an obstacle to the success of mergers and acquisitions, should start from the idea that cultural distance may also improve performance of business systems and the detection of new standards of value. Connecting business systems based on the existence of a joint project and then it is necessary to effectively manage human resources. It is therefore essential that companies realize the benefits in connection with the merger, so they can concentrate on achieving the goals that are set together. When it comes to human resources management, provision should be made and define the necessary changes that will lead to successful transactions on the other hand take into account the new requirements of business environment. When merging two business systems it is required the formation of mixed working teams. Given the different

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interests of managers, communication plays a significant role. Finally, it is advisable to provide for cultural change within the company, defines the method of work tools and management style. Creating a new corporate culture that integrates the positive aspects i.e. understanding and appreciation of cultural diversity helps to avoid conflict and creating a creative atmosphere for the realization of business activities.

Respect for the balance of nationality and jurisdiction led to a significant transfer of employees. Faced with corporate cultures that are not significantly different, managers new companies recommended human resource policy which aims to build a common business spirit. English should be adopted as an official language and corporate culture is based on the spirit of teamwork. It is recommended to separate the large number of people who need to work on the harmonization and integration of human resources. Recruitment of new labor force contributes to building a new corporate culture. Managers who have experience of working in these companies, mergers and acquisitions of different cultures “consider cultural diversity” as a special advantage of the new merged company. As a result, several work teams are employees of different nationalities. Cultural diversity is a source of: creativity, original ideas. Otherwise, it should be noted that in order to facilitate the integration process, it is recommended to change the structure of the organization, with several “mono-cultural” teams “bi-or tri-cultural” teams.

In accordance with these changes in the course of realization of business activity, it is assumed that it is possible that members of multicultural teams deal with some problems that must be solved quickly. Only systematic explanations of cultural differences to overcome these obstacles that will inevitably cause friction between the different management concepts due to cultural differences. Thus formed teams unite individuals with diverse interests individually contribute to the activities of the team. In this way we achieve greater effectiveness in the implementation of business activity because the members of this team formed in discussing and negotiating that is share their knowledge and diverse experiences. In the realization of business tasks with teams whose individuals from different cultures big role in the manager. The main task of managers in these cases is that binds all members of the group into one entity and to strive towards the goals set. In fact, this manager has no hierarchical role, but the role of coordinator of interest. In such conditions, the manager focuses on working conditions for the team, supports cooperation among members and seeks to harmonize the differences that exist between them. In order to successfully carry out his task manager or team leader, with members from different cultures, must be aware that cultural factors may cause misunderstanding. For these reasons, it is important knowledge, understanding and respect for cultural differences in the management of human resources in the modern business environment.

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Multinational corporations and human resource managementIntensifying the international trend of linking companies worldwide

represents a significant challenge for human resource management function in terms of creating a balance between the need to keep a unique strategy and human resources management at the level of the continent and the need to adapt to local regulations and customs. That is why in recent times international human resource management is more important for a growing number of companies around the world.

Human resource management in multinational companies means defining questions the extent to which branches should act and behave like local firms versus the extent to which their practices resemble practices corporate parent or another international standard. In the paper on this topic4 described three types of multinationals: ethnocentric, polycentric and global. According to this typology, current management practices in foreign affiliates of multinational companies could resemble practices in the home country (ethnocentric), or could be in accordance with local practices of the host country (polycentric), or to adhere to international standards (global). The typology of management practices in multinational corporations in terms of overall orientation. In recent years, some scholars have argued that the observation of multinational companies in terms of general orientation obscures the internal differentiation of management practices within the multinational corporation5. Instead, they claim that multinational company is properly viewed as a link between differentiated practice.

When implementing the business activities of multinational companies in defining ways of managing human resources to solve two dilemmas i.e. trying to make a balance towards achieving internal consistency or to achieve local adaptation? If passed that the pressure to achieve internal consistency stronger explanation follows as follows: since the employee can move between subunits, multinational companies are trying to develop a consistent approach to remuneration and benefits, as well as to maintain consistent policies and procedures. Sometimes in the absence of broad employee mobility across borders, multinational companies may wish, for reasons of internal equity, to adopt a consistent set of practices in human resources management worldwide. Accordingly, it should be expected that the practices of human resource management in the branches are formed mainly with the desire to achieve internal consistency. Adverse pressure to internal consistency, the pressure to achieve those practices of human resource management in the branches that resemble the practices of countries where the branches. Some practices will

4 H. Perlmutter, The Tortuous Evolution of the Multinational Corporation, “Columbia Journal of World Business”, No. 5(1), 1969.5 G. Hedlund, The Hypermodern MNC – A Hetetarchy, “Human Resource Management”, No. 25(1), 1986, p. 9-25.

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perhaps have to comply with local laws and regulations i.e. will be forced to resemble local practices. In other cases, the branches can be no coercion strive to look like a local company that may compete more effectively in local labor markets, or to better “fit” imitating local practices.

If the human resources management seeks to be closer to the local practice, the reason may be that the practice of human resource management is often decorated with local regulations and with the other branches of multinational corporations in most cases, there is little choice but to hire people with competitive local labor market, so it could be too difficult to depart from the local norms. In multinational companies in human resources management adapting to local practices may be a few essential items:

• Leisure most like local practices, because this factor is determined by local laws or collective agreements;

• Composition of employees by gender, in most situations branches of multinational companies are trying to conform to local standards. Yet in practice the parent company will continue to serve as an important influence, because the parent company may be embarrassed to put women in positions of responsibility, especially if they are not used to it in their environment;

• The training needs of employees can vary depending on local conditions. Also, in order to increase competition, subsidiaries of multinational companies will need to provide training for their employees to improve their skills and knowledge that are comparable to those offered by local competitors.

It is less likely that the affiliates of multinational companies comply with the practices of their local competitor when it comes to:

• Bonuses in compensation for executive directors although we should draw attention to branches of multinational companies may face pressure to comply with local practices, especially if they want to hire talented managers in the highly competitive local labor market;

• The level of employee participation in executive decision-making, the pressure to adapt to the local branch of the practice is the weakest, but the executive decision-making is not an area where multinational companies significantly deviate from the practice of the parent company as it relates to important processes of strategic choices and allocation of resources, which the parent company gives a great importance, and which retains a direct influence.

In short, managed human resources for which there are well-defined local norms are usually closely coordinated with the practices of local competitors. In practice, for which there are diverse and poorly defined local norms, or which are considered essential to the maintenance of internal consistency or making key decisions, it is less likely to adapt to local

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standards but keep the internal consistency of human resources management of the parent company.

ConclusionsThe central setting of contemporary philosophy of human resource

management, the human resources are the most dynamic segment of each corporation. People and their ideas, productivity, ability to change and capacity to learn at all levels of the organization are a crucial competitive advantage of the organization.

Globalization is a phenomenon that not only changes the appearance of the world but also the world-view of the transition from obsreving the multicultural world based on intercultural foundations. This means respecting the environment, possesing an intercultural understanding and developing cultural awareness and knowledge of new skills.

The new environment requires a change of the education system regarding the involvement of intercultural knowledge in order to create adequate manpower and fairer society which is able to “learn to live together”. The results of changes in the environment require employees who are qualified with multiple skills, flexible and trained with new knowledge necessary for new business ventures, as well as being able to master new technologies for the purpose of globalization, knowledge and cultural diversity.

Literature:1. Carnoy M., Globalisation and Educational Reforms: What Planners need to

Know, UNESCO International Institute for Educational Planning, Paris, 1999.

2. Educational Restructuring in the Context of Globalisation and National Policy, (ed.) H. Daun, Routledge/ Falmer, London, 2002.

3. Hedlund G., The Hypermodern MNC – A Hetetarchy, Human Resource Management”, No. 25(1), 1986.

4. Hofstede G., Hofstede G.J., Cultures and organizations. Software of the mind, McGraw-Hill, New York 2005.

5. Perlmutter H., The Tortuous Evolution of the Multinational Corporation, “Columbia Journal of World Business”, No. 5(1), 1969.

Jolanta Walas-TrębaczPhD, Assistant Professor, Cracow University of Economics

THE APPLICATION OF BALANCED SCORECARD IN THE HUMAN RESOURCE MANAGEMENT IN THE ENTERPRISE1

Keywords:balanced scorecard (BSC), changes in human resources management (HRM), BSC in HRM, procedure for development of BSC

SummaryBalanced Scorecard is a recognized modern management tool that provides

balancing of the elements to measure implementation of the strategy in the different business areas. One of the areas of application of this instrument is the human resource management. If it has to be effective, should be supported IT systems.

This article aims to show the general assumptions the construction of the BSC and the tasks related to its implementation to the area of human resources management (HRM), present the most important reasons and directions of changes in HRM, presentation of preparation procedure Scorecard in the area of HRM and exemplification of the implementation of the BSC in the area of HRM in the enterprise.

IntroductionThe balanced scorecard (BSC) is considered as a form of a modern

organization management, it constitutes a programming tool for the organization’s activities and a system of measurement and assessment of its efficiency2. The BSC protects against an unjustified investing in new and risky types of activities. The balanced scorecard not only clearly indicates directions of development but also describes in the form of a strategic plan what and when

1 The publication was financed from the resources allocated to the Management Faculty of Cracow University of Economics, under the grant for the maintenance of the research potential in 2015.2 K. Cholewicka-Goździk, Strategiczna karta wyników – instrument oceny efektywności organizacji, „Problemy Jakości”, No. 2, 2002, p. 6-9.

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Jolanta Walas-Trębacz

it should be achieved3. Using properly constructed card allows to stimulate the improvement of efficiency of business processes. It is also important that the BSC provides a balance of measurement elements of a strategy realized in different areas of activity. One area of application of this tool is human resource management. The BSC concept has undergone some evolution despite its young age and nowadays, it is developing very rapidly. It is evidenced by the fact that in the last five years appeared new applications associated with experience of a growing number of organizations that have implemented it.

Therefore, the aim of this article is to present:• the overall assumptions of the construction of the balanced scorecard and

purposes of its implementation to the area of human capital management,• procedures of development of the balanced scorecard in the area of

human resource management,• practical solutions in the range of formulating the balanced scorecard in

the area of human resource management.

General assumptions of the balanced scorecard constructionThe balanced scorecard (BSC) is a tool which allows to translate strategy

into specific tasks and measurements of its implementation for particular organizational units of an enterprise. It was constructed by R.S. Kaplan and D.P. Norton in 19924. In their approach, the authors have taken into account four perspectives: financial, customer, internal processes, and innovation and growth opportunities5. The BSC is based on the assumption that an enterprise has obligations to shareholders which are expressed in ensuring the future potential of the enterprise, not only focusing on the implementation of the short-term tasks in the range of gained profit. That is why, monitored factors in the card go far beyond the financial sphere. The essence of the method consists in creating and using in a control a coordinated set of measures of multi-faceted assessment of the functioning of the enterprise. For every organization many measures and indicators for particular processes from different areas can be offered, not only within the enterprise, but also connected with external processes of the enterprise. The BSC allows to answer to four basic questions: how customers see the enterprise, how efficient are internal processes in the value chain, whether the developed solutions are innovative and enable further growth and create value in the future, as well as how owners perceive the enterprise6. It is important

3 A. Brzozowski, Balanced Scorecard w polskich przedsiębiorstwach średniej wielkości, „Controlling i Rachunkowość Zarządcza”, No. 8, 2004, p. 16.4 R.S. Kaplan, D.P. Norton, The Balanced Scorecard – measures that drive performance, “Harvard Business Review”, Vol. 70, No. 1, 1992, p. 71-79.5 BSC may also be expanded according to different perspectives, e.g. partner relationship management, quality management, etc.6 R. Tarasiewicz, Jak mierzyć efektywność łańcuchów dostaw, Oficyna Wydawnicza SGH, Warszawa 2014, p. 97-98.

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THE APPLICATION OF BALANCED SCORECARD IN THE HUMAN RESOURCE MANAGEMENT IN THE ENTERPRISE

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to link the designated measures and indicators with specific goals and tasks in different areas and at different levels of the enterprise, what allows to organize cause-effect relations between strategic objectives. It is a tool that should be perceived as an integrated assessment system of the organization management. The application of the BSC gives the possibility to look at the value chain from a broad perspective taking into account financial and non-financial aspects as well as from strategic and operational level7.

Achieving goals and tasks of the four main areas allows to realize the strategy of the enterprise. Within each perspective should be defined: strategic objectives, the way of measuring purposes, the desired size of the target and initiatives, that must be realized in order to achieve objectives by the enterprise.

Reasons and directions of changes in human resource managementEvery modern enterprise, regardless of size, location or industry, has to face

many challenges. The most important are: globalization, achieving profitability through growth, using opportunities created by technologies, generating intellectual capital as a source of competitive advantage, the necessity of functioning in constantly changing conditions. To meet these challenges, factors such as: speed, flexibility, the ability to learn quickly, and high competencies of employees must be constantly developed. Intentions to compete through traditional factors such as costs, new technologies, production and distribution systems, or the characteristics of products, most likely will be very short-sighted and insufficient. This situation creates need to define a new role of the personnel function and thereby increase its rank in the organization. In figure 1, there are characterized typical changes apparent in the modern economy which should not only initiate a new organizational order of enterprises but also a new approach to place and role of their employees.

Figure 1. New directions for the human resource management

Source: A. Pocztowski, Zarządzanie zasobami ludzkimi, Strategie-procesy-metody, PWE, Warszawa 2008, p. 39.

7 J. Brzóska, A. Karbownik, M. Kruczek, A. Szmal, Z. Żebrucki, Strategiczna karta wyników w teorii i praktyce, Wydawnictwo Politechniki Śląskiej, Gliwice 2012, p. 147-148.

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There also can be noticed an increasing impact of customer-oriented process on human resource management. In terms of practice, it means not only taking actions aimed at closer link between the organization’s activities to the situation on the internal and external labour market but also identifying customers of personal services and professionally satisfying their needs. In turn, the level of satisfaction of these needs should constitute the indicator of the efficiency assessment in the field of human resource management (HRM). More and more often, a major problem in the human resource management is work efficiency understood as the effectiveness of achieving objectives at various levels of the organization. Opportunities which contribute to success of the organization by improving productivity and quality of work are becoming another challenge in the field of HRM. Therefore, all the activities constituting the process, such as planning employment, acquiring employees, assessment, remuneration and training should be carried out, as well as judged by the criterion of efficiency. The basic condition for improving work efficiency is to have competent employees on almost all workplaces, and that is why the ability to determine the competencies and then to develop them, is becoming one of the most important challenges facing contemporary human resource managers. Competency-based human resource management determines an interesting direction of developing this field of management. Competencies can be a starting point for both the selection of employees on worksite and shaping assessment systems, remuneration and development.

Challenges in the field of HRM are also related to the increasing incidence of technological and organizational changes, observed in many enterprises. It can be seen, inter alia, in various forms of restructuring, flattening hierarchical structures, reengineering business processes and introducing new forms of work, such as teleworking or virtual organization. These processes have an impact on the condition and structure of employment but also on the way of leadership in the organization. Continuous changes in the structure of employment has led to a situation in which the most numerous group of the professionally active population are knowledge workers with a high level of theoretical knowledge, not resulting directly from practical experience. Therefore, one of the biggest challenges facing management is the change of philosophy and the modification of the methods being used. HRM can and should play the most important role in the recognition of a particular organization’s ability to learn and to develop five disciplines that make up the model of learning organization: system thinking, building common visions, exploring and opening own mental models, boosting collaborative learning and developing personal mastery.

Increasing globalization and areas of activity of many organizations going beyond the territorial boundaries of individual countries, represent new challenges in the field of human resource management. They are primarily related to increasing cultural diversity, which can be seen not only in terms of traditional features differentiating employees, such as gender, age, education.

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More and more important are becoming new diversity dimensions, for instance, skin colour, ethnic origin, nationality, level of mental and physical aptitude, sexual orientation, or ethics.

Considering the above observations, there can be expressed the view that the modern concepts of HRM should evolve gradually in the direction of human capital management. The specificity of human capital is characterized by, inter alia, individual elements which are unique, virtually impossible to imitate by competitors. Due to dispersion and qualitative nature of these elements, equally complicated are their evidence and measurability. This forces the need for changes in the approach to perform personnel function, in particular its regulatory aspects. The direction of these changes seems to be clearly defined and it is moving away from functionalism towards value creation networks. Future human capital management in lower extent should be a sequential process of recruitment and employment reduction, assessment, remuneration and development, and in greater extent an interactive, non-linear configuration of the individual elements consisting on human resource management system, which consequently consist on value creation network. There can be identified three main interpenetrating areas of this management: the area of human capital formation, the area of human capital usage and the area of human capital transformation into structural capital8.

Human capital (resource) management has a fundamental meaning in the process of generating intellectual capital of the organization. Although, it does not create value directly, it creates it indirectly – by employing people with a high potential of knowledge, creating conditions for its dissemination within the organization, and its perpetuation and continuous renewal, which in turn lead to value creation for employees, as well as for customers and shareholders. The characteristics of human resources treated as the most important success creating factor requires a differentiated approach: static (recording the size of human resources and identifying their most important features) and dynamic (investigating and characterizing means of “use”, transforming human resources into capital, considered as a main factor which creates success)9.

The Twenty-First-Century organizations are expected to be innovative, be able to rapid changes and to adapt quickly. Their aim is to achieve success in the market. It becomes possible by using the potential of employee qualification, i.e. knowledge, experience, skills and engagement of employees10.

8 A. Pocztowski, Zarządzanie zasobami ludzkimi, Strategie-procesy-metody, PWE, Warszawa 2008, p. 41-43.9 L. Gilejko, Zarządzanie zasobami ludzkimi a partycypacja pracownicza, [in:] W kierunku jakości kapitału ludzkiego, (ed.) A. Pocztowski, IPiSS, Warszawa 2007, p. 83.10 Z. Janowska, Zarządzanie zasobami ludzkimi. Wyzwanie XXI wieku, PWE, Warszawa 2001, p. 179.

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Objectives of creating BSC in the area of human resource managementThe measure of HRM effectiveness is used to assess the degree of

implementation of tasks resulting from the strategy of the enterprise, creating the desired attitudes of employees towards realized tasks. Properly constructed measurement system should have the following features: should allow to assess the essence of personal activity of a particular enterprise from the point of view of the enterprise’s strategy, contain the most important measures from the point of view of the enterprise’s strategic objectives, identify occurring cause-effective relations and suggest types of undertaken repair actions in selected areas of personnel policy of the enterprise, inform about the enterprise’s future achievements in the range of implementation of personal tasks. HRM assessment system, having indicated characteristics, should progress on three levels: the enterprise (to determine the effects of performed personal tasks on the enterprise’s success as a whole), functional areas (branches) of the enterprise (to determine the effects of personnel policy for the implementation of other internal processes in the enterprise), and behaviour of employees (in order to assess the various functions of HRM, the effectiveness of methods which are used, however, provided that begins and depends on the behaviour and talents of employees in the organization)11. The use of the BSC should allow to indicate mutual cause-effect relations occurring between personal actions undertaken at the three levels of assessment of HRM efficiency in the enterprise. For the whole enterprise in elaborated cards can be found, in the different perspectives, indicators relevant to measure the efficiency of HRM carried out through the prism of assessment of the enterprise’s strategy and supporting it, the personal strategy.

Table 1. Balanced Scorecard of HRM: juxtaposition of objectives, assessment measures of activities’ efficiency

The prospects for the development of the enterprise/ the

enterprise’s objectives

Assessment measures of activities’ efficiency The comment

Financial perspective:

• increase in the enterprise’s profitability

• the value added of human capital,

• the economic value added of human capital,

• assessment of human resource management from the financial perspective.

11 J. Fitz-enz, Rentowność inwestycji w kapitał ludzki, Dom Wydawniczy ABC, Kraków 2001, p. 33, p. 45-50, p. 117, p. 181; A. Lipka, W stronę kwalitologii zasobów ludzkich, Difin, Warszawa 2005, p. 31.

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• the rate of return on investment in human capital (profitability of human capital),

• financial indicator of human capital,

• percent of total labour costs.Customer perspective:

• quality improvement of customer service

• rate of employee engagement,

• the cost of customer service,

• number of loyal customers,

• percentage of new customers acquired during a particular year,

• the value of sold products/ services,

• comparative analysis with other enterprises.

• assessment concerns the way how customers perceive the enterprise through attitude of employees to customers,

• assessment of customer satisfaction.

Internal processes perspective:

• improvement of realization of internal processes

• % of remuneration programs tailored to the strategy and development time of programs,

• the cost and % of conducted trainings,

• cost of services provided by the personnel department,

• the level of labour productivity,

• the indicator of paying growth of productivity by growth of unit labour cost,

• indicator of nominal using of working time,

• overtime rate,• indicator of lost time,

• assessment of the level of labour productivity is the result of increasing skills and morale of employees, innovation and process improvement within the enterprise.

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• the percentage of employees with flexible working hours,

• the percentage of employees employed in flexible (untypical) forms of employment,

• unit labour costs,• profitability of labour

costs,• share of labour costs in

the value of sales.Development perspective:

• acquisition of employees

• maintenance of employees

• remuneration of employees

• development of competencies

• the number of new employees, the rate of employing, the time required to fill a vacant worksite, the level of qualification of new employees, the cost per newly employed, the number of newly employed,

• indicator of employment stability, the average length of employment, adaptation rate, the rate of exemptions, the rate of layoffs at the request of the employee, indicator of employees mobility, indicator of internal mobility, fluctuations cost,

• the degree of adjustment of the remuneration system to the enterprise’s strategy, the amount of average wage, share of fringe benefits in the value of wage bill, the cost of developing and introducing new

• assessment of employee satisfaction – as a condition of increase in labour productivity and stability of employment,

• assessment of the enterprise’s ability to retain key employees in the long-term time period,

• assessment refers to expenses (costs) related to human resource management and their compliance with enterprise’s strategy.

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remuneration system, share of total labour costs in operating costs,

• the average level of employees’ education, the percentage of specialists and experts, the percentage of employees with higher education, the total cost of training, the total number of hours devoted to training, the average number of hours of training per employee, the number of hours of training divided into professional groups, the profitability of investment in training, internal rate of promotion.

Source: M. Tyrańska, J. Walas-Trębacz, Możliwości wykorzystania strategicznej karty wyników w zarządzaniu zasobami ludzkimi na przykładzie przedsiębiorstwa ciepłowniczego, Zeszyty Naukowe PTE, No. 4, Kraków 2006, p. 181-183.

The catalogue of assessment measures of HRM efficiency presented in table 1 is wide, but not definitive. The choice of measures should always be determined by the strategic objectives of the enterprise, which also indicate mutual relationships with objectives set for the area of human resource management. The implementation of this rule will improve internal processes and more effective realization of the enterprise’s strategy, and in the long-term perspective will improve acceptance of such assessment system through the enterprise’s employees.

The procedure for the development of BSC in the area of human resource managementChanging conditions of functioning of today’s organizations lead to

determine new roles and tasks of the Department of Human Resource Management (HRM). Generally, these activities take place towards strengthening responsibility of department for the results of the enterprise and creating values which meet the needs of main shareholders12. In particular, the main challenges faced by today’s HRM departments in enterprises, include:

12 A. Pocztowski, Organizacja zarządzania zasobami ludzkimi, [in:] Zarządzanie zasobami ludzkimi. Tworzenie kapitału organizacji, (eds.) H. Król, A. Ludwiczyński, Wydawnictwo Naukowe PWN, Warszawa 2006, p. 502-503.

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introduction of new technologies (tools) of human resource management, development of competencies of all employed, concentration on internal customers, increase in measurable value of activities related to human resource management. HRM department should perform the following role in the organization:

• strategic business partner,• change agent,• organizational expert,• a wizard of employee engagement13.

The new approach to the role of HRM department causes simultaneously the need to apply a new criterion for the evaluation of its work, namely the assessment of the impact of human resource management on the performance of the entire enterprise. A helpful tool in determining this relationship is, inter alia, balanced scorecard which serves to emphasize cause-effect relations between the work of the HRM department and good results of the enterprise14.

In order to elaborate the BSC in the field of HRM, there is a need to proceed as follows, namely:

• Appointing the team responsible for the progress of work (employees from the Department of Human Resources should majorly participate).

• Analysing and developing sets of objectives and measures for the entire enterprise paying special attention to individualise targets for key processes located in the area of HRM, namely: hiring employees, periodic assessment, motivation, professional development of employees, relations in the enterprise;

• Describing and presenting in graphic form each process separately to determine whether it is effective and consistent with the strategy, to match measures to it (gathering opinions on personnel processes of employees involved in IT, finance, sales, production, to identify areas for improvement and find ways to reduce costs and make better use of resources);

• Setting goals and measures in the area of HRM in perspectives: process, finance, customer and development;

• Introducing changes in the organizational structure – the appointment of persons responsible for each process of HRM15 (indication of the relationship between positions, employees responsible for receipt,

13 J. Marciniak, Standaryzacja procesów zarządzania personelem, Oficyna Ekonomiczna, Kraków 2006, p. 16.14 B. Wiernek, Nowe metody oceny realizacji funkcji personalnych, [in:] Nowe tendencje i wyzwania w zarządzaniu personelem, (ed.) L. Zbiegień-Maciąg, Oficyna Ekonomiczna, Kraków 2006, p. 201.15 While implementing BSC, multiple barriers and difficulties should be expected: S. Cyfert, R. Muszyńska, Bariery w implementacji systemu strategicznej karty wyników, “Controlling i Rachunkowość Zarządcza”, No. 2, 2004, p. 18-20; H.R. Friedag, W. Schmidt, My Balanced Scorecard, C.H. Beck, Warszawa 2003, p. 58.

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processing and transmission of information), and proposing changes in the range of objectives and measures of their achievement, and updating job descriptions;

• Monitoring and modifying objectives and measures – introducing changes in individual perspectives in compliance with established enterprise’s strategy in order to evaluate their effectiveness and impact on other organizational processes of the enterprise, as well as changes in the behaviour of employees16.

The efficiency assessment of HRM causes that broad access to current and relevant information becomes more important, which is easier and more efficient thanks to use of information and IT systems by organizations. Information systems should play controlling and steering role in the field of HRM and in particular include specific conducting procedures of employees organizational units in the area of performing personnel function and should include data describing staff of the organization17.

It should be emphasized that during the growing complexity of the environment and the personnel function, information system is a tool allowing not only the construction of the BSC for this area of the enterprise, but also efficient HRM in the organization. The information system supported by IT systems through the ability to collect, store and process a large number of varied personal data provides more rational and effective personnel decision-making, and also makes it possible to diagnose HRM system in a particular enterprise.

The example of the application of the BSC in the area of human resource management in the researched enterpriseChanges that have occurred in recent years in the researched enterprise

occurred also in the area of long-term planning, as well as in the control of realized strategy. The management board of the enterprise has introduced one of the tools that allows to measure the strategy, namely the Balanced Scorecard (BSC). The enterprise started to design scorecard at the end of 2008 and in 2010 structure of this document for the enterprise was developed. An important step in building the BSC was to define the vision, mission and goals of the enterprise. To presented and approved plans, by the Board of Directors, were set concrete activities to achieve them. The indicators were defined to particular activities in

16 M. Tyrańska, J. Walas-Trębacz, Możliwości wykorzystania strategicznej karty wyników w zarządzaniu zasobami ludzkimi na przykładzie przedsiębiorstwa ciepłowniczego, Zeszyty Naukowe PTE, No. 4, Kraków 2006, p. 185-186.17 Basically, these systems are divided into three groups: information and recording systems, information and searching systems, information-decision-making systems: A. Suchodolski, System informacji personalnej, Prace Naukowe Akademii Ekonomicznej we Wrocławiu, No. 871, Wrocław 2000, p. 203-204.

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order to control achieving objectives18.In the enterprise there has been developed a map of strategic objectives

which constitutes a perfect picture of goals of that enterprise. Objectives defined in the map have been associated with measures, and then ordered according to the four perspectives of the Balanced Scorecard. In elaborating scorecard for the enterprise was used grouping of existing processes and measures in accordance to the four perspectives indicated by Kaplan and Norton. The layout of objectives and measures (measures to achieve them) mentioned in the four perspectives for the researched enterprise, served as a basis to build a scorecard for individual organizational units, inter alia, Human Resource Department, as well as for individual employees of the enterprise.

The personnel policy in the researched enterprise is carried out in four basic activities: employment (analysis of employment and changes concerning job positions); trainings (in terms of introducing more advanced technologies in the production and distribution of thermal energy, as well as in terms of completing education); wage policy (increase in wages and the development of a new project of bonus system); social activity (conducted according to Act of 04.03.1994 about enterprise social benefit fund in agreement with trade unions functioning in the enterprise).

An example of balanced scorecard for Human Resource Department in the researched enterprise is presented in table 2.

The management board of analysed enterprise introduced a mechanism that allows to present objectives of the enterprise and units, and allows to translate them into activities of particular teams and members. The introduction of personal scorecards caused that measures and activities at all levels are understandable and achievable for employees and are implemented in daily work. It was enough to link system of management by objectives existing in the enterprise with cards of teams and employees in such a way that they are consistent with the strategic objectives and facilitate the implementation of the strategy.

Table 2. Balanced Scorecard for Human Resource Department in the researched enterprise

Financial perspective Customer perspective

1. Increse in the value of the enterprise

• the value added of human capital.

1. Fast and good service

• the percent of problems handled by “one phone”,

• operating costs and benchmark.

18 The researched enterprise performs a strategy based on Sustainable Development combining care about nearest environment where it operates with technological progress and financial rationality. Directional objectives of researched enterprise include functioning of Poland within the structure of the European Union, as well as development plans of city’s infrastructure.

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2. Minimization of costs of human resource management

• the percent of the total labour costs,

• indicator of competitiveness potential.

2. Reduce the level of complaints

• the average time to solve the problem.

3. Worldwide standard

• assessment of the way of human resource management in relation to other enterprises.

Internal process perspective Development perspective

1. Compatibility of plans concerning human resource management with the enterprise’s strategy

• the percent of completed strategic plans concerning human resource management.

1. Systematic improvement of employees’ qualifications

• acquiring important skills,

• internal path of promotion.

2. Improving the communication process

• improving executed commands and functioning of department,

• the availability of information needed for decision-making.

2. Improvement of traceability of employee with the enterprise

• maintenance of managerial staff in the enterprise.

3. Creating an atmosphere of innovation

• comparison to the achievements of other personnel departments

• atmosphere based on the results.

Source: own elaboration based on data from the enterprise.

The BSC defined at all levels of the organization, is an effective way to raise awareness of strategy among employees. All levels of the elaborated BSC have been made available to employees. The way to achieve this goal was to use functioning internal IT network, called Intranet, in the enterprise. The databases and information including reports, elaborations, and other documents and records of the previous measure of achievements operate in the researched

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enterprise. Information collected in a synthetic way constituted an excellent material for building the BSC and its continuous updating. All cards of the BSC are updated on the latest measurements of metrics by using for this purpose Excel program and programs in Visual Basic supporting visualization of trends phenomena and making predictions. During introducing and updating the BSC have been used many different mass media in the enterprise, inter alia: notice board, video cassettes, meetings, periodic brochures and newsletters, strategic dialogue, detailed monthly reports, meetings with leaders of implementing the BSC. Although, open informing employees about the priorities of the organization is a condition for effective implementation of the strategy, it is necessary to take into account the need to maintain confidentiality and secrecy of certain information.

ConclusionsThe Polish enterprises have to look for new sources of advantage, such as

better understanding of the needs of customers, the highest quality, the best adjusted offer, innovative brand up against changes in market and functioning Poland in the structures of the European Union. Traditional management systems cannot describe the process of value creation from intangible assets, it is possible because of, inter alia, using the Balanced Scorecard which becomes a very useful tool of strategic management for the enterprise. The card acts as an early warning system, discrediting genuineness of cause-effect relation is a signal to identify unobserved changes and start the process of adaptation even before changes will give the effect of reducing profits of the enterprise.

The article presents the reasons for introducing the BSC in the enterprise with particular emphasis on the area of HRM. Moreover, there was indicated an important, supportive role of information systems in its construction. On the basis of the researched enterprise has been presented in a synthetic way the scope of work related to the implementation of the Balanced Scorecard, and in particular activities concerning its formulating for the need of HRM. The analysed enterprise assumed that rapid and effective implementation of the BSC will be possible by integrating it with existing systems, i.e. quality management system, environmental management system, IT system and motivation system. Introducing the BSC to management system has allowed the researched enterprise to join to organizations managed in a manner appropriate to the current world standards and characterized by innovative solutions.

Literature:1. Brzozowski A., Balanced Scorecard w polskich przedsiębiorstwach średniej

wielkości, „Controlling i Rachunkowość Zarządcza”, No. 8, 2004.2. Brzóska J., Karbownik A., Kruczek M., Szmal A., Żebrucki Z., Strategiczna

karta wyników w teorii i praktyce, Wydawnictwo Politechniki Śląskiej,

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Gliwice 2012.3. Cholewicka-Goździk K., Strategiczna karta wyników – instrument oceny

efektywności organizacji, „Problemy Jakości”, No. 2, 2002.4. Cyfert S., Muszyńska R., Bariery w implementacji systemu strategicznej karty

wyników, “Controlling i Rachunkowość Zarządcza”, No. 2, 2004.5. Fitz-enz J., Rentowność inwestycji w kapitał ludzki, Dom Wydawniczy ABC,

Kraków 2001.6. Friedag H.R., Schmidt W., My Balanced Scorecard, C.H. Beck, Warszawa

2003.7. Gilejko L., Zarządzanie zasobami ludzkimi a partycypacja pracownicza, [in:]

W kierunku jakości kapitału ludzkiego, (ed.) A. Pocztowski, IPiSS, Warszawa 2007.

8. Janowska Z., Zarządzanie zasobami ludzkimi. Wyzwanie XXI wieku, PWE, Warszawa 2001.

9. Kaplan R.S., Norton D.P., The Balanced Scorecard – measures that drive performance, “Harvard Business Review”, Vol. 70, No. 1, 1992.

10. Lipka A., W stronę kwalitologii zasobów ludzkich, Difin, Warszawa 2005.11. Marciniak J., Standaryzacja procesów zarządzania personelem, Oficyna

Ekonomiczna, Kraków 2006.12. Pocztowski A., Organizacja zarządzania zasobami ludzkimi, [in:]

Zarządzanie zasobami ludzkimi. Tworzenie kapitału organizacji, (eds.) H. Król, A. Ludwiczyński, Wydawnictwo Naukowe PWN, Warszawa 2006.

13. Pocztowski A., Zarządzanie zasobami ludzkimi, Strategie-procesy-metody, PWE, Warszawa 2008.

14. Suchodolski A., System informacji personalnej, Prace Naukowe Akademii Ekonomicznej we Wrocławiu, No. 871, Wrocław 2000.

15. Tarasiewicz R., Jak mierzyć efektywność łańcuchów dostaw, Oficyna Wydawnicza SGH, Warszawa 2014.

16. Tyrańska M., Walas-Trębacz J., Możliwości wykorzystania strategicznej karty wyników w zarządzaniu zasobami ludzkimi na przykładzie przedsiębiorstwa ciepłowniczego, Zeszyty Naukowe PTE, No. 4, Kraków 2006.

17. Walas-Trębacz J., Możliwości wykorzystania strategicznej karty wyników w zarządzaniu zasobami ludzkimi na przykładzie przedsiębiorstwa ciepłowniczego, Zeszyty Naukowe PTE, No. 4, Kraków 2006.

18. Wiernek B., Nowe metody oceny realizacji funkcji personalnych, [in:] Nowe tendencje i wyzwania w zarządzaniu personelem, (ed.) L. Zbiegień-Maciąg, Oficyna Ekonomiczna, Kraków 2006.

Piotr ZającPhD, Assistant Professor, Department of Labor Resources Management, Cracow University of Economics

SITUATIONAL LEADERSHIP IN HUMAN CAPITAL MANAGEMENT

Keywords:personnel management, human resource management, human capital management, management, leadership, situational leadership

SummaryModern companies, operating under the knowledge economy in an

international dimension, wanting to meet the requirements dictated by the market, are forced to offer more modern and more perfect products and services. They can do so only through the work of a highly skilled, committed, easily adaptive to changes, highly motivated, ready to learn, loyal and productive staff. An important issue is also a proper management of the human capital, which may be facilitated by the situational leadership. With the situational leadership and using the leadership styles in accordance with the rules there are involved three skills that a leader must possess: flexibility, diagnosis and partnership. The second thing is flexibility.

At this point, the leader must simply learn to use different management styles, depending on the situation and the employee. Training is the best option here. The third issue is partnership, sometimes referred to as a partnership for results. Common high results of the manager and the subordinate become in this case a target to be achieved in a given timeframe. It is an element linked to a specific agreement on what kind of leadership the coworkers expect and need at given time in order to succeed.

From human resources management to human capital managementThe issues within the range of the HR function of an enterprise are variously

described by the authors analyzing these issues both at home and abroad. While describing personal activities, the following terms can be found in the literature: “personnel management”, “human resource management”, “management of labor resources” or “human resource management”. This state of affairs can be

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Piotr Zając

explained by the evolution of the approach to the people in an organization, their place and their role. It can be observed even by more and more frequent highlighting of the strategic dimension of a man and his/ her capital in an organization; hence “human capital management”.

The survival and development of a company in the market economic system is conditioned by the efficiency and harmony of the realization of the following (among others) functions such as: a production, a technical, a financial, a marketing as well as a personal one. A personnel function is defined as duties and responsibilities that the company should realize towards their staff, which determines the requirements that can be demanded from their employees. The personnel function of the company, as well as other functions, undergo systematic modifications. They refer both to the changes within the HR function, to the changes in the approach to the staff and to the changes in the relations between the personnel function and other functions of an enterprise1.

The evolution of the company personnel function got revealed in, inter alia, the real processes of the company management, as well as in the model human resource2 management of economic organizations. The tendency of these changes can be defined as mastering of the management integration features. These features relate both to the effective ways of welding employees with the company, which is an internal problem of the company, as well as to its integration with the environment. The following can be regarded as the basis of the modern human resource management and – at the same time – as management components interpreted in the category of the process of coordinating and integrating its people with the objectives of the organization3:

• defining mutual employees’ expectations and their employing organizations,

• concluding numerous contracts describing the mutual expectations of the organization and employees,

• creating conditions that would ensure meeting the mutual expectations.

The listed components imply a certain way of approaching the labor relations within an organization, which connects them with a personnel management.

The term “human resource management” is a strategic and coherent approach to the management of the most valuable assets of an organization, which are the people working in it, contributing to the achievement of its objectives. Human resource management is a method of managing the employment, aiming to gain a competitive advantage through a strategic distribution of highly dedicated and

1 A. Szałkowski, Personel w systemie zarządzania przedsiębiorstwem, [in:] Podstawy zarządzania personelem, (ed.) A. Szałkowski, Wydawnictwo Akademii Ekonomicznej w Krakowie, Kraków 2006, p. 21.2 You can read more on the model human resources management in: Podstawy zarządzania personelem, (ed.) A. Szałkowski, Wydawnictwo Akademii Ekonomicznej w Krakowie, Kraków 2006, p. 28.3 Ibidem, p. 42.

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skilled workers, using a variety of cultural, structural and personnel techniques4. This definition was formed in the 80’s of the 20th century in the United States; it was an attempt to seek a new term in the management of people, different from the practices used in American companies at that time.

Human resource management can be regarded as a set of interrelated activities possessing ideological and philosophical justification. It includes employment, development, rewarding people in organizations and a development of proper relations between the management and the workers. These problems are dealt with by all line managers, team leaders and human resource management specialists.

The philosophy of human resource management is to recognize employees as one of the most valuable elements of the company. The strategy of human resources and the global strategy of each organization should be in tune, and shaping of the corporation culture should be compatible with the requirements of the corporate strategy. This raises a philosophical assumption of human resource management here; namely – that it is a pursuit to build rules for identifying the employees with the organization. This commitment is not so much about the bureaucratic commitment to the organization, but more about the fact that employees represent certain attitudes, are attached to their own values and to the values associated with belonging to a family, a professional group or trade unions.

The interest in human resources management in recent years has led to different approaches to this concept, taking into account specific circumstances of the countries from which individual authors analyzing the issues of managing people in organizations derive. However, considering the common concepts, one can indicate some typical characteristics of human resource management5:

• The first feature is the perception of human resources of a company as a source of its competitive advantage. This confirms an assumption, formed in the first models of human resource management, of perceiving people employed in a given organization as a valuable asset of the company. The activities in the sphere of the management of people employed in an organization should be aimed at creating and effective utilization of the potential embedded in the human resources;

• The consequence of treating people as a source of competitive advantage is the second feature of human resource management strategy, namely the demand for the integration of human resources strategy with the overall strategy of the company. Emphasizing the need for practicing people management not only on the operational level, but also in a strategic dimension refers to the original models of management.

4 M. Armstrong, Zarządzanie zasobami ludzkimi, Oficyna Ekonomiczna, Kraków 2005, p. 29.5 A. Pocztowski, Zarządzanie zasobami ludzkimi, Strategie – procesy – metody, PWE, Warszawa 2008, p. 31.

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This means a need for the company management to engage in solving complex personnel issues and to treat personnel decisions as strategic ones;

• The third feature of human resource management is highlighting the need for active involvement of line managers in the processes of planning, organizing, directing and controlling the personnel issues, which is associated with a certain decentralization of the responsibility for employment matters. It stems directly from an assumption of the priority significance of human resources in business processes;

• Other features of human resource management, serving as a specific base for exercising a personnel function, may include highlighting the importance of organizational culture as the basis for an action in the field of business management, individualization of labor relations, a development of direct forms of employee participation in the life of the organization, a change in the employees’ management style towards transformational leadership and orientation at a customer in the relations between individual workers and their various groups present in the organization.

Human resource management has a functional, institutional and instrumental dimension. The functional dimension concerns the organization of individual tasks and activities in the process of creating value; in terms of the institutional dimension it refers to defining the roles and responsibilities of entities authorized to make personnel decisions and the interrelationships between them; the instrumental dimension relates to the selection of appropriate methods and techniques for dealing with personnel issues6.

Within the realization of HR processes there are used many tools of various complexity that make up the instrumentation of a manager/ consultant. Due to the interdisciplinary nature of human resource management, there are also used methods and techniques that derive from allied disciplines such as work sociology, work psychology, work physiology, ergonomics and economic analysis. Within the range of human resource management tools one can mention, among others:

• work analysis,• employment planning techniques,• employee recruitment techniques,• assessment systems,• coaching, mentoring,• job evaluation,• personnel controlling,• personnel audit7.

6 Ibidem, p. 34.7 You can read more on the topic of tools for human resources management in: A. Pocztowski, Zarządzanie zasobami ludzkimi, strategie procesy metody, PWE, Warszawa 2008, p. 36.

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The aforementioned examples do not exhaust a set of common features and tools attributed to the concept of human resource management described by different authors.

Modern companies, regardless of their size, location or industry affiliation, have to face many new challenges in the context of which the following can be mentioned: globalization, taking advantage of opportunities created by new technologies, achieving profitability through growth, creating of intellectual capital as a source of a competitive advantage and the need for action in a changing environment. Organizations which want to meet these challenges, cannot compete using traditional factors such as costs, modern technologies, production and distribution systems and product characteristics, but should reach for factors of an organizational nature, such as an operating speed, flexibility to change, an ability to learn quickly and high competences of employees.

For the professionals dealing with the world economy, late twentieth century and the beginning of the twenty-first century is, most of all, a period of the implementation of economic changes (the expansion of the European Union with further member states, opening of the borders, etc.).

In this economy, especially in highly developed countries, the existence of a new economic order is highlighted, in which the main factor of production is the knowledge used, increasingly, on all levels in the society. This knowledge is inseparably connected with the people who create and distribute it within the company – these are the employees. While the collection, processing and storage of knowledge can take place without the participation of employees – mainly through information systems – it is difficult to imagine creating the knowledge without the human participation. Therefore, we conclude that well-educated, experienced and motivated personnel in an organization functioning in the new economy is a major factor thanks to which the organization becomes highly competitive.

In the light of the discussed conditionings of enterprise performance in the twenty-first century, one can say that the concept of “human resource management is evolving towards the management of human capital”8. The human capital includes the totality of features and characteristics gathered in humans (knowledge, skills, abilities, health, motivation, values) which have a certain value and provide a secure source of potential revenue for both the employee as the owner of this human capital, as well as for the organization using the services of that capital holder, on conditions previously determined.

With the development of the knowledge-based economy, the human capital is more and more often recognized, at the microeconomic level, as the main (strategic, the most important) resource that an organization has9.

8 Ibidem, p. 41.9 G. Łukasiewicz, Kapitał ludzki w przedsiębiorstwie, [w:] Zarządzanie personelem, materiały do ćwiczeń, (ed.) A. Szałkowski, Wydawnictwo Akademii Ekonomicznej w Krakowie, Kraków 2006, p. 83.

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One can point to the enormous influence of the size and structure of the human capital on the development of societies, nations and even the humanity; in this case we talk about the macroeconomic level. In particular, it is emphasized that the human capital10:

• has a serious impact on the innovation of economies and societies, their absorption abilities in terms of grasping and the implementation of the world’s scientific, technical, organizational, mind-set and other achievements’,

• has an impact on institutional changes and on modernizing structures of a different kind,

• encourages promoting and popularizing modern patterns of consumption and life quality,

• shapes a modern technical and organizational, information and social infrastructure and so on.

In contrast, the threats caused by under-investment in the human capital contribute to the existence of a civilization and education gap, to the processes of manufacturer and socio-political alienation, pose a threat of an economic stagnation and accelerate the emigration, harmful for the economy of a given country, of the qualifying capital (a loss of a pension in respect of education; apart from other effects – biological and social ones).

The specifics of the human capital is expressed by the fact that individual components of that capital are unique and very difficult to imitate by competitors; as are their measurability and registering due to the dispersion and their quality character; it causes a necessity to change the approach to exercising the personnel function and in particular to its regulatory aspect. The direction of these changes seems to be fairly well-defined and means moving away from the functionalism towards the network of creating the value. This means that the future management of the human resource (capital) will be a less and less sequential process of recruitment, evaluation, remuneration, development and de-recruitment and more and more an interactive and non-linear configuration of individual elements comprising the human resource management system, which elements will constitute the network of creating the value. One can identify three major and overlapping areas of this management11:

• an area of creating the human capital,• an area of using the human capital,• an area of transforming the human capital into the structural one.

The human capital formation in the context of company personnel function takes a form of a net of activities of the human capital planning, sourcing,

10 Cited from: Zarządzanie Zasobami Ludzkimi, Tworzenie kapitału ludzkiego organizacji, (eds.) H. Król, A. Ludwiczyński, Wydawnictwo Naukowe PWN, Warszawa 2006, p. 111.11 A. Pocztowski, Zarządzanie zasobami ludzkimi, Strategie – procesy – metody, PWE, Warszawa 2008, p. 41.

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their evaluation, development, remuneration, relocation, communicating and shaping human relationships nature.

The main elements of a value creation in the area of human capital are: organizing the work, directing teams, motivating, performance management, assessment and communication.

By contrast, the transformation of the area of human capital into the structural capital includes activities connected with capturing the human knowledge in procedures, databases, manuals, formal methods and intellectual property.

Situational leadership in managementLeadership, as written by Peter Drucker12, who in my opinion is one of

the people who laid the foundations for the modern management methods, is applicable mainly to people. Particularly, the leadership related to the issue of managing an organization is focused on its employees. It should be remembered that in a general notion, a leadership as such is a completely voluntary act of cooperation to achieve a defined together purpose. Communities, cultures, groups and individuals are supporters of a person who leads them and they do it without any coercion. Also the task that remains to be done is not strictly enforced on them, but has become a work of joint efforts. Psychology as well as later sociology consider the leadership or the leaders themselves in a number of broader and deeper aspects, however at the level of the organization management itself, I believe it is not necessary.

The concepts of leadership, just like the very definition of leadership, pose in their extent and variety quite a challenge. Over the years many experts in this subject have created very elaborate models of leadership styles that have been linked to the power, a situation or managing.

A qualifying approach is one of the oldest perspectives of the leadership. The basic assumption of this concept is that a leader or a figurehead has certain in-born qualities which allow them to be a leader or not. It was assumed that certain personality traits that are possessed by the best leaders are not even available to other people. For the research needs, there were prepared lists of attributes, which may arise at the leaders and which should appear in true figureheads. Looking back at the characteristics which a leader should have, as presented at those times, such as assertiveness, communication skills, stress resistance, a tendency to dominate and the need to develop or wholeheartedness, we can say that this is now a standard “wish list” for candidates for managerial positions.

In turn, the main thesis of the behavioral concept is as follows: “a leader can be trained by reinforcing the desired or by suppressing the inappropriate behavior”13.

A situational approach to the leadership appeared after failed or unsuccessful

12 Peter Ferdynand Drucker, born on 19.11.1909, died on 11.11.2005. He was an expert in management issues. He is called a father/ founder of management or the “pope of management”.13 A.K. Koźmiński, W. Piotrowski, Zarządzanie teoria i praktyka, PWN, Warszawa, 2005, p. 340.

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research related to the behavioral concept. The researchers concluded that different leadership styles are more or less effective depending on a given situation. It turned out that there is no single best leadership style, which would prove itself anytime, anywhere and against any person or activity. The situation approach focuses on the following aspects:

• Requirements arising from tasks;• Expectations and behaviors of colleagues;• Features, expectations and behaviors of subordinates;• Culture and the principles of the organization policy14.

According to James A.F. Stoner, Fiedler15 is the author of one of most thoroughly researched situational models16. Fiedler writes that group performance depends on the correct “aligning” of the leadership style and the extent to which the existing situation allows you for control and social impact. Eventually Fiedler has defined the following situational factors:

• Leader/ participant relations;• Sentence structure;• The power of a leader.

In the further course, he assumed two situational states – a good and a bad one, and then he introduced a typology of managerial situations (table 1). Table 1 shows the connections between the emotional contacts occurring in the relations between a leader and a subordinate, a type of a task and what is, in an appropriate situation, a degree of authority of the manager.

Table 1. Typology of managerial situations according to F.E. Fiedler

SituationEmotional relationships between the manager

and a groupTask type

The range of manager’s authority

IIIIIIIVVVIVIIVIII

goodgoodgoodgoodbadbadbadbad

easyeasycomplexcomplexeasyeasycomplexcomplex

widenarrowwidenarrowwidenarrowwidenarrow

Source: A.K. Koźmiński, W. Piotrowski, Zarządzanie teoria i praktyka, PWN, Warszawa, 2005, p. 343.

14 J.A.F. Stoner, R.E. Freeman, D.R. Gilbert, Kierowanie, PWE, Warszawa, 1999, p. 463.15 Fred Edward Fiedler, born in Vienna in 1922, the author of a theory of an unwanted employee. He worked on factors influencing the management models.16 J.A.F. Stoner, R.E. Freeman, D.R. Gilbert, Kierowanie, PWE, Warszawa, 1999, p. 465.

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The model presented by Fiedler shows how the leader reaches the highest efficiency in changing conditions, or what conditions would be the most appropriate for the leader of an established style of action (figure 1).

Figure 1. The relationship between a management style and the management situation

Source: D. Hellriegel, J.W. Slocum, as given by: A.K. Koźmiński, W. Piotrowski, Zarządzanie teoria i praktyka, PWN, Warszawa, 2005, p. 344.

Figure 1 illustrates the relationship that exists between eight situations described in table 1 which a leader may encounter, and the style which a manager using the Fiedler’s model should use. We can observe that situations I, II, III as well as VIII require strong authoritarian leadership style while the democratic style has been assigned to the events IV, V, VI and VII.

According to what Fiedler presents, each leader has only one leadership style, which is a big difference between the Blanchard’s theory; additionally, according to Fiedler, a manager cannot change it if the situation changes. What is possible is a scenery change so as to match the leader.

In my opinion leaders have more than one style of management. One thing is certain – namely that the concept of situational leadership, which was examined by Fiedler has been widely adopted and accepted by many managers around the world.

P. Hersey’s and K. Blanchard’s evolutionary model has a significant influence on the concept of a situational leadership. “Situational Leadership is not something you do to people, it is something that you do with people”17. This Blanchard’s phrase captures the entire essence of a situational management, defined in this case as an evolutionary one. People, their commitment and

17 K. Blanchard, Jednominutowy menedżer i przywództwo, MT Biznes, Warszawa, 2008, p. 83.

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motivation on one hand and skills and competencies on the other became the cornerstone of the theory presented by Hersey and Blanchard. Assumptions talking about the fact that people really want to be the best, want to achieve the highest results, want to improve and train and want to be appreciated are not empty slogans proclaimed by the creators of the theory of the situational leadership. Universal and flexible approach to the management – besides, flexibility is an element that is mentioned in almost all publications of the authors mentioned above – gives many solutions and possibilities for a leader, but they also pose challenges for him/ her. This challenge is an ability to apply a few and precisely four – leadership styles. The research conducted by Blanchard Training and Development company showed how inflexible are the managers who stick to what in their opinion is the best management style or to what they just learned earlier. It should be noted though that the use of all four styles simultaneously during a normal working day in relation to different people is understandably not easy and requires experience and training. If we add to it that even one subordinate may require, depending on a task, a different approach, then we end up with a lot of solutions and opportunities. Generally speaking, a situational management demands from the manager to change the leadership style depending on certain employee characteristics. These features are commitment, motivation, skills and knowledge. Blanchard and Hersey, after many studies, observations and experiences identified four stages of the employee development (figure 2). These stages describe how in subsequent periods of work the above – mentioned commitment and skills of individual employees change.

Figure 2. Stages of employee development according to Blanchard

Source: developed on the basis of: K. Blanchard, Jednominutowy menedżer i przywództwo, MT Biznes, Warszawa 2008; K. Blanchard, Jednominutowy menedżer spotyka małpę, MT Biznes, Warszawa 2009; K. Blanchard, M. Blanchard, D. Edington, Jednominutowy menedżer, równowaga życia i pracy, MT Biznes, Warszawa 2010.

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In figure 2 we can see that in the initial stage an employee has a strong internal motivation to work, but his skills are usually low. The next stage is learning and gaining confidence as well as commitment in order to become an employee of the fourth stage. The various stages of an employee development describe how strong their internal motivation they have to complete the task (involvement) and what are their skills and knowledge to perform the entrusted task (competencies).

Terminology used for naming the development stages:• Stage 1 – R1 – „Enthusiastic beginner”;• Stage 2 – R2 – „Employee without illusions”;• Stage 3 – R3 – „Employee with changeable commitment”;• Stage 4 – R4 – „Perfect executor”.

The development of an employee as described above also applies to entire groups. Similarly to individuals, also groups go through the four stages of development. These stages are called differently as these are recognition, dissatisfaction, production and integration, yet the same mechanism of the operation is very similar; namely – the transition from the initial euphoria and curiosity through a difficult stage of dissatisfaction to production and integration. Due to that, managing groups is based on the same rules as managing a single person. Ken Blanchard used an interesting phrase that is associated with groups, which brilliantly captures their status and purpose: “None of us is as smart as all of us”18.

Employee development stages have been directly connected with leadership styles that should be used. Leadership styles in Blanchard’s situational management is a combination of directive and supportive behaviors (figure 3). In this case, directiveness is associated with a clear defining to a subordinate of what, how and what time to perform, as well as with supervising and controlling the entrusted task (instructions and control on figure 3). As for the supporting elements, what I mean is listening to people, supporting them in activities and encouraging to facilitate a task execution. In the situational management, the leadership style depends on the stage of the employee development and contains more or less directive behaviors (instructions and control) and support for the employee.

18 K. Blanchard, Jednominutowy menedżer buduje wydajny zespół, MT Biznes, Warszawa, 2010, p. 28.

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Figure 3. Management styles according to Blanchard

Source: developed on the basis of: K. Blanchard, Jednominutowy menedżer i przywództwo, MT Biznes, Warszawa 2008; K. Blanchard, Jednominutowy menedżer spotyka małpę, MT Biznes, Warszawa 2009; K. Blanchard, M. Blanchard, D. Edington, Jednominutowy menedżer, równowaga życia i pracy, MT Biznes, Warszawa 2010.

The graphical presentation of management styles informs that consecutive leadership styles contain a different number of supportive behaviors which must be provided to a subordinate by the manager; and a changing number of instructions and controls given which depend on, or otherwise, are associated with them.

Terminology used in figure 3:• Style 1 – S1 – directive style;• Style 2 – S2 – coaching style;• Style 3 – S3 – supportive style;• Style 4 – S4 – delegating style.The further stages of the employee development were connected by Hersey

and Blanchard with particular leadership styles (figure 4). Figure 4 presents a summary and comparison of employee development stages to the leadership style.

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Figure 4. Management style according to Blanchard, a collation with the stages of the employee development.

Source : developed on the basis of: K. Blanchard, Jednominutowy menedżer i przywództwo, MT Biznes, Warszawa 2008; K. Blanchard, Jednominutowy menedżer spotyka małpę, MT Biznes, Warszawa 2009; K. Blanchard, M. Blanchard, D. Edington, Jednominutowy menedżer, równowaga życia i pracy, MT Biznes, Warszawa 2010.

Hersey and Blanchard clearly specified at what stage of the employee development what style of the leadership should be used.

With the situational leadership and using the leadership styles in accordance with Blanchard’s rules there are involved three skills that a leader must possess: flexibility, diagnosis and partnership. Firstly, one should diagnose the needs of their subordinates or colleagues. In other words, one should write down the activities and tasks they carry out and then determine at what development stage they are when it comes to a specific task. The second thing is flexibility.

At this point, the leader must simply learn to use different management styles, depending on the situation and the employee. Training is the best option here. The third issue is partnership, sometimes referred to as a partnership for results. Common high results of the manager and the subordinate become in this case a target to be achieved in a given timeframe. It is an element linked to a specific agreement on what kind of leadership the coworkers expect and need at given time in order to succeed. “Some with the hair, the others against the grain”19. I think this quote sums up the considerations described.

ConclusionsModern companies, operating under the knowledge economy in an

international dimension, wanting to meet the requirements dictated by the

19 K. Blanchard, Jednominutowy menedżer i przywództwo, MT Biznes, Warszawa, 2008, p. 19.

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market, are forced to offer more modern and more perfect products and services. They can do so only through the work of a highly skilled, committed, easily adaptive to changes, highly motivated, ready to learn, loyal and productive staff. An important issue is also a proper management of the human capital, which may be facilitated by the situational leadership. Therefore, with such requirements dictated by new economic conditions it is impossible to forget about the tools of human resources management, which allow to control the processes in specific areas of human capital management, bringing results for the company and thus for all employees. Treating the controlling and personnel audit as a kind of a tool for human resource management, one can contribute to the optimal use of the employed personnel, by improving the effectiveness of leadership.

Literature:1. Armstrong M., Zarządzanie zasobami ludzkimi, Oficyna Ekonomiczna,

Kraków 2005.2. Blanchard K., Blanchard M., Edington D., Jednominutowy menedżer,

równowaga życia i pracy, MT Biznes, Warszawa 2010.3. Blanchard K., Jednominutowy menedżer buduje wydajny zespół, MT Biznes,

Warszawa, 2010.4. Blanchard K., Jednominutowy menedżer i przywództwo, MT Biznes,

Warszawa, 2008.5. Blanchard K., Jednominutowy menedżer spotyka małpę, MT Biznes,

Warszawa 2009.6. Koźmiński A.K., Piotrowski W., Zarządzanie teoria i praktyka, PWN,

Warszawa, 2005.7. Łukasiewicz G., Kapitał ludzki w przedsiębiorstwie, [w:] Zarządzanie

personelem, materiały do ćwiczeń, (ed.) A. Szałkowski, Wydawnictwo Akademii Ekonomicznej w Krakowie, Kraków 2006.

8. Pocztowski A., Zarządzanie zasobami ludzkimi, Strategie – procesy – metody, PWE, Warszawa 2008.

9. Podstawy zarządzania personelem, (ed.) A. Szałkowski, Wydawnictwo Akademii Ekonomicznej w Krakowie, Kraków 2006.

10. Stoner J.A.F., Freeman R.E., Gilbert D.R., Kierowanie, PWE, Warszawa, 1999.

11. Szałkowski A., Personel w systemie zarządzania przedsiębiorstwem, [in:] Podstawy zarządzania personelem, (ed.) A. Szałkowski, Wydawnictwo Akademii Ekonomicznej w Krakowie, Kraków 2006.

12. Zarządzanie Zasobami Ludzkimi, Tworzenie kapitału ludzkiego organizacji, (eds.) H. Król, A. Ludwiczyński, Wydawnictwo Naukowe PWN, Warszawa 2006.


A KNOWLEDGE BASED ECONOMY

THE ISSUE OF KNOWLEDGE AND INTELLECTUAL

CAPITAL MANAGEMENT

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Scientific Editors:



This book presents part of the results of PERSPECTIVE project. PERSPECTIVE is a European Union educational project dedicated to improve the way of teaching in the context of building the entrepreneurial spirit. The school is seen as a natural learning environment in which it is possible to develop the entrepreneurial mindset. […] In fact, human resources are becoming the most important factor in the job, where teamwork and cooperation take on increasing importance. […] The leadership situation in human capital management and the relations between organization’s intangible resources and company’s intellectual capital are described in order to identify their connections focus on the role of social capital in shaping the level of an organization’s intellectual capital. There has been introduced a helpful tool in determining the assessment of the impact of human resources management on the performance of the entire enterprise. […]

(Fragment of the review)

Professor María Segovia-Vargas,Professor Teresa Blanco-Hernández

Documents

MANAGEMENT OF ENTREPRENEURSHIP IN A ...janek.uek.krakow.pl/~kzzo/MM2.pdfmanagement and intangible resources in the organization are very important nowadays and their importance over