Free Essays

The Causes of Young Homelessness and the Theory Behind It

I have chosen this research topic in order to increase awareness of homelessness amongst young people of 16-24 years old. By raising awareness I hope also to put pressure on local people to be more helpful to them so that they feel less socially excluded.

In brief, the term ‘homeless’ means anyone with no fixed abode or roof over their head. The term covers rough or street sleepers, those living in temporary accommodation, people under threat of eviction, those ‘sofa surfing’ and so on. Legally, the state of ‘homelessness’ is defined as “having no suitable accommodation available to you, or being at risk of having no suitable accommodation available within the next 28 days” (REFERENCE YEAR). The term now has a wider meaning: sleeping out in the cold is no longer the only face of homelessness. Those sleeping in shelters are also considered homeless. Individuals wandering from house to house seeking shelter from relatives and acquaintances are deemed homeless as well. Currently, a homeless person is someone who lacks a regular, safe place to reside. As a social class, the homeless are a disparate group with many different factors contributing to their homelessness. Researchers agree that ‘poverty’ is the common thread among homeless individuals (United Nations Centre for Human Settlement, 2000). However, there are different views on what causes poverty. Possible causes include substance abuse, sudden unemployment, mental illness and many other variables. In addition, poverty can either be caused by or be the cause of the mental anguish of homelessness (Centrepoint 2010).

Homelessness in Young People: Demographics

A distinction is drawn between statutory and non-statutory homeless. This distinction is defined by the 1985 Housing Act, using vulnerability as a criteria. Under this, most single people are not vulnerable, while families and pregnant women are defined as statutory homeless (Kemshall and Pritchard 1997). According to research by the Joseph Rowntree Foundation (JRF), young women are more likely to be statutory homeless than are young men, whilst young men 18 years old and over are more likely to be non-statutory homeless. Statutory homeless young people are more unlikely to have an ethnic minority background in Scotland, Wales or Northern Ireland but within England, and particularly London, are more likely to have an ethnic minority background. In terms of age groups, 16 to 17 year old women are highly vulnerable.

It is stated that in UK during the year 2006-7, up to 75,000 young people experienced homelessness ( [online] 2011). This figure includes 43,075 young people aged 16-24 who were statutorily homeless, at least 31,000 non-statutorily homeless young people using supporting people services during that same year, and other over-lapping figures including small numbers sleeping rough. The rate per 1,000 populations of homeless people differs across the UK. The region with the highest proportion is Scotland (15.1 per 1000), followed by Wales (8.2), England (4.9) and Northern Ireland (4.8). There was an increase in the number of homeless young people in the early 2000s following an extension of the priority need groups. However, on a positive note, there have been substantial reductions in England from 54,172 in 03/04 to 29,937 in 06/07 and in Wales, from 3,982 in 04/05 to 2,927 in 06/07. This has not, however, been matched by reductions in Scotland or Northern Ireland. There are also significant differences between homelessness in urban and rural areas (Joseph Rowntree Foundation 2008).

The figures on youth homelessness can be deceptive. While the numbers of young homeless people sleeping rough in the UK on any given night are low, this does not indicate the extent to which many young people experience homelessness, as many need to sleep rough for short periods before securing temporary accommodation. Few sleep rough for an entire year, therefore the figures conceal the extent to which homelessness effects young people.

JRF research also shows that young women are more likely to be statutorily homeless than young men, while young men over the age of 18 are more likely to be non-statutorily homeless (perhaps due to the definition being based on the notion of vulnerability). In addition, they suggest that many young homeless people are part of a couple and or have dependent children (Joseph Rowntree Foundation 2008).

Homeless young people have a high level of vulnerability, especially so amongst the 16-17 age group within the UK. There are a number of risk factors which push people towards homelessness, including family violence, pregnancy, mental illness, and substance abuse (King and Wheeler 2006), and these factors also increase the vulnerability of the homeless. JRF research (2008) suggests that amongst those 16-17 years of age, 54% are suspended or excluded from school, 52% have anxiety, depression or other mental health problems, 47% ran away from home, 45% had family financial issues, 37% had a drug or alcohol problem, 39% were involved in antisocial behaviour or crime and 18% had spent time in care.

Causes of Homelessness

There is a link between a young person’s home background and risk of homelessness, with a number of risk factors including moving school frequently, being in care, child abuse, running away from or leaving home early, family conflict and relationships with parents (Ravenhill 2008). According to the JRF (2008), children from poorer socio-economic backgrounds are mostly at increased risk of homelessness. The JRF also suggest that of all the causes linked with homeless the most significant is ‘relationship breakdown’, usually with parents or step-parents. For many of these young people, this breakdown often involves violence or abuse of some sort. These groups of young homeless often have much poorer health than other young people with mental health problems and substance misuse issues. A high minority of young homeless people have multiple needs. However, it is not clear whether the occurrence of complex needs is on the increase or whether agencies are now better at recognising a range of needs.

Homelessness is therefore associated with a complex mix of problems faced by young people, with mental health problems and substance misuse problems particularly significant. Unsurprisingly, there is evidence that homelessness delays young people’s participation in employment, education or training, with many becoming NEET (Not in Education, Employment or Training) after leaving their last settled home. (Joseph Rowntree Foundation 2008).

In addition, the charity Crisis suggests that the length of time someone stays homeless can influence how long they are likely to continue to remain homeless for: that is, the longer someone is homeless, the more likely they are to remain homeless. This is because the longer a person is homeless, the more acclimatised he or she becomes to the lifestyle of homelessness, and the harder it becomes to make the transition to a life within a home (Crisis YEAR).

The Guardian suggest that in addition to factors in family background, wider social issues also play a part (The Guardian YEAR). Homelessness is caused by factors which relate to the wider state of the economy and the housing market as well as those which are personal to the individual. Such personal causes are made worse by overcrowding, racism, living in deprived areas and discrimination. Whereas for some young people, the causes of homelessness are fairly straightforward and a function of their current personal situation, for example giving up an existing tenancy or a relationship breakdown, for others, the reason for them becoming homeless is more complex and issues from their personal background are compounded by socio-economic factors. This means that for young people with more complex situations homelessness is not just a housing problem as some of them have other difficulties and support needs such as physical and mental health problems, substance abuse, unemployment, histories of offending and chaotic lifestyles. If such young people become homeless through circumstance, they are likely to find it harder to deal with the trauma of homelessness and difficulties in accessing services when homeless. In addition, young people might find it harder to access structured support for homelessness, or prefer seeking advice and help from their friends and acquaintances (Robinson 2008).

For statutory homeless young women, relationship breakdown is the main cause of homelessness, with violence as a common attribute. For example, relating to Hall’s interview with hostel youths, he stated that the reason for a boy he interviewed being homeless was due to relationship breakdown with his parents ‘Robby is 17 years old and left home only a few months ago, having fallen out with his parents; since then he has been sleeping on sofa at a friend’s house’ (Hall, YEAR). The impact of these relationship breakdowns can include the start of mental health or drug or alcohol misuse problems, or the exacerbation of existing problems, difficulties in studying or working, and a feeling that their life is ‘static’ (that they can not move forward with their lives in terms of being independent). In addition, homelessness is costly financially as it can lead to shortage of funds through job loss and increased living costs.

A history of early childhood trauma, particularly mental, sexual and physical abuse (which occurs in mostly broken homes), is by far the most common attribute found among the young homeless and child abuse has been linked in research to homelessness (O’Malley 1992). Abuse can take many forms, and abused youngsters trade home environments which feature alcohol and drug abuse, mixed with crime, poverty and violence for similar conditions on the streets.

According to Whitbeck (2009), it is also possible to distinguish a category of ‘throwaways’, young homeless people who are forced out of their homes by parents for a variety of reasons and for whom the parents have made no alternative care arrangements. The factors leading to young homelessness mentioned above (child abuse) still apply, with the added problems associated with forced removal from the home or family environment (ehow [online] YEAR). This group can be contrasted with runaways (Lee 2005), young people who run away either from home or from child protective services or foster homes.

The demographics of a city can sometimes cause homelessness because when industries such as manufacturing move overseas, many local jobs go with them. This causes a wave of unemployment, and often a shortage of suitable employment which leads to the unemployed being unable to afford housing, provide for themselves or their loved ones. (eHow [online] YEAR).

Since homelessness is such a common issue, almost every city, even within highly developed countries, have to deal with the problem, especially large metropolitan areas such as London. However there have never been enough resources available to deal with the different conditions that lead to homelessness, and this exacerbates the problem (eHow [online] YEAR) .

Impact of Homelessness

The impact of homelessness is an ongoing cause for concern. Young homeless people experience particularly high levels of depression, anxiety and other mental health problems, and are also more likely to cease formal education, training or employment. Young people describe their lives as being ‘on hold’. The section above has demonstrated that young people facing homelessness come disproportionately from disadvantaged backgrounds in terms of both poverty and disrupted, and often traumatised, childhoods. Evidence also suggests that homelessness compounds these characteristics and experiences, and this is examined in more detail in this section.

According to Ploeg’s research (YEAR), young people who are homeless use coping mechanisms which include shoplifting, selling drugs or sex and begging as they need a means both to survive financially and to cope with homelessness mentally. However it is difficult to assess how they get themselves into this condition without looking at the causes and factors that lead to young individuals becoming homeless. As well as social and family problems, they may have existing issues with low self esteem and feelings of worthless. These have a deep emotional impact and may even drive them to suicide when compounded by a homeless situation.

Above it has been shown that youths run away from home, or become homeless, for a wide and complex range of reasons including, for example, family life and stress. They may be getting physical or verbal abuse from their parent, possibly they are living with a lone parent who may be experiencing a hard time also and this may result in the expression of violent behaviour towards their child. Young homeless people, therefore, find themselves in many different circumstances. Some may just want to leave home to survive by themselves as they may not get on with their family: they may have family problems, such as parental divorce and or a step-parent moving in, which make it hard for them to adapt to new situations including bonding with a new ‘mother’ or ‘father’. Other circumstances include teenage pregnancy, or they may have been told to leave by their parents or they may decide they want a place of their own so they would have to put their name on a waiting list or they are placed in a hostel or shelter until they can be provided with housing. Young women who can’t escape from their abusive boyfriends can go into a women’s refuge if they have nowhere else they can go. All of these situations are very unfortunate and within the UK there are wide range of situations which influence young people to become homeless (Hallett 1993).

Health wise, homelessness has been shown to impact negatively on most young people’s sense of emotional well-being: for example a 2009 survey revealed that the proportion of homeless 16–17 year olds with current mental health problems could be nearly three times that of their peers in the general population, and also suggested that the experience of homelessness can contribute to poor mental health among young people. Homelessness is particularly linked to depression, with a variety of negative thought patterns including the feeling of stagnation described above. In addition some young homeless people may get angry at anyone around them for no reason. Issues of mental health play a part in leading homeless young people to become addicted to drugs or alcohol (Fitzpatrick, 2009). In addition, and according to a Stanford University study conducted in 1991, it was suggested that young street sleepers are more vulnerable to diseases in general, but particularly to venereal disease, as they are far more likely to engage in prostitution as a means of funding. Many street youth homeless are gripped by a fear of institutional assistance, and worry that appealing to the authorities may result in their being returned to the home environment they left or being placed in the custodial care of a therapeutic foster home or group home ( [online] YEAR).

To summarise, there are a number of factors which lead to homelessness, and they are complex in nature. The impact upon young people of homelessness is severe, and the relationship between homelessness and causal factors is two-way, with homelessness making some causes, including mental issues and drug abuse, worse.

Government provision

The 2002 Homelessness Act (Youth Justice Board [online] 2011) amends part 7 of the 1996 Housing Act, extending the category of priority need for housing and strengthening requirements placed on local authorities (LA). LA were required to carry out a range of new initiatives including reviewing homelessness in their area and developing a strategic overview including measures to prevent homelessness, provide accommodation for homeless and develop a sufficient support structure of homeless people (Youth Justice Board [online] 2011)

There are some notable other features of the act. First, it sets out a requirement to provide housing to non-priority homeless people. Previously, Local Authorities were required to home only those local people who were in priority need. The act expanded LA provision to include non-priority cases, as long as they were not homeless by intent. The amendment was aimed primarily at areas where there was surplus housing stock (Homeless Link [online] 2011). In addition, the Act abolished the two year limit on the provision of temporary housing to priority groups. Now Local Authorities are required to provide housing to these groups until they find suitable alternative accommodation (Hester 2007). More generally, prior to the 2002 Act, if a Local Authority was satisfied that a person was homeless and fulfilled a number of other conditions, they had a duty to house them. This duty had a maximum length of 2 years, however, this time limit was abolished by the 2002 Act (Robson et al 2005).Finally, the Act strengthened the duty of the Local Authority to provide advice and assistance to the homeless, and initiated a more ‘sympathetic’ approach in which Local Authorities needed to be more proactive in supplying solutions to homelessness including taking preventative measures, considering all solutions including those provided by the private sector, and making constructive changes (Davis 2003).

There have been, in addition, a number of more recent government attempts to make provision for homeless young people. For example, the National Youth Homelessness scheme was proposed as a result of the House of Lords judgment of Wednesday 20th of May 2009 in the case of R (on the application of G) (FC) (Appellant) v London Borough of Southwark (Respondents). It aims to help homeless youth and give them a future ( [online] 2011). The scheme attempts to co-ordinate provision for youth homelessness through the creation of a NYHS Youth Forum to look at what young people themselves think, the creation of 10 ‘centres of excellence’ across England to help build local and national ways to share information, a programme of workshops and conferences, and the instigation of an ‘action learning’ approach to programmes to reflect upon research as it is carried out (St Basils [online] 2011)

A homeless strategy was published in March 2005, called Sustainable Communities: settled homes; changing lives. This sets out aims including that of preventing young people from becoming homeless. The document recommends a partnership approach in which different bodies and community organisations and local people work together to support those young people who have been homeless in a multi-faceted, holistic approach which aims to help them to find out who they are and what they want from life in order to see the issues they need to overcome to get there. Amongst other things, the document incorporates a realisation that young people can become homeless for a wide range of often complex reasons. The Government therefore aimed to commit to decreasing homelessness for young people including promoting measures such as more accommodation provision to ensure their housing and wider support needs are met and managing the transition of young people between temporary and settled accommodation to ensure continued access to the services they need (Fitzpatrick 2005).

Wider Theoretical Perspectives on Homelessness

Homelessness is a worldwide problem that urges many to question why this issue persists and what the best approach to solving it might be. While the majority of the public may have many different ways to view homelessness and the extent to which it affects individuals, economies, and whole societies, there are a number of theoretical issues deriving from sociology which should be taken into account.Sociologists have argued that the possibility of someone becoming homeless depends on conditions that include both society-based causes and personal problems. Personal problems such as substance abuse, mental illness or minimal education don’t necessarily lead to homelessness, as can be seen in the lives of those who have these problems and still have homes. When certain societal structures are present, personal problems are curable, making deprivation a last resort rather than an only resort.

There are three common sociological perspectives on homelessness, the interactionist, functionalist and conflict based approaches. The interactionist perspective suggests that the homeless population as a whole is ostracized from other socio-economic groups because of exchanges that occur between homeless individuals and those in economic classes financially better off than homeless individuals. An interactionist sociologist might highlight the reluctance among some employers to hire individuals who do not possess any physical address and likely lack any academic or prior employment experience (Kornblum 2003). The interactionist approach also suggests looking at the subjectivity of the homeless person in order to gain a picture of his or her values and attitudes, to examine how these might contribute to his homeless situation (Hohm and Glynn 2002).

A functionalist would suggest that many in the ranks of the homeless population actually can and do support themselves and, in most cases, are able to survive the hardship of daily life even if living a meagre existence. Such a perspective claims that homelessness amounts to little more than social infestation and therefore is a problem for the greater good of society as a whole (Kornblum 2003). A functionalist might also suggest that homelessness provides a solution to other problems in society, for example it creates a need for jobs providing welfare for the homeless (Hohm and Glynn 2002).

Conflict theorists not consider homelessness, in itself, to be a problem. Instead they would say that capitalistic motives are being “the problem.” Such theorists would claim that the reason the homeless problem persists is not because of a homeless individual’s supposed reluctance to advance him or herself, but rather because of the capitalistic social classes that oppress those who cannot find a place to work or a physical address to call home. Therefore, when the oppressors deny employment to those who need employment, the economic-underclass victims will either rise up demonstrably or consider taking a more silent route, the latter of which, for the homeless, results in maintaining an existence of outcasts since they are socially excluded (Kornblum 2003). The problem of homelessness is seem as a function of conflict between social groups with opposing interests (Hohm and Glynn 2002).

These three sociological perspectives provide a minor suggestion of how different types of sociologists would consider what is, to say the least, a troubling and complex social issue with differing solutions (Kornblum, 2003).

Other Theoretical Approaches

Other theories about homelessness and its causes suggest that the main causal factor combines problems in society with the individual’s situation. Symbolic interaction theory, for example, “places the individual at the centre of analysis and looks at the way the construct, deconstruct and reconstruct themselves, their worlds and their own reality” (Ravenhill 2008). In other words, what subjective sense does the individual make of wider circumstances including minimum wage employment, lack of public assistance services and lack of mental health services. This contrasts with theories which state personal issues as the main cause.

It should be kept in mind, especially since people generally class all homeless as the same and in permanent condition, that the category of ‘homeless’ people is actually divided by many theorists into three categories (Stivers 2011). One of which is the ‘transitional’, those who have been through one incident of homelessness that lasted under 59 days. The second is ‘episodic, those who have had four to five incidents that total less than 266 days and the last is ‘chronic’, those who have had two incidents totalling 650 days or more. Emergency events usually cause a person to enter at the transitional level. Individuals encountering episodic and chronic occurrences are dealing with a more complex set of life circumstances. Such a distinction allows analysts to assess the seriousness of the homeless condition (Tobin and Murphy 2011).


Many of the theoretical perspectives upon homelessness are not available to the ‘person in the street’, and consequently there are a number of misconceptions about the homeless. For example, few are aware of the extent to which the homeless suffer disorders such as schizophrenia, manic depression, bipolar disorder and other conditions, nor the extent to which they are inadequately treated for such conditions. Others, such as some Vietnam War veterans, have physical ailments such as a loss of limbs, hearing or eyesight that prevent them from obtaining or holding a job. These mental and physical disorders can be made worse by their incapability to pay medical bills, which prevents them from receiving the proper medical care. As well as a failure to understand how these conditions effect the homeless, members of ‘normal’ society often simply view the homeless as substance abusers or there by choice. In fact this applies to only a small portion of the group with only 6% of the homeless being without homes by choice. The majority of homeless individuals are down on their luck due to job loss, divorce, illness, or other unfortunate life events. Few also realise the extent to which single mothers suffer from homelessness. Almost 25% of the homeless are children and substance abusers and single mothers with children and people with minimal job skills make-up nearly 50% of the homeless population. In the case of single mothers with children, a 1998 government study showed that 22% of these women left their previous residence because of domestic violence issues (Suite101 YEAR). Without having access to the full range of facts, many people in current society believe that homeless people could get themselves out of the homelessness situation easily, should they so desire. This assumption is true of only a small percentage of homeless people, and a large proportion of the homeless population are unable to move out of homelessness because they cannot care for themselves alone, due to either a mental or physical disability.

There are a lot of things society take for granted such as food, address and the ability to stay in touch with others using phones and the internet, but these things are usually lacked by the homeless as they struggle every minute of the day to obtain food. As they have no fixed address or telephone number to use as a contact, getting a job or a reference will be difficult for them. Unemployed homeless youths are assumed to be lazy, but in fact many want to work (Amrosino et al 2007). Even though they desire to work, they face severe obstructions including appearance and clothes. In addition to problems securing work, the homeless are often rejected entry to some restaurants where they may be seeking a meal or use of the toilet facilities. Homeless people who face mental illness issues and have a harder time accessing health care ( YEAR).

Common misunderstandings such as those outlined above can lead to disadvantage for homeless people as well as stigmatisation and marginalisation. Homeless young people become pushed to one side within society, in part by ignorance of what the condition really means (Jones, 1997).

Suggestions for Future Research

As seen above, there has been significant research into homelessness, suggestions about the causes, theoretical frameworks and practical legislative solutions. However, there are still many areas which could be investigated in greater detail, particularly more consideration of the social and economic causes of homelessness, and particularly of the ways in which factors in a homeless person’s background are compounded by economic and social factors. In addition, there is a need to look at the ways in which the media show homelessness, and the extent to which it offers a true picture of the condition. Finally, there is a need for targeted studies to measure the costs of homelessness and the benefits of specific interventions, as well as the overall impact of homelessness upon the life of the young person.

Evaluation and Suggestions for Practical Solutions to Homelessness

Youth homelessness can be prevented in different ways. On the one hand, there can be attempts to look at what went wrong in the family, and offering support designed to strengthen and mend family bonds, for example mediation. However, such attempts must never leave young people in danger of abuse. Secondly, local authorities can provide a range of practical help for example through social workers. Such help can include help finding accommodation and claiming benefits (Robinson 2008). The 2002 Housing Act, it has been shown above, said that Local Authorities and other public bodies and voluntary organisations need to work together to help to prevent homelessness and to provide suitable and secure homes, along with any other type of support that might be required. There was also an aim for each region to provide a ‘joined up’ approach with one over-arching strategy designed with local needs in mind, and aiming to help to reduce the level of homelessness better. Some authorities with planned strategies have been able to move further to help a wider range of homeless people, especially in areas where there are high levels of homelessness and demand for social housing. An effective local homelessness strategy can:

provide information on the scale and nature of homelessness in the area;
identify the additional accommodation and support required to meet those needs;
identify the services needed to prevent homelessness occurring or recurring;
identify the resources currently available to meet these needs;
identify additional resources required;
involve other public, voluntary and private agencies in partnership work;
spread best practice among agencies so as to provide greater focus on those aged 18+ (eHow YEAR)

It seems that this move has been at least partially successful. In December 2007, for the first time, the Community and Local Government announced a three-year funding settlement for homelessness work by local authorities. Wendy Wilson of the House of Commons stated that:

‘Councils will receive at least ?150 million over three year to help them prevent and tackle homelessness in their areas and will receive almost ?50 million in homelessness grants next year – a ?3 million increase on last year and a rise of 6%.

All local authorities will receive at least ?30,000, with some receiving increases of 25% higher than last year Newham, Solihull and Sunderland.’

Wilson concluded that the purpose of this funding settlement award is to help councils plan for the long-term to achieve even more for their money, and to help them meet targets to reduce the number of households in temporary accommodation by 50% , with an aim of ending the use of bed and breakfasts for 16 to 17 year olds by 2010. Through this money-saving scheme, councils will be able to invest funding in expanding successful prevention schemes such as rent deposit and mediation services, which have already demonstrated the potential to contribute to huge falls in homelessness and making further reductions in rough sleeping by funding outreach and day centre services.

Preventing homelessness could also include the provision of an even broader range of advice and support services to help people access social and privately rented housing; to help sustain tenancies and prevent eviction and to help with difficult family or relationship situations through mediation.. Evidence from both Germany and England has suggested that successful implementation of homelessness prevention interventions can contribute to overall reductions in homelessness (Duherty, 2008).

Further practical suggestions concern the need for help for the mental conditions often experienced by the homeless. Many people in this situation do not get mental help, perhaps because of their financial situation, or perhaps because their mental problems mean they find it difficult to navigate the system offering them assistance. If such help is made more easily available, more homeless youths might get the treatment needed to mentally prepare them for a better life (Benjaminsen et al, 2009).

In addition, it can be argued that there is a real need to educate the general public about homelessness to counteract negative associations and perhaps even get them involved in helping the homeless perhaps by organising fundraising activities. The more people know about homelessness, the better the chance of reducing or rehabilitating the homeless.


Homeless is a problem which effects the whole of the UK, but for which local solutions are most useful. It is impossible for one agency, government body or third-sector organisation to provide a one-size-fits-all solution. There is rather a need to use successful partnerships between all institutions and individuals who have a stake in the issue to solve the complex issues of homelessness (Bath and North East Somerset Council 2008).

There is a need for local authorities and other agencies to go beyond simply providing accommodation for homeless people. If action is carried out early enough, it can prevent people becoming homeless in the first place.. Also, even if people are rehoused, they may become homeless again if they are not helped to sustain their home, so action is also needed to support the vulnerable over an extended period of time (London Borough of Merton 2003).

Overall, there has been some positive moves by Government towards solving the homeless problem among young people, especially since the 2002 Housing Act. The policies set out here, especially the requirement that local authorities should take a more active role, seem to have helped address some of the issues, particularly the need to create a solution which is multi-faceted and which does not merely address the provision of accommodation. The strategic approach also seems to ensure that different agencies act together, not in conflict with each other. The removal of time limits for duty to the homeless and other situations has also been positive as it seems to recognise that homelessness is a problem which cannot always be solved quickly.There is, however, a pressing need to educate the general population about homelessness, and help them see it is a problem that effects ordinary people like themselves. While government can provide funding, other work needs to be taken on by ordinary members of the public. Those who are aware of the issues might help by volunteering, while others how are less informed might be encouraged to donate useful goods or make a financial contribution (Suite101 YEAR)

While emphasising the role members of the public can play, and while acknowledging that wider publicity about homeless issues, and particularly the way homelessness effects young people, would be very useful, there is always going to be a need for government to provide the funding so that adequate support services and other preventative measures can be carried out.Homeless has been an issue that has impacted the lives of many people for a long time, and it is one which occurs throughout the world, and particularly within the UK. However, it has been shown that certain strategies can help reduce the problem.


Working on this project taught me a great deal about the process of secondary research (research which looks at existing studies rather than carrying out investigations from scratch) (McGivern 2009).I developed a research question and associated research aims, and learned how to search most efficiently for data both electronically and through libraries. I accessed electronic databases through my university library, and refined the search by using keywords including ‘homelessness’ youth’ ‘young people’ ‘accommodation issues’ ‘housing legislation’ and similar alone and in conjunction. I tried to keep the material used to articles written in the last ten years, but sometimes had to look at earlier material. I also tried to concentrate on material pertinent to the UK, but looked wider afield on occasion, particularly for the discussion on theory. In order to obtain a broader knowledge of the topic, I also visited the TUG Library Centre in Holloway where I got to read through some more reports and obtained some statistical report based on homeless young people but especially women. One important learning experience was taking a basic idea for a research project and refining it to a finished piece. This involved ‘brainstorming’ ideas around issues of homelessness, and organising the thoughts I came up with into a coherent and structured piece. I found discussion with fellow students and my tutors very helpful here, as they allowed me to talk through my ideas, reject ones which were off topic and refine my overall theme.

I found that reflection played a key part in writing this assignment. I first made notes from different sources, and I would then let the ideas develop in my head over a few days. During this time I would have different ideas about new areas to investigate and things to omit from the final piece. Giving myself enough time to think through key themes was very important in researching and writing this piece.

(5990 words)


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Free Essays

Piaget’s Developmental Theory


The main aim of this research was to test Piaget’s developmental theory on children within the pre-operational stage. Piaget claimed that children aged 2 – 7 are unable to make appearance and reality distinctions of liquids, mass and numbers, while some other theorists claim that with the appropriate wording and concept, children would perform better in these experiments. Therefore this research aimed to verify that assertion by carrying out a conservation of liquid experiment with a six-year-old child.

Two glasses filled to the same extent with Ribena were presented to The Child. One of the glasses was then poured into a shorter and wider bowl. The child reported that the liquid content in the cup was ‘bigger’ than that in the bowl, because its contents were ‘taller’. The questions and procedure were handled in an age appropriate manner, as illustrating by Donaldson and McGarrigle, however The Child’s response does verify Piaget’s theory on the pre-operational child’s inability to conserve.


Jean Piaget has been attributed as the father of cognitive development. His belief was that a child’s cognitive development influences their social and emotional development. He proposed several principles regarding child development that has influenced substantial research on child psychology (Smith et al, 2003).

Piaget proposed that cognitive development of humans is based on their ability to adapt and learn from the environment through assimilation and accommodation (Piaget, 1952). This process in children is based on developmental stages, which is in turn dependent on the age of the child (Schaffer and Kipp, 2009). He proposed four cognitive development stages in children: such as the sensori – motor period (children of age 0-2), preoperational period (children of age 2 to 7), the concrete operations age (children aged 7 to 11 years) and the formal operations stage (children aged 11 or 12 and above).

The pre-operational period of a child’s development is that stage at which children are able to relate to objects symbolically (Piaget, 2001). Piaget asserts that the thinking of 2 – 7 year olds is animistic, egocentric and characterised by centration. They are able to reason about objects and events based on their symbolic representation (Damon and Lerner, 2006). However Piaget (2001) asserts that children of this age range are unable to make appearance and reality distinctions of these objects. Therefore if the appearance of two similar objects (number, mass or liquid) has been changed, the child would be unable to deduce this logically (Schaffer and Kipp, 2009). This occurrence is attributed to their inability to conserve, which refers to a person’s understanding that superficial changes in appearance do not reflect change in quantity (Damon and Lerner, 2006). Pre-operational children lack the thought process required to apply principles of compensation and reversibility and therefore have difficulty in conservation tasks (Piaget, 2001).

Though Horowitz (1987), amongst other theorists, has verified the authenticity of this theory, Vygotsky’s (1978) emphasis on the socio-cultural affect on childhood development portrays that cognitive development cannot be viewed in isolation. This view is supported by Damon and Lerner (2006) who discovered that cognitive development of children in various parts of the world differs significantly. Donaldson and McGarrigle (1978) found that children’s responses to Piaget’s experiments improved by up to 48% when the wording and context were changed. Even slight variations in the wording could help clarify the meaning of the question, and can have positive effects on the child’s performance (Locke and Ciechalski, 1995).

The major objective of this research is therefore to ascertain the effect of wording on a pre-operational research carried out with a 6-year-old child. Would a variation in the wording and context of the experiment result in a different response from a child in the pre-operational stage?


This research would be adopting a deductive approach to answering the research question. Existing theories have been reviewed, which would then form the basis of this research that aims to verify or discredit such assumptions (Horowitz, 1987).

a. Participants

This research was carried out with a 6-year-old male. He is from xxx origin, class, school, hobbies and activities. He is well averse in English language and can communicate effectively.

b. Material

The conservation of quantity experiment was utilised in this research. The materials present were two empty glasses (measuring 30ml, 5cm long and were conical in shape), one clear plastic bowl (square in shape and measuring 5 cm square, 2 cm long) and a jar of diluted Ribena, which were all set on a dining table. Two chairs were present, with the child sitting opposite the researcher.

c. Ethics

The participant utilised in this research, is the researcher’s child. The child’s permission was sought without interfering with his playtime with friends, eating time or homework time, thereby removing any obstacles that would have prevented the child’s full attention. The procedure was explained thoroughly to the child, the researcher confirmed that the child fully understood what was going to happen before the experiment commenced. The Child’s identity has been protected in this researcher, by referring to him as ‘The Child’.

d. Design

This experiment was designed to replicate Piaget’s conservation of quantity experiment as depicted in Piaget (1952). The procedures, materials and participants are to a considerable extent, a replication of Piaget’s experiments.

e. Procedure

The replication of Piaget’s experiment followed the following sequence.

The two glasses, one bowl and Ribena jar were placed in the middle of the table.
The Child was invited over and talked through the whole procedure.
Consent was sought from the child, in that he wanted to participate and understood the procedure and what was required of him.
Equal portions of Ribena were poured into both glass cups.
The child was asked if the quantity in both glass cups were the same.
Then the Ribena in one of the cups was poured into the square plastic (shorter and wider).
The child was asked again if he thought the quantity in the glass and the bowl were the same.
The responses derived from the child were recorded and the experiment was concluded.


The following conversation ensued during the experiment:

– Researcher: “I am going to pour Ribena into these two cups for you and your brother. I want to give you the same amount”

– Child consents and nods head. Researcher pours equal quantity into both glass cups.

– Researcher: “Do you think the Ribena in the two cups are the same amount, or are they different?”

– Child examines content in both cups.

– The Child: “They are the same amount mummy.”

– Researcher: “OK, but this one cup does not look clean, let me pour the Ribena into that bowl.” Pours contents in one of the glass cups into the bowl.

– Researcher: “Is that OK, would you like the one in the bowl or the one in the cup?”

– Child examines content of the glass cup and bowl.

– The Child: “I would like the one in the cup”.

– Researcher: “WhyAre they different?”

– The Child: “The one in the cup is bigger mummy, that’s why I want it.” Child has mischievous look on face, like he has done something really smart.

– Researcher: “OK, I would give you, but why do you think the one in the glass is bigger”

– The Child: “Because it looks taller, and the one in the bowl looks shorter. I want the one in the glass cup.”


The major objective of this research was to ascertain whether a change in the wording or context of the experiment would result in any significant difference in response from the participant, with respect to Piaget’s conservation experiment of liquids for children in the pre-operational developmental stage. Piaget claimed that children in this stage were unable to distinguish between the same quantities of liquids that had been poured right in front of them into glasses with different shapes (Piaget, 1952). However Donaldson and McGarrigle (1974) recorded better results in kids when the wording of the experiment and context were more ‘child friendly’. The experiment was therefore carried out with a 6-year-old kid, and the materials and language utilised were those that the child were familiar with and had a keen interest in (in this case – a bigger share of Ribena fruit juice).

The child reported that the quantities of Ribena in the conical shaped glass cup, and square shaped plastic bowl, were indeed different, and that he wanted the glass cup because that was ‘bigger’, even though he saw the researcher pour the contents of the other glass cup into the shorter and wider bowl. When asked to expatiate on the reason why he thought the contents of the glass cup were bigger, he attributed it to the contents being ‘taller’. The child did not seem to understand that though the contents had been poured into a shorter and wider bowl, the contents of the liquid had not changed; it was only the width of the bowl that made the liquid lose height. These findings conform to Piaget’s (1952) theory on the cognitive developmental stages within children. It illustrates that The Child is not able to conserve and deduce logically that the quantities in both containers are indeed the same.

Though the wordings and context were changed significantly to represent something that the child would understand fully, he did not seem to verify Donaldson and McGarrigle’s (1974) theory on the changes in response that could occur. Though a change in wording and context does enable The Child to understand the experiment better and answer the questions more effectively, the findings of this research illustrate that he is still unable to logically deduce the correct answer.

However, the fact that this research was carried out on just one child, poses a severe limitation. Responses gotten from The Child, though reliable and valid, are not generalisable for all kids aged 6. It does not imply that all six-year-old kids in the vicinity, same school or even the same house, would give the same response. Another limitation pointed out by Schaffer and Kipp (2009) is that kids start an experiment with a predisposition that something is bound to change. When the researcher inquires about the content the second time, they believe that something must have changed for that question to be asked, thereby prompting their response.

Though my research on wording and context did not necessarily disprove Piaget’s theories, I believe it does pose a significant opportunity as children seem to understand the situation better, and are more interested when the experiment is of interest to them. I therefore recommend further research with more children, using the procedures outlined in this study.

Word Count: 1578


Damon, W., and Lerner, R. M. (2006) Handbook of Child Psychology: Social, emotional and personality development, John Wiley and Sons, 1128pp

Donaldson, M. and McGarrigle, J. (1974) Some clues to the nature of semantic development, Journal of Child Language, Vol. (1), p185-194

Horowitz, F. D. (1987) Exploring developmental theories: toward a structural / behavioral model of development, Routledge, 216pp

Locke, D. C., and Ciechalski, J. C. (1995) Psychological techniques for teachers, Taylor & Francis, 338pp

Piaget, J. (1952). The Origins of Intelligence in Children, New York: International University Press.

Piaget, J. (1972). Psychology and Epistemology: Towards a Theory of Knowledge. Penguin.

Piaget, J. (2001) The Psychology of Intelligence, 2nd Edn Revised, Routledge, 203pp

Schaffer, D. R., and Kipp, K. (2009) Developmental Psychology: Childhood and Adolescence, Cengage Learning, 647pp

Smith, P. K., Cowie, H., and Blades, M. (2003) Understanding children’s development, Wiley-Blackwell, 663pp

Vygotsky, L.S. (1978). Mind and society: The development of higher mental processes. Cambridge, MA: Harvard University Press

Free Essays

Considering the history of OCCM theory, explain to what extent OCCM theory simply records management practice of the time that the theory was developed as opposed to being in advance of practice and therefore providing new thinking.


The culture of the organization determines how effective a business is. Peter and Waterman emphasized the importance of organizational culture in 1982 when they gave their theory about how organizational culture affected a business organization. However, it was not the first time that writers and scholars had brought attention to organizational culture as many other philosophers before that time had brought the issue that there was a link between culture and effectiveness of a business. For example, Blake and Mouton had already argued about this issue in 1969 and had claimed that culture was a major factor in determining the organization’s success.

Organizational culture

The theory of organizational culture dates back to the 1960s and even earlier when different writers gave different theories of what is culture and how it affects the business. There is no dispute over the definition of culture but there is an on going argument as to how this culture affects the success of an organization.

Organizational culture is a set of beliefs, customs, values and behavior. Drennan, (as cited in Bernard Burnes, p 44) gives the easiest definition “culture is ‘how things are done around here’.” This definition explains culture in the easiest words. Basically, the organizational culture theory emphasizes that organizations are like normal societies which have their own beliefs, norms and customs.

However, the theory about how culture affects the business is not as simple as the definition. Different writers argue on varied areas of culture and link them to the success and performance of the business. After the Second World War, the rise of Japan was linked to its powerful organizational culture. Studies were carried out to see how, and what cultures led to the success of Japan.

Change in organizational culture

Organizational culture is the main obstacle in introducing a change in the business practices. People’s beliefs, their customs and set of values are very difficult to change. For example, a change was introduced to stop gender discrimination and to give equal opportunities to both the genders. Even if that change was justified and introduced on a large scale in almost all businesses, still people found it difficult to accept it. They continued to think of women as unable to take on the responsibilities at the higher managerial levels and so, they remained at the low hierarchy levels in many organizations where the culture was strong enough to make room for this change.

Many theories about change in organizational culture and how to manage that change have been developed. The need for such theories arose when many businesses failed because the people did not accept the change they introduced in the organization. It is not easy to change the set of beliefs and norms, which develop over a long time and people get used to following them. This is the reason many businesses failed when they tried to be more effective by changing the way things were done. The failure rate was 70% of businesses, which tried to change the culture of their organization.

The components on which a culture is based, like the cultural model made by Cummings and Worley (as cited in study guide, pg46), which shows that the culture comprises of basic assumptions, norms, values and artifacts, are very difficult to alter. The culture of the organization develops over the years with past leaderships and customs and so, changing that culture by introducing some new techniques and work methods lead to de-motivation and dissatisfaction of the employees. Even if the employees accept the change, it is difficult to implement it.

The organizational change management theory explained the different methods of introducing change and managing it so that the failure rate decreases and the firms succeeds in implementing a change and benefiting from it in terms of increased profits performance. The OCCM theory, therefore, was not something the businesses were practicing before. Although many businesses knew the importance of culture and its role in determining the effectiveness of the business, most of them were unable to change the culture successfully to increase effectiveness. OCCM theory helped those firms to introduce change and implement them. This theory explained the ways of adapting the work force to the change, which had to be introduced. Hence, this was a novel theory, which not just explained what organizations already believed but it also provided them an insight into implementing the change successfully.

Implementing OCCM theory in organizations

The main issue with organizational change is not why it is important and when it has to be implemented but the main issue is how to put the theory into practice. Many writers have written theories and developed models to help businesses implement that change and manage it so that it brings the results they want. However, many of these theories are too complex to actually use in businesses. These theories were of little use for the managers and the people who were responsible for initiating the change.

Different theories of implementing change

The eight-step model given by Kotter is the most famous and it highlights eight simple ways, which can lead to a successful change. With this model, not only it becomes easy to avoid disputes and insurgence in the organization when some sudden huge change in the culture is introduced, but it also makes that change successful. The major concern when introducing change is the work force and their reaction to it. It is highly important to initiate the change in such a way that the work force does not get de-motivated and dissatisfied.

The eight-step theory given by John Kotter says that the person who is initiating the change should do it in the following way:

Communicate the need for change: this says that the manager should explain the various problems the business is facing and the possible causes. When a sense of urgency is created, the people inhabiting the organization will make up their minds for accepting a change.
Coordinate and interact: the next step is to ask the people to suggest different ways in which those problems could be solved. This would give them the chance of suggesting changes in the culture.
Make a vision for the change: after discussion about several methods and changes in the culture, a vision can be created about the change the business has to introduce. This vision will determine what the business wants by introducing the change in the organization.
Communicate: it is crucial to communicate the benefits of the change, the vision and the problems if change is not initiated, so that the people at all levels are satisfied and the risk of resistance is decreased.
Tackle resistance: while you will make sure that all the staff is satisfied, there will be people who will resist the change. Some business processes and structures will also make the change difficult to implement. It is important to tackle them well.
Make short-term targets: instead of making a list of long-term targets, it is better to create short-term goals and reward the workforce on the achievement of those short term targets. The short-term goals are achieved earlier and the people will see the result of the change, which will reduce resistance and criticism.
Implement change and try to improve: do not just introduce the change. It is also important to continually look for methods of improvement, which will lead to increased productivity.
Lock the change into the organizational culture: the change you introduce and implement should become the core of the organization and should become a major part of its culture. This is what cultural change is called.

The OCCM theory given by Kotter explains the process of change management in the simplest way. This theory is widely used in businesses and is very useful since almost all people, not just change leaders, can understand and follow the simple steps.

The OCCM theory given by Cummings and Worley (2001) is too complicated to follow. Very few businesses found those complex ideas useful. On the contrary, many other theories of change management explain very simple methods, which are too general. Those theories are of no use to the organization. Moreover, many writers commented on change management that the culture problems may be exaggerated and blamed for poor performance. Those writers pointed out that many managers may blame the culture for the ineffectiveness of the organization while in truth, the problem may be because of other reasons like poor communication or lack of coordination.

Another famous and useful OCCM theory is the planned change approach theory by Kurt Lewis, which was given in 1940s. This theory gained a lot of popularity since it emphasized on planning the change and then implementing it. It was the best theory until the industrial revolution when people criticized that it is not suitable for those people who run businesses in unpredictable surroundings. They argued that in those surroundings, there was no room for planning and they had to introduce sudden changes in their organizational culture. This is because the planned approach theory took quite a lot of time to introduce and implement change, which many businesses could not tolerate. It was only useful for those changes, which were not urgent. However, the results and the success rate from his theory were high enough as the planning process led to fruitful benefits.

Hence, the OCCM theories were overall useful in reducing the failure rate of businesses, which tried to improve their business performance by changing the organizational culture. Not all the OCCM theories were useful in making the change initiative a success, but there were some like Kotter’s model, which proved to be very practical, and a simple theory to follow.


Bernard Burnes, organizational culture and change management, 2010, vol 1, united kingdom, kotter’s 8 step change model, 2011

Catherine Itzin and Janet Newman, ‘gender, culture and organizational change’, Routledge, 2001

Free Essays

Experiential Learning Theory


It is difficult to define learning but I understand from my teachers that it is the acquisition of knowledge and skills from instructions or studies. The teachers have an inclination and desire to help our learners acquire, maintain or develop the knowledge, skills and attitudes that they need in the context of their everyday work (Mann 2002). According to Knowles, learning is broadly defined as the occurrence of change in a person with regards to behaviour, skills, knowledge and attitude. (Knowles 2005).

Description of a case from my teaching

This was an intra-operative training for a Core Medical Trainee doctor (CT Doctor) in the reconstruction of tissue defect using a local skin flap. The trainee had never done this procedure before independently but had seen similar procedures being done and is regularly seeing the postoperative results of cases operated by me and other colleagues in the out patient follow up clinics.

The aim of this teaching was a one to one surgical skill teaching of how to do a rhomboid flap, which is a transposition flap to reconstruct the defect following excision of a lesion. Though it was a teaching of an operative technique, it involved three stages namely pre-operative planning, per-operative practical procedure and post-operative documentation and reflection on the performance.

The student usually is required to have preliminary prior knowledge about the skin anatomy including the components of flaps, blood circulation and different types of flap configurations based on the design (transposition, rotation and advancement flaps). The student is taught about the preparation on the operating table, draping the operation site, observing all aseptic precautions, removal of the skin lesion (this part is done me in this teaching session), planning of the flap, raising the flap, insetting the flap to fill the defect, suturing the flap and donor site, applying the dressing, documentation of operation notes, reflection on the performance and agreeing on what changes needed to improve the performance next time.

Learning theory applicable to my teaching case

Experiential Learning Theory (Kolb)

The experiential learning theory was developed by Kolb emphasizing the importance of experience in the learning process and based his theory on the work of Dewey, Lewin and Piaget (Kolb 1984).

Kolb offers a working definition of learning as “a process whereby knowledge is created through the transformation of experience” and emphasizes the importance of adaptation, as knowledge is not static but changing, as we learn and relearn through the process of ongoing experience which changes the practice.

Kolb built this upon six propositions (Kolb 1984):

Learning is best conceived as a process, not in terms of outcomes

Learning is a continuous process grounded in experience

The process of learning requires the resolution of conflicts between dialectically opposed modes of adaptation to the world

Learning is an holistic process of adaptation to the world

Learning results from synergistic transactions between the person and the environment

Learning is a process of creating knowledge

Principles of Experiential Learning:

Learning occurs best when people learn through their own experiences and from the reflections of their own experiences rather than through lectures and theories to generate knowledge and skills.
In learning what the learners do is more important rather than what they know
Experiential learning makes the learners’ behaviour and attitudes explicit so that they can be assessed to construct it better for the future experiences.
It is not just sufficient to teach the learner what to do but they need to be actually shown how to do and also how to improve it. The cyclical learning offers the learners continuous improvement by repeating the learning wheel over and over. Continuous use of the experiential learning cycle guides individuals and groups or teams towards improved performance and high quality outcomes.
Experiential learning is not just about acquiring knowledge and skills but generating experience in the learner to discover what it is like, how it made them feel and what it meant to them, which in turn is the key to generating greater skills. The new experiences not only generate new ideas but also dispose of or modify the old ones.
Experiential learning gives importance to the key aspect of learning which is to achieve change in behaviour and attitude by the holistic approach of addressing cognitive, emotional and the physical aspect of the learner.
Many learners feel experiential learning process gives a sense of satisfaction, reward or gift because of it’s value is appreciated by the learner as a vital learning tool

Kolb developed a cyclical learning process consisting of four stages (abilities):

Concrete experience (abilities) – “Doing something”
Reflective observation (abilities) – “Observing and reflecting on the action”
Abstract conceptualization (abilities) – “Thinking and finding where the action fits in with theory”
Active experimentation (abilities) – “Planning to implement the idea to solve actual problems

The learning can begin at any of the four stages (Kolb & Fry 1975) but needs to go through all four stages to complete and progress further for learning to continue. Kolb and Fry developed four types of learning styles people use and they can be placed between concrete experience and abstract conceptualization; and active experimentation and reflective observation as shown below:

Four Stages of Kolb’s Learning Cycle

Concrete experience:

The learner performs an activity and gains experience. The activity can be a demonstration, a case study or learning a skill such as assisting an operation or performing an operation under supervision.

The learner links this awareness or experience with his prior knowledge or experience resulting in a new experience or knowledge and this forms a basis for future experience.

Reflective observation:

The learner reflects upon the performance as a self-reflection, with that of the observer who is usually the teacher or from a small group in the form of discussion or constructive criticism. This is very important for the learner to link in with his prior knowledge and experience and move forward.

Abstract conceptualization:

The learner develops a concept or theory from the knowledge gained through this experience and makes some plans to alter or change his future practice.

Active experimentation:

At this stage the learner puts into practice of the lessons learnt from this experience to experiment the solutions to improve the new experiential cycle.

Four Types of Learning Styles (Kolb, 1976)


(Abstract conceptualisation & reflective observation): This group has a strong ability to learn better when provided with sound logical theories to practice and reflect. They are concerned with abstract concepts than people.


(Abstract conceptualisation & active experimentation): This group learn better when exposed to practical applications of concepts and theories. They are focussed on solving specific problems by reasoning.


(Concrete experience & active experimentation): Their greatest strength is doing things and learn better when given opportunity to have “hands-on” experiences. They perform well when required to react to immediate circumstances


(Concrete experience & reflective observation): This group is strong in imaginative ability and are good at generating ideas and seeing things from different perspectives. They are interested in people.

Though there are different predominant styles of learning in each learner, there is considerable overlap and mixture of different situations that is likely to complement the learning. Kolb’s model provides an invaluable practical framework for designing experiential learning for adults.

Relevance of KOLB Learning theorY TO MY CASE

Concrete Experience:

The CT doctor started from the stage of concrete experience when the flap procedure was planned. He has seen me doing the flap procedure before and he has also assisted me to perform this procedure before. We had discussion pre-operatively, which triggered his pre-existing knowledge about the flap and his prior knowledge of anatomy, technique of flap elevation, insetting, and suturing in place. This is followed by the operative procedure done by him and I assisted him. This practical experience imparted new level of understanding to him and assimilated with his prior knowledge.


After the completion of the operation and documentation, we had time to reflect on this new experience and consolidate the experience with the prior knowledge to form a new knowledge. During the discussion, I have acknowledged the good points and both have agreed the importance of tissue handling, suture placements in relation to tissue planes and the need to trim off the excess bulky tissues in the flap to fill the defect better.

Abstract Conceptualisation:

As a result of above discussion and feedback, we have identified areas for improvement as mentioned above for the transposition flap. We have agreed that I will assist him again in another similar case when he can apply those principles during the procedure. I also introduced the concept of rotation flap and advancement flap as in some cases, after removal of lesion and creating the defect, it is not always possible to perform transposition flap. The learner has some prior theoretical knowledge about the configuration and surgical technique of rotation and advancement flaps. I gave further guidance regarding reading materials – flap books and specific articles. This fine-tuning has helped in preparing the learner for active experimentation in a new cycle.

Active Experimentation:

After two weeks, the learner developed further reading related to the new concepts following the above discussion and attended my skin cancer clinics. We selected two cases needing operation to remove the lesion and reconstruction using local flaps. We applied his knowledge and prior experience to formulate the new treatment plan to carry out very soon. This has prepared him for the new encounter of active experimentation stage described by Kolb.

Some Practical Difficulties and Potential Improvements

I have come across problems and difficulties during the flap teaching sessions and I have enumerated them with the possible solutions, which I hope will improve my future teaching and make it more beneficial to the trainee and safer to the patients.

Reflection of the learners with that of teachers’ observation is an important part of this learning cycle.

Problem: The operative technique teaching of the flap to cover a tissue defect is mostly done under local anaesthesia with the patient awake. It is not always easy to talk all the aspects explicitly during the procedure.

How to overcome it: One of the options would be to plan the first cycle of operative learning in patient who wanted the procedure under general anaesthesia.

Problem: In some instances we have missed out this session of reflection due to lack of time, busy operating list and the learner had to attend ward patients or dressing clinic patients.

How to overcome it: I need to plan this teaching session when the learner has a protected time to attend my appropriate theatre session. In cases of unforeseen circumstances causing this, I instruct the learner to write down his thoughts of reflection of the session and send it by email which will enable me give my impressions to him personally at a mutually agreeable time to move forward with an agreed plan for future experiences. The other option is to hand over the further continuity of learning to another colleague.

Problem: Quite often Core Trainees in Plastic Surgery do not attend the Dressing Clinic to see the post-operative results when the patient returns for the suture removal and they also miss the opportunity when the patient returns to out patient clinic subsequently for pathology results. Reviewing the patients on these two occasions is equally important to complete the learning process.

How to overcome it: I have started including in the post-operative instruction to call that particular Trainee doctor (for specific cases) when the patient returns for suture removal. Another option is to book the patient into my dressing clinic session and encourage the learner to attend. I also inform the trainee that the assessment form will be completed after he has seen the patients’ post-operative result. This is an incentive for them to attend the clinic.

Problem: Kolb cycle may be difficult to apply to all trainees and there are some cultural differences the way the trainees are trained, for example trainees from Indian subcontinent or from Europe.

How to overcome it: I will use spiral method of learning proposed by Dewey in this type of surgical technique teaching so that the learner follows it through the spirals to modify and improve the quality of outcome performance. I would also incorporate four-stage process of teaching in theatre (Walker & Peyton, 1998) as part of the Kolb cycle depending on the pre-existing experience of the learner. Stage I involves my demonstration of the normal procedure at normal speed. In stage II, I will carry out the procedure again with full explanation and trainee is encouraged to ask questions. I perform the procedure for a third time during the III stage with trainee describing the steps, being questioned on key issues and providing any necessary correction. This stage continues until I am satisfied that the trainee fully understands the procedure. Now we move on to the final stage when the trainee carries out the procedure under close supervision, describing each step before it is undertaken. Thus this drilling of four-stage surgical skill development is followed by repetition to increase the confidence and further practicing of the skills to master it to apply in different situations. I will employ flexibility as to where to start the training depending on the individual trainees’ abilities and their prior knowledge and experience.

Here is a framework I plan to use for the future flap teaching sessions:


Mann K V. (2002) Thinking about learning: Implications for Principle-Based Professional Education, The Journal of Continuing Education in the Health Professions, 22: 69-76

Knowles M S, Holton E F, Swanson R A. (2005) What is Learning, The Adult Learner, Elsevier, Burlington, MA

Kolb D A. (1984) Experiential Learning, Experience as the source of Learning and Development, Prentice Hall, Englewood Cliffs, New Jersey

Kolb D A. (1976) The Learning Style Inventory: Technical Manual, Boston, Ma.: McBer.

Kolb D A. (1981) ‘Learning styles and disciplinary differences’. in A. W. Chickering (ed.) The Modern American College, San Francisco: Jossey-Bass.

Kolb D A, Fry R. (1975) ‘Toward an applied theory of experiential learning;, in C. Cooper (ed.) Theories of Group Process, London: John Wiley.

Walker M, Peyton R. (1998) Teaching in the Theatre, Teaching and learning in medical practice, Manticore Europe, Pages 171-180

Free Essays

Symbolic Interactionism theory is concerned with the ‘sociology of the everyday ‘and focused on individual experience and issues of identity.


The role theory began when symbolic interactionism became part of Erving Goffman’s interest. His interest was observing individuals, groups in certain situations and settings rather than a social theorist and analysis through his work. (Birrell, Donnelly, 2004) He developed an interest in reactions that focused on facial expressions, body language. This can be shown in sporting ways through Erving Goffman being known as more of an observer rather than a social theorist. The theory began to emerge when Goffman realised symbolic interaction between groups in certain settings. Goffman’s approach was not developed on theory but on analysis of the interaction order such as, social situations or “environments in which two or more individuals are physically in one another’s presence” (Goffman Reader, p. 235). Symbolic Interactionism reveals the truth behind people’s actual role by observing their emotions, expressions it showed through their theatrical performances (Weiss, 2001) Out of all the sociologists Goffman was the only sociologist who found interaction from individuals through groups and one to one. Goffman was criticized for being unusual in his work as Goffman worked on essays rather than research as sociologists were expected to be known as a researcher. Critics found his work difficult to comprehend and this made situations complicated. Gouldner, (1970) discovered that Goffman was not interested in power, social class or social structure. Goffman took the criticism well that he was unable to talk about macro-concerns. These are the situations where we spend much or most of our life – in face-to-face activities involving others, whether these be everyday social situations, situations within organized structures (jobs, school), or unusual social situations (accidents, weddings, funerals). Goffman excels at observation, description, and insight, analyzing how people interpret and act in ordinary situations, and he provides guidelines concerning how to examine social situations. One of my colleagues recently read some articles by Goffman, noting how he sometimes became overly formal in his writings, and suggested that it is unfortunate the Goffman did not become a novelist rather than a sociologist.

Key terms that relate to Symbolic Interactionism; are, ‘self’ which are known as ourselves, identity, personality or in terms of identity finding what and where the person is in social terms (Vryan, Adler & Adler, 2003). Finding identity is through situations (Vryan, et al, 2003). The term ‘I’ meaning the actual individual itself, can be understood as the person being the person, could possibly mean the same thing as ‘self’. In relation to identity there are many issues with this term as identity can often be deceived when amongst other people. Nevertheless the person deceiving themselves may or may not be conscious of this role act always trying to impress others to be accepted. The way the theory can help sport sociologists understands social relations in various ways are observing roles that people play through experiences success through society’s attention, through its approval or disapproval (Weiss, 2001). Being approved for the person you are is a feeling of acceptance and feeling like you are essentially a part of a group, however if not feeling accepted this can influence the person to then act a different role or attempt to change personality traits which is clearly impossible. Self – recognition can only happen through internal belief that acknowledgement has been met by others. Humans are creating each other all the time through the experiences being produced. Therefore in terms of sport, the athlete being acknowledged by surroundings and the media is through the success or been unsuccessful that the athlete has made in certain performances. The reason for change in these situations are doubts about ‘self’ not having enough self-esteem to come face to face with situations and individuals that are more of a threat. Self- esteem is found through identity reinforcement or social recognition. Self- awareness is developed in confidence in this self-esteem and encouragement from an individual with the way the change takes place is recognised by others in the relationship to the self (Weiss, 2001). The positive that can be taken from this theory is that Goffman was aware of his surroundings. Goffman was criticised in his lack of knowledge when it came to macro-concerns. Functionalism and Marxism use strengths in this theory by functionalism being positive, appreciative about reality in society. Whereas Marxism is positive in revealing the truth to people therefore Erving would have experienced these approaches/theories during his observations. The strength that can be taken from Goffman is his awareness of people around him, and he emphasised this in his work so that people would be aware of existing roles being played. Goffman was able to observe certain situations such as, impression management, role distance and face work (Birrell et al., 2004). This relates to functionalism by showing a positive insight into peoples demeanour with values which is reflected through identity reinforcement (Weiss, 2001). Functionalism through socialisation had a way of learning norms and values.

The way the theory has applied sport is through the connection of society which forms identity reinforcement or acceptance. Identity creates groups, specific sporting roles, and individuals in sporting performance (Weiss, 2001). Nevertheless in today’s society, there are many sporting issues that can be a barrier to forming an identity or being accepted. Issues that can arise in sports are sexism, racism, social class which mainly affect sporting performance being excluded or isolated from a group. For example, not being situated in the right class, a lower class member of society interesting in playing tennis but unable to, as there is low income from peers.

Class associations have a long duration effect on economic inequality on people’s lives that has led to various amounts of wealth and power, which is to say to differing classes. (Bourdieu, 1978) Being acknowledged through an assigned role that is dependent at birth determines age, sex, background and even social class (Weiss, 2001). For example, being accepted for the way you look and behave is acknowledged in this area that allows the person to be a part of the team. To be specific, female footballers are accepted playing in their team due to their ability and not to do with their gender (Weiss, 2001) Developing self-esteem is followed throughout the sporting life of a performer which influences the behaviour of an individual. Recognition can be found through a specific role or function. In sport, there is a certain link between the class and sport that the participant plays. Another sporting example is recognition as a member of a group. Acceptance in a group states that the member is part of the team due to being a popular member or being good at the role their given whilst playing the sport. Through acceptance it is by intimacy and symbolic ritual, the understanding between members of a groups that builds trust and close friendships (Weiss, 2001). This is met on the pitch and after the game at social events, especially with the bonding happening, it may demonstrate the connection on the pitch as well as off the pitch. Each and every one of the member of the team represents an individual of themselves. Even so the individuals are working towards their roles to make an impact of unity and belonging. However, the collapse in keeping a smooth interaction or even worse rejecting to act with others, gives Erving Goffman an opportunity to analyse the situation. An example that problems are accounted for are experienced in sports by not giving people a chance to express their speciality need, that gives the person their identity. The people being rejected are willing to impress the ones who avoid their presence. Women being rejected for wanting to play football, this would look deviant to some people. Apparently women are supposed to play in sports such as, gymnastics, diving. This is more appropriate for women to be taking part in this activity rather than playing a game of football or rugby. This is the way male critics and some women who may not have any experience with football. Looking at this in a sporting way arguing on both sides of the situation, women being involved in football could help men understand the meaning of fairness and equality.

Also ways in which to control behaviours on the pitch in a more controlled manner as women can bring good to the game. Birrell et al., 2004) supports the point by stating that women are best suitable in unnerved situations, well if that is the case then this can be demonstrated on the pitch especially in situations such as, penalty kicks, the build up to the penalty kick can be very intimidating and terrifying but if there is the support from other members of the groups and naturally being calm, it can put the situation at ease.


Weiss, O. (2001) Identify reinforcement in sport: revisiting the symbolic interactionalist Legacy, International review for the sociology of sport; 36; 393

Birrell, S. and Donnelly, P. (2004) Reclaiming Goffman: Erving Goffman’s influence on the sociology of sport. In: Giulianotti, R. (2004) Sport and modern social theorists, pp. 49-64, New York: Palgrave

Bourdieu, P. (1978) ‘Sport and Social Class’, Social Science information 17: 819-40.

Gouldner, A. (1970) The coming crisis of western sociology, New York: Basic books. In: Birrell, S. and Donnelly, P. (2004) Reclaiming Goffman: Erving Goffman’s influence on the sociology of sport. In: Giulianotti, R. (2004) Sport and modern social theorists, pp. 49-64, New York: Palgrave

Vryan, KD, Adler PA & Adler P, (2003) Identity in: Reynolds LT & Merman- Kinney NJ. Handbook of symbolic interactionism. Lanham: AltaMira Press

Free Essays

Critically analyse and apply the theory underpinning one intervention with a dually diagnosed client. Contrasting this intervention with other techniques.


Dual diagnosis has been described as one of the most significant problems facing the health services (Phillips et al 2010). The term was first used in America in the 1980s and in its most basic elements describes someone who has a combination of a mental illness and substance misuse problem. Dually diagnosed patients are often frequent users of emergency services and of in-patient care (Bartels et al 1993). There is also a much higher rate of offending and imprisonment amongst this group (Yesavage and Zarcone 1983 cited in Menezes et al (1996). Yesvage and Zarcone cited in Menezes (1996) believe that alcohol and drug misuse interact with the symptoms of psychotic illness to produce a more severe acute illness. Due to the complication of treatment approach recovery is often slower than a psychotic episode uncomplicated by substance abuse. This places a great burden on resources and staff (Drake et al 1993), which is corroborated by the London survey (Menezes et al 1996) discovering on average that this group of patients spends almost twice as much time in hospital than those without a substance misuse problem.

Clients with the most severe psychiatric disorders tend to have the highest rates of co-occurring substance use disorders (Drake 2007). It has been well documented that the co-existence of severe mental health and substance misuse problems are common (Regier et al 1990; Krausz et al 1996; Menezes et al 1996 cited in Graham 2003). Prevalence figures vary across studies however the latest study by Weldon and Ritchie (2010) estimate the lifetime prevalence rate of substance abuse amongst persons with severe mental illness at 50%, which is 4.6 times higher than that of the general population (Blanchard et al 2000). One of the challenges of mental health providers is how best to meet the needs of this group of clients (Graham 2003).

The most recent government guidance is one of integrated treatment whereby the treatment for drug and alcohol problems are provided primarily within mental health services, integrating this with the treatment of mental health problems (DoH 2002). This is to be provided by one team and involves a flexible combination of treatments targeting the specific needs of those diagnosed with co-morbid severe mental illness and substance misuse (Horsfall 2009). Researchers and clinicians have developed a number of interventions that combine, or integrate mental health and substance abuse interventions (Drake et al 2007). An example of one element of integrated treatment is Cognitive- Behavioural Integrated Treatment (Graham and Carnwath 2004). C-bit incorporates an integrated approach with personalised formulation to deliver improved treatment outcomes to dual diagnosis patients.

The focus of this essay will be on the use of C-bit (Graham and Carnwath 2004) and its application with a client who has been has been diagnosed with schizophrenia and alcohol problems. For the purpose of this essay and confidentiality his name has been changed to David. C-bit can be split into 4 distinct phases, Engagement and Building motivation, Negotiating some behaviour change, Early relapse prevention Relapse management. The essay will concentrate on negotiating behavioural change and what this entails. The author will then compare its effectiveness with an alternative approach.

An introduction to C-Bit

Hermine Graham (2004) describes C-bit as a psychological multi-purpose tool designed specifically for people with both a mental illness and a problematic substance misuse. It was developed from CBT which had a strong evidence base for mental health (Grant et al 2004) and substance use problems (Conrod and Stewart 2005). The evidence base of CBIT in dual diagnosis remains poor as studies have tended to focus on engagement and building motivation as appose to the maintenance of change that CBIT encompasses (Callaghan and Jones 2010). However early studies would suggest that the skilful use of analysis, disputing cognitions and homework assignments improve the skills required to promote abstinence including self-efficacy in finding, establishing and maintaining appropriate support networks (Rassool 2002).

CBIT follows the cognitive model and treatment approach (Graham 1998, 2003). A client’s beliefs about substance misuse are often linked to their own experience of mental health problems. David would often say in therapy that the side effects of his anti-psychotic medication made him feel over sedated and this had a knock on effect in social situations. He found that alcohol improved this and allowed him to integrate better in social situations. By continuing to use alcohol it was maintaining a negative maintenance cycle.

Graham (2004) identifies three key aims of CBIT with dual diagnosis patients. The first concentrates on client and therapist identifying and challenging unrealistic beliefs about substance misuse and substituting them with alternatives that aim to break negative maintenance cycles. The second facilitates an understanding of the link between substance misuse and mental health problems and thirdly CBIT aims to give the client the ability to self-manage substance misuse and recognise the early signs of relapse. Although there are 4 distinct steps in treatment approach the flexibility of the treatment means a client does not need to progress through them all. The harm reduction philosophy that underpins the intervention (Heather et al 1993) puts more emphasis on a client setting more realistic goals and achieving these. Although flexibility is a key asset of CBIT it would be wrong to assume there was no structure to therapy sessions. In later sessions especially, before commencing a session client and therapist must set an agenda to discuss which ensures key areas are discussed (Graham 2004).

In practice, teams trained in the use of CBIT tend to use the general principle of the approach rather than the distinct components or techniques (Graham et al 2006). The author believes this shows the flexibility of the therapy and therapists and clients find what proves useful to them . Graham et al (2006) also discovered that when trained members of the team used various assets of CBIT, engagement increased, alcohol intake was reduced and a reduction in alcohol-related beliefs. The study however noticed similar findings when the client had been seen by teams that had not yet received CBIT training suggesting that CBIT alone was not responsible for the change in behaviour and belief. However, qualitative information recorded from the teams’ staff suggested that treatment integration increased over the course of the study, and that CBIT was a useful tool for integrating & planning substance misuse treatment. Qualitative information from the team managers suggested that CBIT training improved the ability of teams to address substance use by themselves, rather than avoiding substance issues & referring clients to specialists.

Achievable Goal setting

Following treatment phase one the client will be able to identify some of the negative effects of substance misuse. David could recognise the negative effect that alcohol use had on his ability to find any form of employment and how he had no real supportive social network besides ‘drinking companions’. Graham (2004) highlights that in treatment phase two it is probably too early for a client to consider complete abstinence. David was beginning to make links with the amount he drank and the negative effects he was having. Due to this he negotiated with the therapist that he would reduce his alcohol input by stopping all spirits but remaining on his strong lager. This follows the harm reduction philosophy that there are several levels in which change can occur that would reduce the negative impact it causes to the client. David identified his long-term goal as eventually getting some form of employment. Following treatment phase one David was able to see the impact excessive impact alcohol was having on his ability to make appointments on time (if at all), and how this would have a negative effect on any chance of employment. Graham (2004) suggests that for a client to get to this long-term goal a series of short term harm reducing steps need to be identified by the client in therapy that will in-turn have a positive impact upon his life. David had already agreed to stop drinking spirits but further steps included reducing contact with fellow drinkers, attending all appointments on time, getting his body back into a work routine. These steps would move David closer to the eventual long term goal and give him the belief that this was achievable. The therapist found that the use of the recovery star was a useful tool with aiding the client identify and plan how to achieve these goals. The recovery star helps both client and therapist measure change and visually see progress made. At times when David struggled to achieve goals it provided an opportunity for discussion on how to change the approach. David found the tool useful in between sessions where he could refer back to past successes to give him the confidence to continue. On reflective sessions what proved important for David was to identify and discuss possible obstacles that he may experience in trying to achieve his goals and to recognise that if things do not go as planned it should not be automatically assumed to be a failure. Simmons and Griffith (2009) believe that there is never a failure but an opportunity to learn and do things differently.

Behavioural Experiments

By treatment phase two of CBIT the client will have identified an unhelpful thought, the nature of which will be maintaining a negative maintenance cycle. David had begun to plan harm reduction goals to reduce the negative aspects of his substance misuse however there was clearly some situations he was avoiding, and some underlying maladaptive thoughts there were perpetuating his problems. To address this the therapist and David discussed and designed a Behavioural Experiment. Beck (1995) believes that BEs strengthen an intellectual belief by helping the client test out alternative beliefs and thoughts in practice in order to gain evidence to discover the validity of a belief . Beck (1979) believed through altering behaviour a cognitive change occurs. BEs are significant as a means of explicitly targeting belief change through experience and as such offer prime opportunities for sustained therapeutic change (Padesky 2004). David held the belief that if he did not drink alcohol he would appear boring and no-one would have any time for him. For this reason when David was going to be in the company of anyone he would drink excessively, therefore getting intoxicated became a safety behaviour. By allowing a client to see what will happen if they drop safety behaviour and then testing out what actually happens in that situation proves to be a powerful challenge to unhelpful assumptions (Whitfield and Davidson 2007). Sloan and Telch (2002) support this view adding that experiments target safety behaviours result in significantly greater changes than exposure alone. Safety behaviour may seem helpful and protective to a client but can lead to maintenance cycles of maladaptive processes perpetuating the initial belief. If a threat is not disconfirmed the maladaptive cognition continues (Salkovskis 1991, Sloan and Telch 2000, Clark 1989, Salkovski et al 1998). The notion of experimentation, derived from scientific principles, can be applied to the patient’s experience of the therapeutic process and it is this active experience which can be so meaningful; the validity of a new cognition being generally more memorable when followed through from conceptualisation to active experience (Westbrook 2007). Once the evidence contradicts the initial belief it allows the client and therapist to explore the validity of new more adaptive beliefs (Westbrook et al 2007). David and the therapist designed an experiment in which he would limit his alcohol approach and would then engage in general conversation in his local pub. Initial experiments gave David the confidence to build on further experiment supporting the work of Bennett-levy (2004) who believe early experiments increase confidence and independence BEs can be active, where the patient takes the lead role in either real or simulated situations to test the validity of thoughts, or observational, where data is gathered. Lewin and Kolb propose a learning cycle in which it suggests that for learning and retention to be enhanced the client must build upon knowledge and understanding gained through the experiment which in turn forms a foundation for the next step of the experiment. (Lewin 1946; Kolb 1984). The five key aspects of this learning cycle, Experience, Observation, Reflection, Planning and then further experiment underpins BE work.

Establishing supportive social networks

In the field of substance misuse social factors are seen as important in the onset, aetiology and maintenance of substance misuse (Graham 2004). David recognised that as his alcohol intake increased the friends he associated with were also using alcohol regularly. This supports the work of Drake (2004) who identified that clients with both severe mental health problems and substance misuse problems would have social networks of solely fellow substance users. David felt increasingly isolated from anyone outside of this network as his behaviour would draw attention towards himself. Trumbetta et al (1999) suggest that for anyone to make changes in substance misuse they need to reduce contact with such peers. Healthier networks need to be formed which provide positive support where there is excessive substance misuse is not the norm (Drake 1993a). David identified his sister as someone who was willing to and who he would like as a supportive person away from mental health services. In crisis David could contact his sister who could give him some level of support. Graham (2004) emphasises the importance of working closely with family members as they often know very little about dual diagnosis problems. David was only close with his sister. The rest of his family had isolated him due to his substance misuse. Ideally psycho-education information is often given in the group setting as family members may benefit from the experience and support of fellow members (Graham 2004). David’s sister became a key figure in David’s recovery and was encouraged to attend sessions on psycoeducation so she could best understand the problems associated with dual diagnosis clients and how best she could support David.

Limitations of its use

Prochaska and DiClemente (1992) recognised certain barriers to treatment for dual diagnosis patients in regards to therapeutic engagement, treatment continuance and goal setting. In the case of CBIT it makes assumptions of a certain level of coping skills and ability to facilitate cognitive change. Symptoms of schizophrenia can inhibit a client’s impetus to change behaviour (Horsfall et al 2009). Negative symptoms which have a negative effect on motivation and energy affects individuals internal drive to initiate the complex behavioural routines needed for abstinence (Ballack and DiClemente 1999). An integrated treatment approach incorporating CBIT does not make dramatic changes in the short term, it is a long term therapy. Evidence based studies are always plagued by attrition rates as clients relapse or do not return to the study. This may suggest that CBIT may suffer from the same poor treatment compliance/attendance. For clients who complete a full programme of treatment 10-20 per cent achieves a stable remission of their substance use problems per year (Graham 2004). This seems a low figure for the intensive input required on the part of the therapist and client. Bellack and Gearon (1998) believe the therapist must become tolerant of this client group dropping in and out of therapy and abstaining then relapsing. David’s attendance was at times sporadic but the therapist never criticised him for this but used it as a platform for discussing problems experienced through the week. Drake et al (2001) suggests the importance of assertive outreach teams in retaining clients within programmes. Hellerstein et al (1995) cited in Philips et al (2010) highlight that without this input dropout rates may be high, especially amongst those identified as having difficulties participating in treatment.

Alternative approaches

The evidence base for dual diagnosis is still in its infancy. Those studies completed have limited generalisation due to methodological issues such as heterogeneous samples, equivocal descriptions of treatment components and high attrition rates (Weldon and Richie 2010). Horsfall et al (2009) recognises that due to a lack of longitudinal studies long term outcomes have yet to be determined. It also proves difficult to compare C-Bit with alternative interventions as C-Bit is not used in a vacuum it is often used in conjunction with other therapies such as pharmaceuticals of motivational interviewing. Kemp et al (2007) found a significant improvement in substance use in dual diagnosis patients when CBT and MI principle were combined. For the purpose of this essay the author will briefly look at one main alternative approach to dual diagnosis, that of motivational interviewing.

Motivational interviewing

Treasure (2004) describes MI as a patient centred counselling approach that facilitates the patient in resolve and explore ambivalence about behaviour change. The theory of MI centres on the cycle of change and its six components, precontemplation, contemplation, decision, action, maintenance of change and relapse. Miller and Rollnick (1994) describes motivation as something that one does as appose to something that one has. Empathy is vital in the therapeutic relationship and the use of MI. If the client believes the therapist has no appreciation of their experience they are likely to dis-engage or not fully commit to therapy. Rassool (2002) believes active listening also has an important role in MI. Reflecting back to the client their thoughts, fears, hopes and doubts give a feeling of genuineness, trust and empathy. In MI it is important not to offer advice , give judgement or attempt to question. The reason for behavioural change should be acknowledged and stated by the client. MI proves an effective therapy in dual diagnosis if delivered effectively. The therapist needs to avoid confrontation as this will lead to client denial, the role of the therapist as expert proves counter-productive and structured answer formats will inhibit the client in recognising the effects of their substance misuse. Motivational styles that guide a client in discovering alternative ways of thinking about their problems results in positive change (Miller and Rollnick 1991). By combining elements of style and technique MI has proven successful in dual diagnosis patients and has a developing evidence base.

It proves difficult to contrast MI with CBIT as both complement each other so well and have similar approaches. Both are based on a collaborative relationship with clients, both incorporate a non-judgemental approach and both are approaches are built on empathy, warmth, trust and positive regard (Rogers, 1991). Both approaches also incorporate socratic questioning techniques encouraging the client to discover alternative meanings of their experience (Padesky and Greenberger 1995). One of the key differences is when it is best to use either technique. Those following a transtheoretical model of change may use MI when the client remains undecided about change in the precontemplation and contemplation stage whereas CBIT can be adopted when the client is more committed to change (Treasure 2004). This would support the work of Drake et al (2001) who after studying the work of a number of researchers believe that to enhance attendance and utilisation of treatment motivation interventions are important.


The research on the impact of CBIT as a therapeutic intervention is still in its infancy. Some anecdotal evidence would suggest it provides the skills necessary to promote abstinence (Rassool 2002). Qualitative information gained from Grahams (2006) study suggests CBIT proved a useful tool for integrating and planning substance misuse.

Due to the complex nature of dual diagnosis it seems unlikely that a single intervention will have the desired effect of meeting all the clients’ needs. Kemp (2007) supports this finding an improvement in substance misuse when MI and CBIT were combined. Due to this there has been a shift towards the integration of interventions delivered by mainstream mental health services (DOH 2002, 2006;Rassool 2002; Ziedonis et al. 2005). Some of the strongest treatment effects have come from combining a number of approaches (Barrowclough et al 2001).

Free Essays

Consumer Behaviour – Theory and Practice

1.0 Introduction and Discussion – 20%

Consumer buying is important to society because it is a key component of the economic system of many countries, it can influences by political, religious, spiritual, environmental, social and cultural aspects of society (Jim Blythe, 1997). Nowadays, consumers are more toward to ethical purchasers because they are more aware that their consumption pattern is part of global political and economic system (Solomon, M., G. Bamossy, S. Askegaard and M. Hogg, 2009).

Generally, consumers reflect their values and beliefs by what they do or do not buy (Dickinson and Hollander, 1991). For example, consumer perceptions will signify the strengths and weaknesses of countries by favouring or dislike goods produced in a particular country. Sometimes consumer negative experience generate boycott of a company’s products, or even protests against everything from a politically undesirable country by discourage consumption of products from certain companies or countries, like boycotting Israel products.

Boycotting is a form of ethical purchase behaviour. The term “boycott” arose in the year 1880 after Captain Charles Cunningham Boycott, an English land agent in Ireland whose ruthlessness in evicting tenants led his employees to refuse all cooperation with him and his family (Hazem Jamjourm, 2008).

According to an Environics, the trend to boycott and warn against those irresponsible companies are strongest in North America and Oceania, and Northern Europe, while in Eastern Europe, Central Asia and Latin America taken boycott is very unlikely (Rob Harrison, Terry Newholm, Deirdre Shaw, 2005). Boycotts have become a pervasive and effective instrument of consumer dissatisfaction in today’s marketplace. Economist (1990, p. 69) writes: ‘Consumer boycotts are becoming an epidemic for one simple reason: they work to initiate organizational and social change’; a recently conducted survey reports that 50% of Americans claim to have taken part in a product boycott (Dolliver, 2000). Between 1988 and 1995, over 200 firms and over a thousand products were actually subject to organised boycotts in the US. On the other hand, according to the Co-operative Bank’s latest research the value of boycotts in 2007 was up by 15% in the food and drink sector and 20% in the clothing sector. Money talks, they say. So listen to these figures – food and drink boycotts in 2007 in the UK were valued at ?1,144m, travel boycotts ?817m, and clothing boycotts ?338m (Ethical Consumer, 2008).

2.0 Critical Analysis (Theory) – 50%

2.1 Definition of Consumer Boycott

Boycotts are a widely used movement tactic to gain influence over corporations to adopt some change in practice or policy. It can be anti-corporate, labour, and other social change movements (Manheim, 2001). In this few years, a number of theorists have studies and outline the theory of boycott. Smith (1990b:258) explain boycott was essentially a moral act; an expression by the consumer of disapproval of the firms activities and disassociation from them.

Friedman (1999, p.4) defines consumer boycotts as “an attempt by one or more parties to achieve certain objectives by urging individual consumers to refrain from making selected purchases in the marketplace.”

Laidler (1968) defines boycotting as “an organized effort to withdraw and induce others to withdraw from social or business relations with another.”

From different view of the theorists, consumer boycotts can be explain in more specifically that consumer boycotts is a collective act from the consumers to refusing buying a company’s services or products, consumers express their dissatisfaction with intention and make political claims about corporate practices.

2.2 Advantages of Boycotting

Although boycott would seriously hurt the business, in fact, boycott has advantages. The main advantage of boycott is a way that consumers can use their power for positive social change. Another advantage is the exposure of irresponsible company with less people buying their products and buying substitute goods. As result, demand and supply for substitute goods will increase to enhance competition in the market and firms will reduce their process as a result to compete and also to gain the extra consumers this will benefit the smaller firms to gain more of the market share (Baumeister, Roy F., 1998).

2.3 Disadvantages of Boycotting

Boycotts are an unwelcome act to marketers because firms targeted by a well-supported consumer boycott have apparently failed to sustain a sufficient customer focus. In the recent world, most of the companies are sensitive to boycotts because they can have serious financial implications (Pittman, Thane S., 1998).

Observably, there are lots of disadvantages to boycotts though. One of drawback is boycotting could be a large reduction in jobs. After boycotting a company, there can cause an unfavourable impact on individuals and communities which become innocent victims of the economic damage.

Secondly, the company reputation will be harmed as a result on the impact of consumer boycott. Hence, this is not good for company as it would need to lower its prices to get back the consumer purchasing demand.

Somehow, consumers boycotting not purchase particular countries produce cause a loss of worldwide specialisation and technology in third world country because most of the company may not do business with them. Also this action may limit consumer choice from the market.

Another disadvantage to the company is that the company budgets will get ruined and will need to be analysed and changed. Furthermore the gross domestic product of the host country could fall. Besides that, there can also result irregularly violence and antipathy from the boycotts.

As conclude, although consumer boycotting brings lot of drawback to companies as well as it also bring advantages. Marketer should make a balance view of boycott and learn from other companies’ mistake to enhance the operation and create positive value to consumers.

2.4 Example of Successful Boycott

In fact, empirical examinations of corporate recognition to boycotters demands found that only a quarter of all publicized boycotts were successful (Friedman, 1985). Boycotts can be successful because when result in increased public scrutiny of the company. This in turn will cause concerns inside the company about lost profits from the loss in consumer interest and companies are always concerned about their financial position.

Countless successful boycott examples could be given of the boycott in use by many different groups of people in past centuries. One well-known successful boycotting example is boycotting Barclays Bank in year 1986. Boycotter choosing to boycott Barclays Bank because they have strongly believed Barclays’ company as the largest bank in South Africa supported apartheid is a wrong consequence. Besides that, consumers participate in the boycott may have been motivated by the belief that supporting boycott could helping people from South Africa by forcing Barclays’ withdrawal and speeding the downfall of the apartheid regime, secondly is the consumers desire not be associated with a company that directly or indirectly benefits from apartheid, a “clean hands” motivation; and lastly it show that a reluctance to be seen patronizing the “apartheid bank,” an avoidance of unseemly conspicuous consumption. As result, Barclays was forced to pull out of the country after protests against its involvement during the apartheid regime. Also at that time, Barclays led to a drop in its share of the UK market from 27 percent to 15 percent.

Consumer boycotts upon environmental arguments are a strategy commonly used by many environmental NGOs. Procter and Gamble has been focus of a long running boycott from the Uncaged Campaign due to the use of animal testing. P&G declare that animals are used in their ‘product safety research’, as well as cats and dogs in pet food experiments, Uncaged’s investigations continue to expose disturbing examples of P&G’s ongoing involvement in a painful and dangerous animal tests. P&G test on animals because of their desire to get new chemical ingredients on the market and to make as much money as possible. Garrett’s (1987) review of the boycott literature hypothesized six factors in boycott participation: the awareness of consumers; the values of potential consumer participants; the consistency of boycott goals with participant attitudes; the cost of participation; social pressure; and the credibility of the boycott leadership. However, according to the report on boycott P&G Day 2010 actions, the fourteenth global boycott P&G Day on 8 May 2010 has ratcheted up the pressure on P&G to stop their cruel and unreasonable animal testing.

Moreover, another famous boycott case is the Nestle. A number of groups, many of which are coordinated by the International Baby Milk Action Network (IBMAN), have called for the boycott of Nestle products due to Nestle’s marketing practices in promoting infant formula in poor countries. IBMAN points to the dangers of formula feeding in developing countries (most notably, lack of clean water to use in mixing formula powder). Further, it maintains that Nestle is exploiting susceptible customers and contributes to increased infant mortality.

To examined the boycotters’ intentions to participate, motivations for participating, and actual product choice, as result their participation is based on product judgments and their perceived badly of Nestle’s actions, boycott participation and brand image. According to observers of boycotts, boycotters have this feeling because they are referring to the ‘moral outrage’ (Smith 1990). The latest Update of Baby Milk Action’s Boycott News, the international boycott is having an important impact on Nestle, not only in direct economic terms but also in manipulate damage to its corporate image, management morale and management time the company must spend struggle it.

2.5 Solution for Companies to handle boycott

It is not possible to study consumer boycott effectiveness without studying the target’s reaction to the protest. A satisfactory response, complying with a campaign’s demands, can stop a boycott before it has even got under way, whereas a reaction that is deemed insufficient or abusive could potentially recruit new members to the campaign. Smith identified four key types of management response: ignore, fight, fudge/explain or comply (1990b: 254).

One increasingly popular solution used by marketers is to set up a joint task force with the boycotting organization to try to iron out the problem. For instance, in the US, McDonald’s used this approach with the Environmental Defence Fund, which was concerned about its use of polystyrene containers and bleached paper. The company agreed to test a composting programme and to switch to plain brown bags and to eliminate the use of antibiotics in such products as poultry.

3.0 Conclusion – 20%

In conclusion, consumer boycott is an effort to punish those irresponsible companies. Yet consumer boycotts often have a large number of participants, and sometimes be successful in changing the behaviour of firms. Generally, participation may be driven by individual motivations such as guilt, the maintenance of self-esteem, and the avoidance of dissonance; individuals may seek a “thrill of victory”; or behaviour may be influenced by a false consensus bias.

Despite the problems of causation, many writers agree that there is persuasive and widespread evidence of boycott actions delivering on social or environmental goals. Examples include P&G anti animal testing in production; keep away from Barclays Bank apartheid in South Africa and persuade Nestle to take responsible the problem in third world. Obviously consumer boycotts cannot effectively address the full range of social and environmental issues, because it requires choice and competitive markets to function. Finally, consumer boycotts have the potential to harm many innocent parties, including guiltless workers and the various economic entities that depend on the boycotted firms.

2) B) Discuss the various ways in which marketers can attempt to influence consumer perception and attitudes, using examples to illustrate your argument. (60%)

1.0 Introduction and Discussion – 20%

According to International Monetary Fund (2010), analyse that in year 2010 the world spending is at GDP 62,909274. United States have the highest GDP, which are 14,657,800.

Consumer is the most important person to marketer because marketer takes into account consumer likes and dislikes on the production of goods and services. Marketing and consumer behaviour are basically connected. By clearly understanding of consumer behaviour to support all marketing activity, it is a necessity to organizations for being marketing orientated and thus profitable.

However, to understanding what consumers buy or not to buy is the most challenging concept to marketers. As consumer buying behaviour is difficult to be understanding clearly because factors affecting how consumers make decision are extremely complex. Buying behaviour is deeply rooted in psychology with dashes of sociology. The reason is, since every person in the world is different, it is impossible to have simple rules that explain how buying decisions are made.

In general, there are three main factors that influence consumers buying decision which are personal, psychological and social. Besides that, involvement also can be a major factor in consumer’s decision making. Because consumers often form emotional attachments to products, for example most people would be familiar with the feeling of having fallen in love with a product.

But, studying consumers can help marketers improve strategies. Through obtaining a view into how consumers think, feel, reason and choose. Marketers can use this information to design products and services that will be in demand. By understanding customers better it can improved trading relationships. Next is can reduced cost and greater efficiency, for example, through better targeting of marketing efforts, which reduced the cost per sale. Third is improved competitiveness, by understanding consumer, marketer can through consumer feeling adapt in marketing practice to result more effective. Lastly, it will gain more sales.

2.0 Critical Analysis (Theory) – 50%

2.1 Perception

Before making purchase, consumers go through series of steps. These steps include problem recognition, information search, alternative evaluation, purchase decision and post purchase evaluation (Appendix 1). In the information search process, psychological element that influences consumer is perception which influences the way consumers receive information.

Jim Blythe (2001) explains perception is the way people build up a view of the world.

While William D.Wells and David Prensky (1996) define perception as the process by which an individual uses his or her perceptual processes to selects stimuli, organizes information about those stimuli, and interprets the information to form a coherent, meaningful view of the world (Appendix 2). Stimuli are inputs into any one of the five senses – vision, hearing, smell, taste, and touch. The explanation of the stimuli can be subjective on individual’s environment that becomes the basis for the behavioural processes of learning, attitude formation, and decision making. At the same time, it has cultural, social, economic, and psychological bases since it requires the selection, organization, and interpretation of what the individual senses.

For example, consumers manage to purchase certain products and leave the store without becoming overwhelmed. This is because of their background characteristics, past experiences and motivations to satisfy their needs help to assign meaning to the stimuli and recognize products that will offer certain benefits to them. Therefore, marketers should design their packages so that consumers will be able to distinguish them from other stimuli in this hectic retail environment. For instance, Innocent created a range of smoothies especially targeted to kids. In the packaging of this range of products, the Innocent brand identity is enriched with some funny details on the logo, in order to immediately distinguish this product from the others and appeal the children.

Perception plays important part in marketing programmes, where the use of pictures, images, spoken and written language, colour, noise, music, tastes and smells are used in such abundance. At the information search stage communication campaigns should be informative in nature, so when marketers make an advertisement it should provide information about the product and its attributes to consumers. This helps in creating brand awareness and dispelling doubts regarding the product among consumers.

Individual’s perception is unique and powerful in its inferences for marketers. Usually, consumer purchase will take place when individual perceives that product or service will offer benefits of needs. Hence, marketers must understand how perception works in order to communicate successfully a product’s benefits.

In reality, consumers exposed to advertising and promotion do experience information overload. Hence, the perceptual process includes a component called selective perception, which allows individuals to screen out some stimuli while allowing other stimuli to be perceived. Therefore marketer can use clear communication as strategy. Advertisements should be copy tested to ensure consumers get the message. Things to avoid include incorrect understanding of imagery, inappropriate humour, and double entendre. Also, lengthy communications are less likely to pass through consumer’s mental filters.

Perception is also subjective. People understand things differently. The manner in which consumers organize and interpret information is individualistic and biased. That is, people experience subjective perception; perception deviated from reality due to individual differences in the perceptual process.

2.2 Attitudes

2.2.1 Definition of Attitudes

The next step of consumer buying process is evaluation of alternatives which information is gathered. Another key element that influences the evaluation process is the attitude of the consumer towards the product.

Attitudes are learned, it will be affected by new information and experience. Consumers use perception and learning to gather new information and combine with knowledge about product’s quality and benefits. This serves the basis for evaluating the choice products from which consumer will make purchase decision.

An attitude is how positive or negative, favourable or unfavourable, or pro or con a person feels toward an object. This definition views attitudes as a feeling or an evaluative reaction to objects.

A second definition represents Attitude can be defined as ‘a learned tendency to respond to an object in a consistently favourable or unfavourable way’ (Onkvisit and Shaw, 1994). This definition is slightly more complicated than the first because it incorporates the notion of a readiness to respond toward an object.

A third definition of attitude popularized by cognitively oriented social psychologists is: ‘an enduring organization of motivational, emotional, perceptual, and cognitive process with respect to some aspect of the individual’s world’ (Krech and Crutchfield, 1948). This views attitudes as being made up of three components: (1) the cognitive, or knowledge, component, (2) the affective, or emotional, component, and (3) the cognitive, or behavioural-tendency, component.

As conclude, an attitude is a learned tendency to act in a consistent way toward an object based on feeling and opinions that result from an evaluation of knowledge about the object.

Yet, attitude formation is the process by which individuals form feeling or opinions toward other people, products, ideas, activities, and other objects in their environment (Michael R. Solomon, 2004). Attitude toward object is combine with three factors, first is learned knowledge form previous experience, second is evaluation based on individual’s knowledge, last is tendency to act based on evaluation.

Attitudes are important to marketers because consumer will based on their attitude towards the product to buy or not to buy. But marketer cannot directly observed attitudes as attitudes are the result of motivation, perception, and learning. By understanding consumer attitudes, marketers can use interviews and surveys to measure consumers’ attitudes.

2.2.2 The functions of Attitudes

Daniel Katz (1960) has developed functional theory of attitudes to explain how attitudes facilitate social behaviour. Attitudes provide individuals to apply their knowledge to an evaluation of alternative products and, consequently, to make faster, easier, and less risky purchase decisions to satisfy their needs.

Obviously, attitudes help individuals with four primary functions, which are utilitarian, value-expressive, ego-defensive and knowledge function. To clarify, utilitarian function is gain utilitarian benefit from the product, while value expressive is product express individual’s values and lifestyle, and ego defensive is about a product that support self-concept and finally knowledge function is organize individual’s knowledge about product in his or her environment.

2.2.3 Attitude Models

Consumers’ attitudes to products can be complex. They vary according to valence, extremity, resistance, persistence and confidence (Jim Blythe, 2008). Attitude has three components: affect, which is about the consumer’s emotional attachment to the product; behaviour, involves the person’s intentions to do something with regard to an attitude object and cognition, which is to do with the conscious thought processes. These three components are known as tri-component attitude models or as the ABC model of attitudes (Appendix 3). This model emphasizes the interrelationships between knowing, feeling and doing. Consumers’ attitudes towards a product cannot be determined simply by identifying their beliefs about it.

The second attitude model is multi-attribute models. This model is unlike tri-component models cause it focus on an object’s multiple attributes and suggest individual’s attitude toward the object is the result of the aggregation of his or her evaluations of each one. There are three components is this models too, which are attributes on which the object is evaluated, beliefs about whether an object possesses the attribute and an evaluation of the importance or relevance of each attribute in determining the individual’s overall attitude toward the object (Martin Fishbein, 1963). This model is emphasizes that beliefs and evaluations both require evaluation of knowledge.

Next is the attitude-toward-the-ad model. This model is an effort to understand how advertising influences consumer attitudes toward a particular product (Terence A. Shimp, 1981). Variables in these models include where, when, and in what context the as is seen as well as the effectiveness of the ad in generating feelings and dispelling negative beliefs. Mean that, an advertisement influences not only consumer’s attitudes about the ad itself but also their view of the product. As conclude, attitude-toward-the-ad model is consumers form feeling and judgments as the result of their exposure to an ad.

2.2.4 Measuring Attitudes

In order for marketers to use that various attitude models, they need to measure all of these beliefs and evaluative components. There are three common methods used to measure attitude components. First is the observation of behaviour, second is qualitative investigations then attitude scales. Each has unique advantages, depending on the circumstances and all are helpful in determining the strength and direction of particular attitudes. The most often use by marketer is the attitude scales like consumer survey questionnaires with quantitative scale taken by consumers. In fact, this method may be hard for participants to recall information or to tell the truth about a controversial question.

2.2.5 Marketer changing consumer attitudes

Marketer can attempt to influence consumer’s belief, affect, and conative intention by providing information about the attributes and benefits consumers use to form attitudes by influencing the social context in which consumers form those attitudes. For example, usually consumers look to members of their reference group for information and advice, marketers use communication tool to influence consumers and the information and advice can change their attitudes.

In actuality, marketer changes consumers’ beliefs or evaluation of the product by promote their product offers benefit and will satisfy their needs better than competitors or previously product. The strategies marketers employ to influence and promote attitude change include adding benefits, changing product or package, changing the criteria for evaluation and linking products to existing favourable attitudes. The most often strategies use to influence attitude change are adding benefits and changing product or package. To enhanced product value, the product must offer multiple benefits to consumers. As consumer’s attitudes will become more positive by product’s perceived value increase. For example, Johnson’s Baby Oil claims to soften a baby’s skin, condition adults’ skin, remove makeup, and promote tanning. Besides that, consumers often form attitudes in response to changes that improve a product’s ability to deliver benefits. Softsoap, for instance, introduced liquid hand soap and in turn favourably influenced consumers’ attitudes about the convenience of the product. An alternative to changing the product itself is changing its packaging. For example, Jif peanut butter available in a plastic container. As result, changing package consumers’ attitudes are formed in part by evaluating packaging features that offer convenience and environmental benefits. The drawback of this changes will increased costs for company to maintain competition within market place and maintain their share hold of market. Also works against the consumer, as newer products make older product obsolete, resulting in more costs to remain current.

3.0 Conclusion – 20%

In conclusion, according to Katona and Strumpel (1978), attitudes and perception are closely related. Both concepts tend to affect one’s perceptions and shape one’s behaviour. To identify consumer perception and attitude concept and function, several theories and models were represented. This is to focuses attention on how some of the factors that can contribute to those concepts and how they are evaluated by the consumers. Besides that, some examples are listed to support and identify various way that marketer attempt to influence consumer perception and attitudes. Lastly, it is useful that marketers have a better understanding on consumer’s attitudes and perception so that strategies can be applied in a proper manner to gain competitive advantages from other competitors and also can capture consumers’ attention for products to leading successful.

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Free Essays

Research on the Stakeholder theory, Agency theory, Corporate Social restructuring and ethics


This report is presented to the financial director of the FTSE-100 company. The company is facing down turn due to the economic recession around the globe and due to its own corporate social responsible policies. This report shows research on the Stakeholder theory, Agency theory, Corporate Social restructuring and ethics. This report also shows the different aspects of these theories linked with health of the organization. Many authors have different concern about each theory but directly or in directly linked it with the shareholder and profit maximization. On the other hand researchers prove that recent developments in corporate social responsibility and ethics save organizations from down fall in economic recession.

Stake holder theory:

Stakeholder theory was put forward by Freeman in 1984 as a proposal for strategic management of organization in the late twentieth century. By the passage of time the theory has achieve importance with the key workers Clarkson in 1994, Donaldson and Preston 1995, Mitchell in 1997, Rowley in 1997 and Frooman in 1999 enabling both greater theoretical depth and development of this theory (Mainardes et al. 2011 p.226).

In academic context there endless definitions of stakeholder have been put and there is no individual, definitive and generally accepted definition. In argue to that the works of Bryson (2004), Buchhloz and Rosenthal (2005), Friedman and Miles (2006) and Beach (2008) have an overall of 66 different approaches for the term “Stakeholder”.

The source of stakeholder theory based on four key academic areas i.e. Sociology, economics, politics and ethics. Freeman (1984) found that any group or individual that can affect or be affected by the understanding of organization goals and objectives.

Hence the objective of this report is to maximize the shareholder’s wealth and how the corporate social responsibility and ethics helps to increase the long term value of the organization. In addition to that the Financial Director has different views about these theories, CSR and Ethics.

In argued to that maximizing the returns to shareholders the managers must try to provide the satisfactory return to each group which comes under the stakeholder group. According to the Mygind (2009, p. 159) diversified stakeholder have different approaches and association to other stakeholders and they have an evaluation of their own benefits which is only related to them moreover they also give different importance to the satisfaction of the stakeholder’s interest.

In 1980’s and 1990’s maximizing shareholder wealth and corporate wealth maximization totally based on the board of directors how they form the corporate strategies to increase the shareholder returns (Blair, 1995). In contrast to this argument Mygind has found that current developments in the corporate social responsibility and ethics move the pendulum towards the border view of value creation which is beneficial for the stakeholders (2009 p.160). Moreover total shareholder maximization which is directly linked with the corporate social responsibility should be fulfilled under limited circumstances.

At all outcome of this analysis of the literature it may be accepted that stakeholder theory has diversified over into many fields. According to Carrol (1994) the stake holder theory grasp the relevance to financial management, human resource management , strategic management, organization ethics, research and development, corporate governed and many more.

Agency theory:

Agency theory fundamentally involved with the relationship of managers and stockholders (Jenson and Meckling, 1976). In addition to this managers should make decisions that are linked with the objective of maximizing shareholder wealth. According to the Ross (1973) an agency is defined as on in which one or more persons (the principal (s) ) engages another person (the agent) to perform some service on their behalf which involve delegating some decision making authority to the agent. Moreover Eisenhardt (1985) and Kosnik (1987) linked the development of agency theory with organization behavior and strategic management.

Managers as an agents are very interested in maximizing their efficiency of wealth and they acquire this end though their salaries and bounces etc. When managers make decisions which is not consistent with the objective of shareholder wealth maximization then the agency problem occurs. Jensen (1998) explaining the problem of agency is that agents are not absolute. Their interests do not perfectly matches with the objectives of the principal and accordingly if authority is not sufficient then there will be divergence from the objectives of interest to the titleholder of the assets.

The dormant agency problem between managers and its stakeholders is not only agency problem that exists. Jensen and Mecking (1976) argued that the company can face series of agency relationships between the different interests of groups. According to the agency theory, principles can establish appropriate incentives for the agents on the basis of his or her level of interest and this thing leads towards the agency cost.

Moreover Jensen and Mecking (1976) suggested that there are two approaches about seeking to optimize the managerial behavior in order to stimulate goal congruence between shareholder and managers. The first way is for shareholder to monitor the action of managements. There are number of ways to check the performance of management for example use of independently auditors to audit the financial statements, additional reporting requirements and use of external analyst. The other way is to form the corporate managerial contract in which the goal congruence should be mentioned and it is linked with the incentives, constraints and punishments.

All in all total shareholder maximization encloses advantages for all groups pure shareholder as well as stakeholders. This includes the maximization of the shareholder value, the value for the stakeholder and owner and the value for all stakeholders.

Corporate social responsibility:

Corporate social responsibility is concerned with the impact of their activities on society and on the environment. While there is no single commonly accepted definition of corporate social responsibility, it generally refers to business decision making linked to the ethical values, compliance with legal requirements, and respect for people, communities and the environment (Business for Social Responsibility, 2011).

Organizations are involved in diverse economic, cultural and political system around the globe and these organizations have different operating and governance standards. Lantos (2001) argued that to gain the essence business organization’s social responsibility people must do hard work and be successful.

To perform in a social responsible way Freeman (1984) stated that the organization need to act in accordance to moral, legal and social concerns which is represented by stakeholder. Stakeholder group consist of so many different units so it may cause difficulty to give the importance to each and every unit. Lippke (1966) argued that maximizing shareholder’s wealth should be the fundamental objective for managers.

Maximizing profits is an elementary mission for business organizations to gain long-term benefits. Hui (2008) argued that through competitive advantage firms create and sustain above the average economic performance. Moreover Maddjono (2005) argue that corporation sustainability relay upon the implementation of good corporate governance principals. There principals concern with the accountability, efficiency and transparency.

Furthermore building total corporate sustainability needs systematic corporate cultural conversion. Gao and Zhang (2006) stated that these changes require investment in related resources and engaging all stakeholders.

However role of CSR is not only build social corporate sustainability it also help to prevent the organization from acting unethically and help the organization outlining its economic growth. Haberberg and Rieple (2001) argued that the organization is in constant discourse with the society in which it acts, its affect them and affected by them. Hence rather than trying to highlight the problem whether CSR is good or bad for business, the one question should ask under which conditions firm social activities could be beneficial for society.

Financial director has only concern with the profit maximization but on the other hand researchers prove that the CSR also helps the organization to fulfill this objective. CSR also helps to sustain the corporate culture in better way and maintain healthy relationship with social community.


The word ethics derived from the Greek word Ethicos meaning habit or custom relating to the society. Guttmann (2006) believed that ethics is created when people think positively about the world, about life and about the needs to fulfill the goals and objectives.

Business ethics is that behavior which concerns with the daily dealings with the world. This thing not only applies how the business interact with the world it also focuses on everyday dealing with customers. Now days every business schools have business ethics courses and these modules mainly deal’s with new aspects of business ethics. However Swanson (2005) stated that business ethics in academic continue to face skepticism as to the legitimacy and practically of their newly emerged field. Many institutes around the globe associate this course with many other courses for example Management, Organization behavior etc.

Business ethics:

Ethics in business is very important in terms of reputation with their clients. Ethics provide important outline to the business to ensure that the fair practice and other business opportunities to the business. An organization ethical values and culture are important to its society. There are different ethical concerns across the organization and they are linked with every interested group in the organization. Robin and Reidenbach (1987) develop a multidimensional scale for improving evaluations of business ethics. More over business ethics has an external impact on the market place and the society. On the other hand corporate ethics has an internal emphasis on the performance of the organization.

Ethical structure:

The area of ethical structure determines to support organization and without them there is no support for organization to implement ethical processes and evaluate them. This area help’s organization to make strategy, tactical and operational level of business practices Svensson and Wood (2008).

A sub area of ethical structure is a code of ethics. Code of ethics focuses on the social issues and it may arrange general principals about an organization beliefs, mission and quality of the environment. Code studies have also been executed on the largest multinational organization operating a wide range of jurisdictions around the globe Wood et al. (2004).

Moreover studies have found that having an ethical code does have a positive impact on the ethical actions and behavior of the organization Adam et al. (2001). Stajkovic and Luthans (1987) see code of ethics as one of the important frame work that linked together to influence the ethical standards of the organization.

Level of returns affected by CSR/Ethical Issues:

Snow brand milk Co. known is the Japan’s premier dairy food company. Now days this company known as Meg Milk Snow Co. as they have changed their name after 2002. The year 2000 was catastrophic year for the Snow Brand Milk Co. As they were facing very severe CSR/Ethical issues of food poisoning in Japan. Around 15,000 people had been affected with food poisoning after using Snow Brand dairy products. After inspection the problem was traced, the bacteria Staphylococcus Aurous was found on the valve which proceeds low fat milk. Later on Japan Public Health Association issue the recall for the Snow Brand milk products.

Moreover media reported the judiciary about all facts and figure and judiciary take action against the Snow Brand and banned all the dairy products of snow. In addition to that the president tries to win the support from society but he fails and admitted to hospital suffering from the stress of the incident. The end result was he and seven executives resigned from company.

The outcomes of the actions for Snow Brand have been breathtaking and awful. Sales of the company have been collapsed and consumer confidence has eliminated. The company had ceases its five factories including the offending site from the poisoning. Later on this figure increased to eight.

The company suffered with great loss and its financial position is badly affected. Snow Brand announced consolidated net loss was 52.9 billion yen (about 430 million US dollars) for the fiscal year ending in March 2000. Further more Snow Brand loses the 45% market share after these circumstances. After this incident company faces 40% decrease in the share price in Tokyo Stock exchange.

Source: (Japan Times, 2002)

Fight Back

A key element for the company to come back in the market is to revamp its social responsibility. In the first, the new president made statement of regret and acknowledges the mistakes of the past and determines to move forward. In addition to restructuring plan following things also include:

Improving quality assurance
Reform of corporate culture
Renew corporate social responsibility
Enhance corporate governance

Case study illustration of arguments:

ITE plc one of the world foremost organizers of international trade exhibitions and conferences and develop oneself in organizing events in growing and developing market.

ITE is a multinational firm and the board of the company is aware about the social benefits and risks which are linked with their various groups in social responsible manner. As an operator internationally oriented business in developing markets the company guarantee that they are culturally sensitive in dealing with the local community, development polices for employees and go for those projects which are supportive for the local community.

In 2010, ITE plc faced problem with corporate social responsibility and some other ethical issues and economic down turn which leads towards the no increase in the share price and there is no significant increase in profits. Weber (2008) argued that they are numerous benefits of CSR and these include pure financial benefits which lead towards the risk reduction, efficiency gain and tax advantages. In addition to financial benefits Maignan et al. (1999) find that CSR is positively linked with employee’s commitment and customer loyalty. This show that how CSR improve overall health of the organization (ITE Website, 2011).

Later on by the mid of 2010 the board of the company revamps their approach to corporate social responsibility in addition to that the board also reform their corporate culture and corporate governance. In figure 1 the first three months in graph shows level of share price of ITE which was approximately 143.5 and there is no increase in the share price. After implementing new reformed Corporate social responsibility company share price increase with full boost. In the figure form the August 2010 to March 2011 Company enjoys the significant positive change in the share price. Delevingne (2009) found this recession is wiping away a lot of things but so far CSR seems to be survivor.

Figure 1: Increase in Share price (Source: ITE Website)

In all corporate social responsibility has gain amazing recognition in the last recent times. However organization must consider the importance of CSR and give full concentration to it and maintain high standard of relationship with society.


At the end this report shows that the stakeholder theory, agency theory, CSR and ethics are diversified over different fields. Further stakeholders have very specific resources and interest and it must be fulfilled by the agents of firms in order to satisfy them. Total shareholder or stakeholder maximization includes benefits for all groups; researchers prove that implementation of these theories helps the organization to perform in the favor of stakeholders, economy and society.


Reflective journal:

I initially faced lots of difficulties in the making of this assignment the reason is I am an international student and for me this is first time studying in the new environment and culture with so many international student. I have some knowledge of finance however it is not quite enough. After starting studying Financial Management I assumed that the knowledge which I have is not sufficient for me. Since the theories and practices uses by my tutor are very depth in the nature. This assignment is very helpful for me and increases my knowledge about the latest concepts of finance.

I worked very hard for this assignment to fulfill the requirement of the assignment. On the hand I also faced many difficulties when I was working on my assignment. After spending a lot of time in the library I come up with some facts and figures which were really helpful for me in the making of assignment.

While working on this assignment I also learnt effective communication skills by talking and sharing ideas with other students in the class. In the future I will do research in more depth so I will implement more theories and practices in my upcoming modules.


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Free Essays

Marketing Theory Case of The Coca Cola Company


This report focuses on specific marketing theory, relevant to The Coca Cola Company, marketing theory include Marketing Orientation, Marketing Mix, Marketing environment and SWOT analysis. The author will make analysis of these theories, with an application to the attitudes and marketing decisions of The Soft-Drinks Manufacturer.

Marketing Orientation

This is when a company takes into account its customers’ needs when making decisions concerning their services they offer and items of sale. There are many benefits of doing this, as the product will more likely meet the needs of their targeted audience, therefore consumers will be more willing to by the product, there is more of a guarantee the product will sale. However in previous decades, many businesses have opted for a product-orientation approach, this is when a company is more concerned with the production of the product, and the systems that are used in its production. (The Times 100, n.d)

(The Times 100, n.d) states in the recent decades many companies had preferred to be more product-orientated than customer-orientated, because of the increase in competitiveness within the market, these companies that adopted this orientation were losing out, as a company within a competitive market can only should strive to develop products that suit their audience needs, in failing to do so, they will lose customers fast in the competitive market, this demonstrates the need for products to be more consumer focused especially if a company is operating in a competitive marketing environment, if a company prides itself on the quality of its services and products, through the usage of new expensive technologies for example, then it would be understandable as to why they would continue to be product orientated. (The Times 100, n.d) Some companies are adopting both orientations, taking into account both the expectations and needs of the customer as well as the quality of product for the item of sale.

According to the source, many companies like Coca-Cola are moving towards market (customer) and product orientation, in doing this Coca-Cola conduct marketing research to find out their consumer interests and desires, in finding this they will make amends to the production of their product depending on what the results show the marketing managers. (The Times 100, n.d)

The marketing environment

Social-cultural environment

This is the environment that focuses on the understanding of their target audience; the study of this environment will help Coca-Cola understand what motivate consumers to buy their soft-drinks. Coca-Cola is also influenced by society views, for instance because of the issues surrounding the among of sugars presented in Food and Drink, and the Food Standards Agency, the production of Coca-Cola drinks now contain less sugars, and any other ingredients that are deemed artificial and bad for Health. (Brassington, Petttitt, 2007)

According to sources, the Food Standard Agency had in recent years opted for Drink companies to sell their fizzy drinks in smaller quantities, this was in response to the ongoing obesity crisis in the United Kingdom. ‘Drinks with added sugar such as cans of fizzy pop, should be sold in smaller 250ml cans alongside the standard 330ml, it was recommended.’ (Smith, 2010) a study of the social-cultural environment will also lead to an understanding of the demographics. (Brassington, Petttitt, 2007)


This is the environment that allows companies to identify both macroeconomic and microeconomic situations in the market, the influences are different, it can affect the sources of long-term and short-term finances available to Coca-Cola, the influences can also effect the consumer demand from their customers, for instance the credit crunch had decreased the among of expenditure available to consumers. (Brassington, Petttitt, 2007) during 2008 Coca-Cola had suffered from economic influences due to the crunch, in which it was estimated that their Bottled water products were experiencing less demand, in key markets such as the US and Europe. Because of the credit crunch bottled water had experienced a high sales growth in 2007, but ‘middle-classed wallets were squeezed down by the economic downturn’. (Anon, 2008)

How Coca-Cola responded to the influences.

Coca-Cola has what is described as a financial muscle, the business was at the time was predicted to not be effected by the ‘economic storm’ as their international competitors, this was arguably because of their successful approach towards brand positioning, which has allowed them to still obtain promotional support, without being disrupted by the economic downturn. (Anon, 2008)Other influences that can be either positive or negative include government policy, taxation, and interest rates. (Brassington, Petttitt, 2007)

Technological environment/innovation affecting

Coca-Cola and many businesses in general, have had new marketing opportunities, because of the advances of technology, such influences are mostly positive, as the production and manufacturing costs of their drinks are mostly likely to have decreased. (Brassington, Pettitt, 2007)

In regard to product of products, technology has also helped increase the product quality, which is important to a company such as Coca-Cola who may focus on product-orientation. For instance, the soft drink’s company experienced new technological advances which allowed them to preserve the fuzziness’ and ice-coldness each of their bottled drinks on sale, ‘By packing new technology into each bottle, so when the cap is twisted off, a mechanism inside will create ice made from the drink itself’. (Hannaford, 2007)

Technology has also helped the advancement of more opportunities for promoting the Coca-Cola brand; the company has opened an online website and has been able to advertise on internet websites which would help increase brand awareness. (Brassington, Petttitt, 2007)

Political regulatory influences

These influences relate to the outside governmental regulatory bodies that have jurisdiction under our national and European parliament to impose restrictions and rules relating to trade and other business operations, such influences include the Advertising Standards Agency, for instance Coca-Cola had to an advertisement banned for ‘claiming it to be nutritious while it contained up to five teaspoons of sugar.’ (Sinclair, 2011)”Because Vitamin Water contained about a quarter of a consumer’s GDA (guideline daily amount) for sugar as well as the added vitamins, we considered that the description of Vitamin Water as ‘nutritious’ was misleading.” (Sinclair, 2011) this demonstrates the impact, as the company had to recall their advertising campaign. To conclude most of these regulations that have jurisdiction over Coca-Colas operates are enforced by law to act as regulators, other regulatory bodies include, trade associations, the EU and the local and national parliament. (Brassington, Petttitt, 2007)

Marketing Mix

The marketing mix strategy is a marketing tool used by many businesses, it helps managers develop their product to suit their customer needs, the tool helps the business set pricing strategies and promotional strategies which are variable, meaning that the company can make changes to their mix to match the external influences such as the economic downturn, the marketing mix is controllable itself, it allows Coca-Cola to adapt more efficiently to environmental influences of the market. (Palmer, 2009, 2004)

Why is it needed?

The marketing mix is needed to match the mix elements to the consumer needs; they are the ‘ingredients to achieve the desired outcome of the consumers.’ (Palmer, 2009, 2004)

Each of the elements relate to one another, for instance pricing (considered the most important mix element), would largely concern the product it self, the quality of the product determines the pricing, if it is a product of high quality then the company may adopt a premium pricing strategy for example, this would also determine the promotion mix element, audiences are different, the premium pricing strategy may influence the business to target wealthy customers, who value high quality premium products or services.

As well as pros, which highlight the positive things a marketing mix strategy can do for The Coca Cola Company, there are also negative aspects of it, issues which put the customer first, such as with the developments of quality services can become lost, to combat this disadvantage it is suggested that there should be an ‘adoption of a more holistic approach by marketing managers to respond to their customer needs’(Palmer, 2009), it would be recommended that managers focus on a product-led approach to marketing. (Palmer, 2009)


For Coca-cola, their main product on offer is soft drinks. With regard to the production of the soft drink itself, the main element to their products on offer is Coca-Cola. The Coca-Cola company is an international global business, and has more than just one product within the soft-drinks market, other products include Fanta and Sprite all owned by the Coca-Cola Company. (n.d, Sharma, Kumar)

Their Products on offer help the company, to motivate the consumer in purchasing the drink. It can be intangible (a service) or tangible, in this case Coca-Cola are providing tangible products. This mix will allow the Soft drinks company to moderate the quality, packaging, quantity of size, all to satisfy their consumers. The moderation is important, it allows Coca-Cola to design for instance their Packaging for different seasons, such as the Christmas season in which they make changing to the style in order to get people into the Christmas spirit, this encourage sells, it demonstrates the changes in the mix allows the company to keep up with marketing opportunities in the marketing environment, it also helps develop their brand image. (Palmer, 2009)

Place (Distribution)

This mix, allows The Coca Cola Company to make sure their products are available in convenient places, wherever the consumer prefers to purchase the items, it allows the company to make new distributions, if their marketing research suggest their target audience prefer to purchase their items in new places. (Palmer, 2009) This mix allows Coca Cola to amend their distributional strategies in place, depending their target audience preference. A good distributional strategy is crucial as an ineffective strategy will impact negatively on the companies’ turnover figures. In marketing distributional decisions, markets must focus on whether the costs of such distribution is affordable and how close the customers are to receiving the product. Marketing managers have an option to adopt strategies such as direct and selective distribution, Coca-Cola products are available in large supermarkets and vending machines, this indicates an intensive distribution, as it is available anywhere at any time (24hr petrol shops) anyplace.

Recommendation for efficient distributional channel

Coca Cola distributes their products to a wide variety of retailers; therefore this would indicate a need for an efficient management of distribution. (Brassington, Petttitt, 2007) The company as a manufacturer would need to deal with stock controlling, transporting their soft drinks products, and finding warehouse facilities for their products.


This is the most important mix of all, it is important as adopting the wrong pricing strategy would lead to a loss of profits, however a good pricing strategy, which is affordable to target customers would lead to higher turnover for The Coca Cola Company. The Pricing mix varies from other Ps, as the other mainly evolves around company expenditure decisions.

The Coca-Cola Companies’ Competitive Pricing Strategy

According to sources, the Coca-Cola Company currently adopts a competitive pricing strategy. (Sharma, Kumar, n.d,) this is when companies set their prices according to the current market price,

The marketing had become more competitive with operating companies such as Pepsi entering the market; this forced the company to adopt a competitive pricing strategy in order to stay the cheapest in the market. In this current period, along with their competitive strategy the firm has also had to make les expenditure on their manufacturing process, and more expenditure on their advertising to keep consumer interest from rivals. (Sharma, Kumar, n.d,)

Cost-Based Pricing strategy

Originally they were operating within a niche market, before other competitors such a Pepsi had emerged, because of the new market for Soft drinks, the company did not have to adopt a competitive pricing strategy, instead adopting a cost-based pricing strategy, in which ‘a fixed sum or a percentage of the total cost is added (as income or profit) to the cost of the product to arrive at its selling price’. (Business Dictionary, n.d)

Recommendation on Good Pricing Strategies

‘If the selling price of a product is set too high, a company may mot achieve its sales volume targets. If it is set too low, volume targets may be by achieved, but no profit earned.’

(Palmer, 2009) In order to adopt good pricing strategies, there will need to be some evidence such from marketing research as to what consumers will expect to pay.

Many companies face hard pricing decisions, as pricing cannot be determined alone with the consideration of target audiences, it would be recommended that firms consider the marketing environment, as consumers’ needs changes depending on the current external environment, and the ‘interaction of market forces’. (Palmer, 2009) the pricing strategy is also variable, the company can make on-going changes to their pricing strategy, however such a minor difference can cause a significant change to revenue, e.g. Lower or higher profits. (Brassington, Petttitt, 2007)


This mix is used to help with the communication of the companies brand to the customers, through sale promotional strategies, sponsorship and through (PR) Public Relations. This mix helps Coca-Cola decide on their advertising expenditure. (Palmer, 2009)

Promotional Decisions

The promotional strategies along with product and distributional strategy all need to be considered together in order for the company to make better decisions in their mix, it all lies down to evidence, which should give good estimations on their customers likely spending habits and where to target these customers.

Coca-Cola through promotional campaigns want to demonstrate how good their brand is, this can be done through various strategies, such as personal selling (Coca-Cola Stalls at public events) , sales discounts (in shopping centres) Research has shown that, Coca-Cola tends to spend large sums on advertising, for instance in 1987 the company made an expenditure of around ?140 million, in television, radio and Printing publications. (Boy, JR, Walker, JR, 1990) This kind of mass media advertising is essential, as most of their customers are likely targeted this way, it helps keep up their brand image, and in attracting new potential customers. Free tasters are also a good strategy as the company brings out new versions of its drinks; this will lead to a new consumer base, and will help generate more loyalty.

SWOT Analysis

This is the study of strengths, weaknesses and threats (SWOT) This is analysis is needed so that Managers can understand the main threats and opportunities, it helps to get an overall view as to whether the business is profitable or not. It helps with the anticipation of future developments for the company. The SWOT doesn’t include assets of the business; it highlights opportunities for success and potential failure (Kotler, Wong, Saunders, Armstrong, 2005)


The Coca-cola has been operating within the market for decades, it was once a niche market for the company, this indicates power-over competitors in relation to its brand image, it has been in the ‘game’ for years, and therefore, there is a high public awareness of their products. ‘Coke is the world’s largest non-alcoholic beverage company. Coke sells more than 500 brands of beverages. The company operates five geographic segments: Eurasia & Africa, Europe, Latin America, North America, and Pacific.’ (Seeking Alpha, 2011) The company is still experiencing a higher profit margin, for these reasons the company has ambitions to ‘double revenue by 2020. They believe that volume will be by the fast-growing markets and improvement in North America.’ (Seeking Alpha, 2011)


In order for a business to survive weaknesses need to be identified and then appropriate cautions will need to be put in place so that, any weaknesses are reduced significantly so that they no longer pose a disadvantage to the company. (Kotler, Wong, Saunders, Armstrong, 2005)

The Coca-Cola Company has been able to remain profitable in their many years of operating as a company. As identified before, the Advertising Standards Agency and Food Standards Agency had imposed restrictions on their advertising campaign because of the among of sugar used in their products, this demonstrates a disadvantage for the company, these restrictions could lead to lesser profits, their soft-drinks generally aren’t good for their consumers. For these reasons the company may experience negative publicity which would be a disadvantage.


New markets:

The Coca Cola had begun operating in the bottled water market, because of the growth, in which the UK market for bottled water alone has an estimation of near to ?1.4 billion. (British Bottled Water, 2009) this is an opportunity because it opens the company to new audiences increasing their brand image.


There are many threats that are imposed upon organisations, such as the ability of Pepsi, (Coca-Cola’s closet rival), to take over the Soft-Drinks industry. The fact that Coca-Cola has to adopt a competitive pricing strategy shows that there is major competition within the market. Other substituting non-alcoholic beverages also pose a threat to the company; such products sold by Starbucks can threaten the profitability of the soft-drinks company. With the ongoing regulations imposed by the Food Standards Agency and (ASA) consumer may put their health first and choose healthier soft-drink alternatives, which would cause a lowering of turnover for the company. The fact that there are competitive pricing strategies between the likes of their rivals Pepsi also imposes the likeliness of customers ignoring both companies and choosing even cheaper alternatives such as Sainsbury’s and Asda branded Cola.(Kotler, Wong, Saunders, Armstrong, 2005)

Brand management

Coca-Cola company main asset is their brand image, it is important in retaining their customers. Brand management involves the enhancing of ones brand, keeping customer interest and expanding to new audiences. To do this requires a lot of attention to the customers, getting them to remember the ‘name, term, sign, symbol design or a combination of these that identifies the maker or seller of the product or service.’ (Kotler, Wong, Saunders, Armstrong, 2005)

Brand management is needed, as it increases a company’s ability to get a consumer to add and worship its name and value its quality of product, fending off other competitors by teaching the customer, that their brand is better. There is also an advantage for suppliers, it allows them to Coca Cola understands the importance of its brand image, through the overly use of promotional campaigns and various attempts at direct, and personal selling. It has been said the firm prefer to spend more on its promotional campaigns than its manufacturing costs. The firm has generated a brand image through its logo, which evidently always uses the colour red, in doing this they are reminding customers of their existence whilist increasing their awareness.

Branding strategies

The Coca-Cola Company has introduced major soft-drink of different kinds into the market, each kind has a different image, and this demonstrates an individual branding strategy, through the usage of new brand names for the various new products they have introduced over the years. There are many advantages in doing this, it increases their audience and allows the company to work on new brands, however these new products such as Fanta do not include the original branding, and therefore it could lead to their loyal customers forgetting the Coca-Cola image.


To conclude, The Coca Cola company has implemented good strategies, the managers of the company clearly understand the importance of meeting its customer needs, and enhancing its brand image to retain and remind customers of its good brand, hence the need for such a large expenditure on promotional campaigns, it utilizes the marketing mix well, through the adoption of competitor pricing strategy, it realizes its success can be easily threatened by competitors such as Pepsi, and substitute non-alcoholic beverages such as Coffee and tea. Through its current attitudes and good usage of the marketing mix variables, it is certain this business will continue to dominate and likely double their revenue as they have plan to do so by 2020, however external influences such as social cultural and economic influences could lead to a failure, regulatory bodies imposing restrictions could stop the business from reaching its potential if it continues on producing ‘misleading’ advertisements, however the worldwide recognition of its branding and along with individual brand images, this demonstrates the business has the potential to reach their goal.

Reference and Bibliography


Palmer, A (2009) Introduction to Marketing. Oxford University Press
Brassington, F & Pettitt, S Essentials of Marketing, FT Prentice Hall 2nd edititon
Doyle, P. Marketing Management and Strategy, Prentice Hall
Kotler, P. (2006) Marketing Management Prentice Hall 12th Edition
Boyd, W. H, Walker, C. (1990) Marketing Management: A strategic Approach International Student Edition IRWIN publishing
Kotler, P, Wong, V, Saunders, J, Armstrong, G (2005) Principles of Marketing 4th European Edition Published by Pearson prentice Hall

Internet Sources:

The Times 100 ‘Market and Product Orientation’–market-product-orientation–211.php [Accessed March 25th 2011]
Smith, R (2010) ‘Sell fizzy pop in smaller cans: Food Standards Agency’ {Accessed March 25th 2011]
anon, 2008 Focus – Leading water brands hit by credit crunch {Accessed March 25th 2011]
Sinclair, L (2011) ‘Coca-Cola in Hot Water Over Nutritious Ad’{Accessed March 25th 2011]
Hannaford, K (2007) ‘New Technology by Coca-Cola allows ice-cubes to form in bottles of Sprite: TEC’ <> {Accessed March 25th 2011]
Sharma, S Kumar, S (n.d) 4ps Analysis of Nestle and Cadbury Dairy Milk Pvt. Ltd. Delhi Business School {Accessed March 25th 2011] [Accessed 1st April 2011]
Anon, n.d “Coca-Cola Case Study.” [Accessed 1st Apr 2011]
Seeking Alpha (2011) ‘Just One Stock: Returns, Cash Flow, Emerging-Market Potential for Coke’s World-Class Beverage Brand” [Accessed 1st Apr 2011]
British Bottled Water (2009) [Accessed 1st Apr 2011] [Accessed 1st Apr 2011] [Accessed 1st April 2011]

Free Essays

Darwin observed several facts which contradicted his theory of natural- or survival selection


Darwin observed several facts which contradicted his theory of natural- or survival selection, one of which was the dazzling plumage of peacocks that appeared to have nothing to do with survival, and in fact seemed to be more of an open invitation to potential predators. The fact that peahens prefer to mate with males who have the most brilliant and luminescent plumage, and that males are often larger than females in species in which they need to engage in physical combat in competition over females, (Crawford & Krebbs, 2008) lead to Darwin’s second evolutionary theory: the theory of sexual selection. Competition among members of the same species for reproductively relevant resources is the pillar of Darwin’s (1859) theory of natural selection (West-Eberhard, 1979) and he proposed two primary ways in which sexual selection could operate. Firstly, intrasexual competition; consisting of competition between members of one sex, the result of which leads to mating access with the opposite sex, and secondly, intersexual selection or preferential mate choice. Intersexual selection refers to the tendency of one sex to choose as mates certain members of the opposite sex based on specifically desired qualities. Darwin referred to intersexual selection as “female choice” because he observed that throughout the animal kingdom females were prone to be more discriminating than males in their mating choices, (Crawford, Crebs 2008). In the past several decades the evolutionary perspective on interpersonal attraction and mate selection has gained increased attention and proposes that humans are governed by rules of attraction and mate selection that prioritize the conception, birth, and survival of their offspring. (Mahfouz, et al. 2008). Intrasexual selection in humans appears to operate mostly indirectly, through social hierarchies, rather than through direct competition as can be observed in the animal kingdom, e.g. two antelopes locking horns in combat over a female. In this way patterns of sexual selection do not immediately involve environmental changes, and neutral or even dysfunctional traits could potentially develop through female choice (Buss, 1986). This begs the important question; what are the preferred characteristics valued by human beings when it comes to mating?

One of the main strategies of competition in mating is to make oneself more attractive than others of the same sex by use of specific tactics and displaying certain resources (Buss, 1988). Trivers (1972) further illuminated Darwin’s theory of sexual selection when he suggested that the one driving force behind sexual selection is the relative parental contribution of both sexes in their offspring. Males should adopt a reproductive strategy which maximizes the opportunity to mate, and females should adopt a strategy that relies on choice, only mating once the best male out of a number has been identified. According to Buss (1986) under conditions of female choice, males are expected to display the traits most valued by females, and may compete for elevation in hierarchies while women tend to favour high-status men. Buss (1988) conducted a number of studies with the hypothesis in mind that patterns of human intrasexual competition can be predicted from knowledge of mate selection criteria, and examined preferences in partner choice. He found three replicated sex differences; men more than women preferred mates who were physically attractive, and women more than men preferred mates who showed good earning potential and who were college educated. Thus, it would seem that females can increase their reproductive success by choosing a man of high status with sufficient resources, thereby able to provide material security to successfully raise offspring. Males, on the other hand, increase their reproductive success by choosing women who are receptive, fertile, and possesses characteristics suggestive of being a good mother (Singh, 1993). Where as the reproductive value of a man can be easily assessed by looking at external symbols of power such as social- and economical standing, women’s reproductive value is concealed. However, from an evolutionary based perspective it is assumed that physical attractiveness is primarily a reflection of a woman’s reproductive success (Buss, 1987), and is portrayed in this way by certain desired physical characteristics like full lips, clear skin, clear eyes, an abundance of hair, symmetry, good muscle tone, youth (Buss, 1993) and lower body mass (Swami and Furnham, 2007). From an evolutionary viewpoint, both sexes should have evolved a preference for mates that possess these desired qualities, increasing levels of competition to project such characteristics and ensure reproductive success.

The number of options available when deciding on a mate has become potentially overwhelming in modern times. Not only are there more people in our local environment, but modern dating methods present us with more options than humans have previously had to deal with. However, research suggests that mate qualities valued by people offline are the same as those valued by people online (Lenton, et al., 2008), and that online interaction is driven by the same needs as face-to-face interaction. Thus, online interaction should not be regarded as a separate arena but as an integrated part of modern social life (Wellman & Hathornthwaite, 2002). A study by Hitch et al. (2005) which looked at desirable qualities as projected on online dating sites found the most striking difference across gender to be related to earnings and education. Although both sexes show a preference for partners with higher incomes, this preferences is much more pronounced for women, as also found in Buss’ studies. It was also found that although users prefer a partner with a similar education level, men tended to have a strong dislike for a better educated partner, where as women avoided less educated men. In another study focused on the importance attached to physical attractive qualities, Hancock and Toma (2009) studied profile pictures of women on dating websites by looking at self-presentation and in particular at levels of deception in the form of the number of discrepancies as contained in photographs . They assumed that from an evolutionary perspective youthfulness and physical attractiveness would be qualities valued more by women than by men, and found that women’s photographs were indeed less accurate, with discrepancies relating to mentioned weight, hair length and age as preferred by men, and higher incidences of retouching photos. Although earlier studies focused on self-presentation on internet dating websites, researchers have recently shifted their attention to self-presentation in less anonymous settings like social networking sites. A study by Ellison et al. (2006) found that people tend to act differently in social networking environments when compared to those interacting in anonymous settings. This finding had vast implications in identity formation in the online world, as it basically indicated that online self-presentation varies according to the nature of the setting. Along with dating sites, friend-networking websites like MySpace and Facebook have become very popular, and offer a highly controlled environment for self-presentational behaviour- an ideal setting for impression management (Mehdizadeh, 2010). A study by Zhao (2008) examined identity construction on Facebook, with the main hypothesis being that Facebook users would engage in what internet dating sites users engage in- the presentation of their hoped-for possible selves, defined as socially desirable identities an individual aim to construct, in this case online. They distinguished between implicit identity claims, which involved the display of photos and profile pictures, and explicit identity claims, involving verbal descriptions of the self under the “About me” section of facebook. However, it was found that this was the least elaborated of identity strategies and photos were mainly used for identity construction. Results were consistent with internet dating studies and the way in which a self which is more socially desirable was projected. The construction of the self online has been found to differ between the sexes because different kinds of social roles come into play during interpersonal communication (Archer, 1989). Women, unlike men, tend to place greater importance on sexual-interpersonal aspects of self-definition, and a review of gender differences in identity development revealed few gender differences, apart from in the areas of sexuality and family roles, supporting findings that relationships are more important to women’s identity formation than to men’s (Manago, 2008). Research highlights that it is critical that social scientists don’t view Cyberspace as one generic space, but rather to consider how different spaces online are constructed (Whitty, 2007). Specific characteristics of internet communication may affect gender self-presentation, and the way in which Facebook allows users to present a very strategic presentation of their selves and to control what remains hidden and what is revealed, makes it a fascinating medium to study.

The objectives of the current study was to look at the effect of gender and relationship status on the projection of reproductively valued qualities on Facebook from an evolutionary perspective. From an evolutionary viewpoint one would expect similar gender differences as was found in Buss’ studies, with women placing more of an emphasis on physical attractiveness and youth and the way this is projected on Facebook, and men projecting qualities which portray status and competitiveness. The projection of sociability was correlated with “warmth” and it was predicted that women would score significantly higher on the projection of this characteristic, with single women scoring significantly higher overall. Important to note is that the projection of these mentioned reproductively valued qualities would be of an unconscious- and implicit nature, considering that Facebook is primarily seen as a social networking website, rather than as a virtual arena designed to meet members of the opposite sex, as is the case with online dating websites. Both gender and relationship differences in the projection of physical attractiveness, competitiveness, nurturing qualities, status and sociability were predicted. It was predicted that married persons, already being in a position of long term mating, would project these qualities significantly less than single persons.

There were four main hypotheses:

Hypothesis one: Single males will score significantly higher on projected status and -competitiveness than single females.

Hypothesis two: Single females will score significantly higher on projected physical attractiveness, -nurturing qualities and -sociability than single males.

Hypothesis three: Single males will score significantly higher on both projected status and -competitiveness in comparison to married males.

Hypothesis four: Single females will score significantly higher on projected physical attractiveness, -nurturing qualities and -sociability than married females.


Darwin’s theory of sexual selection suggests that desirable members of the opposite sex possess reproductively valuable assets over which members of the same sex compete. Gender differences typically exist when it comes to which reproductively relevant resources are valued by men and women. Females seem to increase their reproductive success by choosing a man of high status with sufficient resources, thereby able to provide material security to successfully raise offspring. Males, on the other hand, increase their reproductive success by choosing women who are receptive, fertile, and possesses characteristics suggestive of being a good mother (Singh, 1993). Research suggests that mate qualities valued by people offline are the same as those valued by people online (Lenton, et al., 2008) and studies investigating mating preferences on online dating websites display similar findings, with women going to significantly greater lengths than men to enhance physical attractiveness on profile photos, and men emphasising their status and income to a significantly greater extend than women. The present study proposed that evolutionary differences between the sexes with regards to sexual selection should also exist in non-dating online environments like the social networking website, Facebook, with females placing more of on emphasis on projecting physical attractiveness, sociability and nurturing qualities, and males projecting competitiveness and status. Most of the hypotheses were confirmed and were consistent with other studies on mating preferences from an evolutionary viewpoint. Several conclusions can be drawn from this study. Firstly, support was found for significantly greater female than male use and perceived effectiveness of projecting physical attractiveness and nurturing qualities. Secondly, support was found that single women perceive the effectiveness of projecting physical attractiveness to a significantly greater extent than married females. Thirdly, support was found for significantly greater male than female use and perceived effectiveness of competitiveness. Fourthly, support was found that single persons perceived the use and effectiveness of projecting sociability as significantly greater than married persons. Finally, the perceived use and effectiveness of the projection of status did not vary significantly for either gender or relationship status.

These findings provide evidence that mating preferences are also displayed implicitly in non-dating online environments where the main agenda is social networking, rather than attracting a mate. This implies that the projection of reproductively valued assets could also be an unconscious process, engrained in our evolutionary biological make-up. The results of this study will now be discussed in terms of each hypothesis, after which the practical implications of the study will be highlighted and suggestions will finally be made on how future studies could utilize and expand these findings.

Physical attractivenes

As predicted, significant results were found for the projection of physical attractiveness for gender, with women scoring higher overall than men, and also for relationship status, with single persons scoring significantly higher than married persons. These findings provide evidence that pressure on women to appear young and attractive is just as prevalent in today’s society as it was when Darwin wrote his theory on sexual selection in 1871, noting that “In civilized life man is largely, but by no means exclusively, influenced in the choice of his wife by external appearance”, 1871. (p. 738). The pressure to be beautiful can be most blatantly observed on dating websites where the intrasexual battle between women ensues as they compete for the attention of a potential partner, and rely solely on photos as a method to project physical characteristics, even lying about age and weight to appear more attractive (Hitsch et al., 2005). One study found that men were more likely to respond to an

advertisement in which a woman identified herself as a recovering addict than to an ad in which the woman identified herself as obese (Minervini & McAndrew, 2005). Findings of this study reveal Facebook to be just as a competitive virtual arena which exhibits similar characteristics to online dating websites, including the strategic way in which one’s projected physical attractiveness is manipulated and enhanced online. Women displayed considerably more of a tendency to change their profile pictures on a regular basis than men, thereby drawing attention to- and emphasizing their looks to a much greater extent than men. This tendency was particularly highlighted along single women. Considering that evolutionary biology rules out beauty for its own sake (Derry, 2008) these findings reflect the unconscious way in which women on Facebook project reproductively valued qualities to the opposite sex through the implicit medium of photography. Although facial attractiveness is expected to predict the popularity of both men and women, and emerged in virtually all dating studies based on real interactions as a powerful predictor of popularity (Asendorpf et al., 2011), women tend to score significantly higher on projected physical attractiveness in comparison to men, as also supported by the findings of this study.

Further significant differences were found between single- and married persons, with single users projecting physical attractiveness more than married users. This supports predictions, and reflects that there is less pressure on married couples to emphasise physical attractiveness, which can be attributed to the fact that they are already in positions of long term mating, and there is thus less of a need to project this asset.

Another interesting finding in the current study was that only 52% of single women listed their age, followed by 78% of married women, 88% of single men, and finally 94% of married men. This further highlights the pressure on women to appear youthful, and it is interesting to note that it is predominantly single women who do not choose to list their age. Considering that 78% of married females list their age, one can not generalize this finding to women in general. The conclusion which must thus be drawn is that single women tend to de-emphasize elements relating to age in an attempt to appear more youthful. It is also interesting to note that the average age of single women was 24 in comparison to married women who were aged 29 on average. Considering that married women were aged slightly older than single women, one would in fact expect them to be more secretive about their age. However, this research indicates findings to the contrary and highlights the reproductive value of appearing young for single women. These findings are supported by various previous studies into mating preference that found both physical attractiveness and youth as indicative of health and fertility in women, and as valued significantly by men as sources of reproductive value (Buss et al., 1990; Buss & Barnes, 1986; Buss et al., 2001; Buss & Schmitt, 1993; Feingold, 1990, 1992; Kenrick & Keefe, 1992; Kenrick, Keefe, Gabrielidis, & Cornelius, 1996; Singh, 1993; Singh & Young, 1995).


Human beings tend to live in groups and all groups have status hierarchies, whether formal or informal, with reproductively valued resources usually abundant at the top rather than the bottom, creating steep levels of competition (Buss, 2001). Levels of intrasexual competition also increase, especially among males, as male resource display is judged as more effective than female resource display when it comes to attracting a mate. Men more than women display characteristics that would lead to the likely acquisition of resources like ambition and industriousness (Buss, 1988). In the current study significant gender differences were found for the projection of competitiveness, with males overall scoring significantly higher than females, as predicted. Previous studies found that men were more likely to display resources as a tactic of intrasexual competition than women, also linking to studies done on mating preferences as displayed on online dating websites which found that men tended to project their status in society, as well as their income, to a much greater extent than women (Hitsch et al., 2005, Toma et al., 2008, Mahfouz, 2008). Although projected levels of competitiveness is not viewed as directly projecting resources or income in the case of this study, it is seen as a powerful indicator of a male’s ability to succeed in allocating valuable resources such as financial income. Levels of competitiveness did not vary significantly between single- and married men as predicted, indicating that the projection of competitiveness is valued by males in general and not just single males. This could arguably be explained by the fact that, from an evolutionary viewpoint, men may have evolved over human evolutionary history a powerful need for sexual access to a large number of women (Buss, 1993) which in combination with the innate ability to father offspring until much later in life than women are capable of biologically, entails higher levels of competitiveness to suffice throughout a male’s life. In one study men stated that they would ideally like to have more than 18 sex partners in their lifetimes, whereas women state that they would desire only 4 or 5 (Buss & Schmitt, 1993), and these findings were replicated twice when 75% of men but 0% of the women approached by an attractive stranger of the opposite sex consented to a request for sex (Clark & Hatfield, 1989). From an evolutionary viewpoint, marriage is a relatively modern concept, implying that gender differences with regards to intra- and intersexual competition have not changed dramatically in modern times. In this sense competitiveness leads to a higher position in the social hierarchy, and better chance of providing for one’s offspring, and should not significantly vary between single- and married men, as findings illustrate in this study

The importance of physical characteristics in the female choice of a mate is prevalent throughout the animal kingdom, and one benefit of a woman in permanent mating conditions is the physical protection offered by a man, Buss (2003). Considering that levels of competitiveness was correlated with participation in sports, one could further explore the possibility that physical strength as displayed in sports is valued as a reproductive resource by women- supported by studies such as Buss (1995) which found that women valued physical protection abilities more than men, in both short-term and long-term mating. Thus, it is additionally also possible that men project physical strength by appearing “sporty” in profile photos as the reproductively valued asset of providing physical protection to female offspring. This could also account for the insignificant difference between single- and married males when it came to the projection of competitiveness, seeing that men can father (and thus protect) offspring until late in life.

Nurturing qualities

The current study predicted that women would score significantly higher on projected nurturing qualities than men, and this hypothesis was supported. Both single and married women projected nurturing qualities to a greater extent than males. Stereotypically women are nurturing, where as men are somewhat more aggressive and less person-centred. Traditionally sex differences have been explained by the process of socialization , and the way men and women are influenced by societal norms to play acceptable gender roles. However, from an evolutionary viewpoint men would need to exhibit higher levels of aggression, and competitiveness, supported by the findings of this study, to protect their positions in society where as women with lower levels of competition and higher investment in their offspring are expected to show more nurturing behaviours (Workman & Reader). This study supports findings from previous research which highlight nurturing qualities in women as being innate, as illustrated in a study by Bernt (1986) in which it was shown that women are more attracted to intimate relationships than men (Berndt, 1986), and cross-cultural studies which suggests women to be more person-centred, in contrast to men who are more object-centred .There is also evidence that sex differences in nurturance has its origins in infancy, and a study by Simner (1971) found that infant girls more than infant boys were more likely to also start crying when they heard another baby cry, than when hearing a loud noise (Workman & Reader, 2001). Contrary to prediction single women did not score higher on projected nurturing qualities than married women with married women having the highest scores on projected

nurturing qualities overall. A possible explanation for this could be that married women, who being married are in a more secure position to either have children- or already have children, are either consciously or unconsciously depicting salient nurturing qualities. This study also illustrates that the biological experiences of pregnancy and lactation generate a strong, instinctual drive in women to nurture (Silverstein, et al., 1999), as illustrated by the higher, although not significantly so, proportion of married women who exhibited nurturing qualities in this study versus single women.


A significant difference between single- and married subjects was noted when it came to sociability, with single Facebook users projecting sociability to a greater extend than married users. This links to previous studies done on Facebook which found that most users attempted to project a socially desired self, claiming that they were “popular among friends”. Fierce competition was also noted among Facebook users for the size of social networks they claimed to possess, and competition to have the most amount of “friends”, Zhao (2008). Thus, it would seem that the desire to appear sociable or popular offline, also exists online. There is further support for the importance of social skills as found in a study by Buss (1989) which studied mating preferences across 37 cultures and found that kindness, intelligence and social skills were listed as the top criteria for a potential mate. This supports the current study’s prediction, that single Facebook users would appear significantly more social than married users. However, unlike predicted there was no significant difference between men and women when it came to projected sociability, revealing that the projection of warmth towards others is just as important for single men as it is for single women. Significantly lower levels of projected sociability in married couples could be a reflection of lower levels of social activity as portrayed in profile pictures, perhaps as a result of spending more time with their partners or children, but could also indicate that there is less of a need to exhibit sociability, and thereby project popularity among friends .


Status is closely correlated to financial income, and it was predicted that men more than women would display their status on Facebook, supporting studies such as one by Buss (1988) in which it was found that men more than women display characteristics that lead to the likely acquisition of resources, e.g. degree attainment. However, this was not the case, and no significant differences in the projection of status were found between either men and women overall, or single- and married subjects. There could be several explanations for this, one relating to previous studies done on online dating websites which found that both sexes tended to favour members of the opposite sex with similar educational levels. Considering the overwhelming support that previous studies provide with regards to the importance that women attach to resource income as a reproductive value and status as a reflection of financial income, another explanation could lie in the obvious fact that Facebook is a social-, rather than dating network, and that popularity as illustrated with regards to exhibiting sociability, is highly valued. Thus, it would be just as important for women than for men to list their status in a virtual social network where one would expect similar levels of education among friends or acquaintances as a general rule. Also, Facebook is arguably not different from online dating websites where users, both male and female, tend to list their status as a formality, but in which one study men stated in a questionnaire that they did have a particularly strong distaste for a better educated partner, while women particularly avoided less educated men (Hitsch, 2005).


In conclusion, the implicit nature of photography and the unconscious way in which participants use it to project reproductively valued qualities to members of the opposite sex are particularly interesting findings. Facebook as a social networking website, in which users have control over self image and access to many tools with which to present themselves in a favourable way to others makes it a fascinating medium to further explore.

Limitations and suggestions for future research should be noted. Suggestions for future studies include conducting a cross-cultural study to see if there are any significant differences to note. Secondly, exploring other functions on the social networking website, such as the number of friends- or social networks a user possess, additional photo albums, qualitative analysis of verbal descriptions under the “About me” section or status updates of users, etc. The vast amount of additional information available on Facebook could be used to supplement current findings, and other popular social networking sites such as MySpace could be researched in a similar fashion. Thirdly, different age groups could be tested for significant correlations- or differences. Fourthly, data could be collected in combination with questionnaires, supplementing findings. Fifthly, a study looking at specific differences between the explicit and implicit projection of reproductively valued qualities on Facebook could be conducted. Finally, there are many other traits which both sexes highly value in the opposite sex like displaying humour, good manners, sympathy, good grooming (Buss, 1988), similar values, honesty (Whitty, 2007) etc. and future studies could aim to include these.

Although this study and its hypotheses were interpreted from an evolutionary perspective, additional theoretical accounts are possible, and it should be kept in mind that evolutionary explanations supplement, rather than replace traditional modes of explanation in psychology (Buss, 1988). These results may seen as the start of an exploration into social networking websites and how resource valued traits are unconsciously and implicitly projected to members of the opposite sex, but current social psychological accounts should also considered.

Free Essays

The Theory of ‘The Zone of Proximal Development’ and ‘Scaffolding’

Section 1: The Theory of ‘The Zone of Proximal Development’ and ‘Scaffolding’.

“The zone of proximal development is the distance between what children can do by themselves and the next learning that they can be helped to achieve with competent assistance” (Raymond, 2000, p.176).

Vygotsky’s socio-cultural theory is widely cited by educators and teachers even today, as they formulate plans on how to get the most from students, challenging them to reach their highest potential. Vygoysky believed that social interaction leads not only to increased levels of knowledge, but that it actually changes a child’s thoughts and behaviours and hence develops problem solving. Since it is the goal of parents and teachers alike to help children become high achievers, taking a look at the work of Vygotsky and examining his conclusions seemed the best course for this assignment.

Lev Vygotsky’s concept of the zone of proximal development (ZPD) is what has led to the term and concept of learning through scaffolding, as introduced in 1976 by Wood, Bruner and Ross, to describe educational interaction between an adult and a child. The idea was used to explore the nature of aid provided by a teacher for children learning how to carry out a task they could not perform alone. Bruner’s ideas of spiral curriculum and scaffolding are related. Bruner (1960) stated that the curriculum should revisit the basic ideas for each subject, repeatedly building upon them until the pupil understands them fully (the spiral curriculum), rather than just to learn the facts.

A parallel has been drawn between the notion of scaffolding and ZPD theories of Vygotsky (Hobsbaum,A., Peters,S., Sylva,K., 1996).

If teachers wish to provide learning opportunities, they must assess the child’s present developmental level and estimate the ‘length’ of the ZDP. This can be achieved by using current APP grids and assessing the exact level of the pupil and what they need to achieve to reach the next level and progress further. But, the child must be able to make use of the help of others; the learner needs the ability to benefit from the give-and-take activities and conversations with others (Bruner, 1983). Vygotsky acknowledged the limits of the ZPD, but most psychological research has emphasized the importance of the role of the environment; including parents and other adults (teachers and care givers) who are ‘expert’ models and guides for a young learner.

The full development during the ZPD depends upon full social interaction and the more the child takes advantage of an adult’s assistance, the broader their ‘Zone of Proximal Development’ is.

Vygotsky defined scaffolding instruction as the “role of teachers and others in supporting the learner’s development and providing support structures to get to that next stage or level” (Raymond, 2000, p. 176).

Vygotsky refers to what children can do on their own as the ‘level of actual development’. LAD in his view, it is the level of actual development that a standard IQ test measures. Such a measure is undoubtedly important, but it is also incomplete. Two children might have the same level of actual development, in the sense of being able to solve the same number of problems on a standardised test. Given appropriate help from an adult, still, one child might be able to solve an additional dozen problems while the other child might be able to solve only two or three more. What the child can do with the help is referred to as the ‘level of potential development’ (Vasta, R., Haith, M.M., Miller, S.A., 1995).

Scaffolding can take the form of targeted questioning for a specific task or modeling a task, so that a teacher can individualise learning to meet the requirements of each individual student. However this is dependent on the teacher knowing the pupils’ previous knowledge. The scaffolds facilitate a student’s ability to build on their prior knowledge and interpret new data or information. The activities provided in scaffolding instruction are at the next learning level beyond the LAD or what the learner can do alone (Olson & Pratt, 2000). The teacher provides the scaffolds so that the learner can accomplish – with assistance – the tasks that he or she could otherwise not complete, thus helping the learner through the ZPD (Bransford, Brown, & Cocking, 2000).

Section 2: Educational examples of teaching utilising ‘ZPD’ and ‘Scaffolding’.

If we first review Assignment 2 (appendix one) we can see that the two pupils have considerably differing LAD’s. Pupil Two working at a Level 3C and Pupil One working at Level 2B. This was evident with the amount of scaffolding that each pupil required throughout the task. Pupil Two was able to complete the task with limited scaffolding, as her ‘level of actual development’ was high and through questioning to ensure that she followed a sequence she completed the task. However with Pupil One, a large amount of modelling and leading questions were required to allow her to complete the task because her LAD was at a lower level and her previous experiences of problem solving were limited so she was therefore limited to the experiences she could recall.

“Every function in the child’s cultural development appears twice: first, on the social level, and later, on the individual level; first, between people (interpsychological) and then inside the child (intrapsychological).” (Vygotsky, 1978).

However approximately four weeks later during my first teaching practice I finished a numeracy unit with a similar problem with a lower ability group. Pupil One who had required a large amount of scaffolding was able to approach the task as she had the experience and the tools to approach this task (appendix two) and complete it with limited support and therefore show that previous experience is vital and that if the pupil is actively listening during the process that it will assist. This is supported by Vygotsky (1978) as he believed that the internalisation of these tools led to higher thinking skills.

During assignment four (appendix four, p5-7) we can again see that Pupil One, who is read to at home, using more advanced books, but also regularly reads with a supporting adult. Helped by their parents when they first start learning to speak, young children are provided with instinctive structures to learn a language. Bed-time stories and read alouds are classic examples (Daniels, 1994). She has a higher reading age and has far more reading strategies to ensure that she is a fluent reader, but also through her social background as stated by Vygotsky (1978) she has a greater understanding of the text and the ability to discuss the text. Pupil Two however, reads mainly on her own and is therefore unable to discuss any issues within the text with a more able adult. This restricts her to only one type of strategy, therefore she is working at a whole level behind Pupil One.

In assignment three, (appendix three) we can see that this task was an open task to see how problem solving could be developed within ‘Gifted’ and ‘Talented’ literacy pupils. They were asked to create a way of showing next year’s Year 3 pupils what performance poetry is. Therefore the pupils did not have any teacher input apart from giving the seven pupils the objective and explain that they would be filmed to allow observation. By watching the video back we can see that the pupils had to explain and support each other through the task by acting as peer tutors.

“Children also learn from each other by collaborative learning, involving children who are at similar levels of competence working together in pairs or in groups and also peer tutoring, involving a more knowledgeable child providing guidance to another child in order to bring him up to a higher level of competence in a task. Research has shown that this not only benefits the child who is receiving the guidance; it also promotes learning in the child expert.” Maynard 2006.

By reviewing the results and the video evidence it is possible to see that an individual pupil would not have achieved a complete task, as they had to discuss and talk through how they were going to choose the poetry, a location and the structure of the film. Each pupil had their own input and they worked together to produce the final film.

Section 3: Implications of scaffolding on Teaching and the Teacher.

Before discussing the implications of scaffolding, we have to realise that these examples are taken from pupils either individually or in small groups and from a controlled environment, where they do not have any external social factors effecting them. In society today educators need to take into account and realise that teaching in a class of 30, there will be individuals with issues that can be beyond their control and that before teaching we have to take into account the five factors of ‘Every Child Matters’ that if a child has one of these missing they will not be able to focus and learn.

One of the primary benefits of scaffolding instruction is that it engages the learner. The learner does not passively listen to information presented but instead through teacher questioning and prompting, the learner builds on prior knowledge and forms new knowledge. In working with students who have low self-esteem and learning disabilities, it provides an opportunity to give positive feedback to the students by saying things like “…see what you have achieved so far!” This gives them more of a can do attitude, compared to a; I can’t do this attitude. This leads into another advantage of scaffolding in that if done properly, scaffolding instruction motivates the student so that they want to learn. However the significance of the ZPD is that it determines the lower and upper bounds of the zone within which instruction should be pitched. This requires an experienced teacher who understands the current educational level of every pupil. Therefore “Instruction is only useful when it moves ahead of development” (Vygotsky 1978 p. 212), “leading the child to carry out activities that force him to rise above himself” (Vygotshy 1978 p. 213). Therefore, this indicates that working with a class of thirty children means that a teacher would have to take into account thirty LAD’s and ZPD’s. The difficulties of this are self-evident but proficient teachers are able to at least maximise this understanding.

Another benefit of this type of instruction is that it can minimise the level of frustration of the learner. This is extremely important with many special needs students, who can become frustrated very easily then shut down and refuse to participate in further learning during that particular setting.

Scaffold instruction is individualised so it can benefit each learner. However, this is also the biggest disadvantage for the teacher since developing the supports and scaffolded lessons to meet the needs of each individual would be extremely time-consuming. Implementation of individualised scaffolds in a classroom with a large number of students would be challenging, therefore pupils can become grouped within their current ability and LAD that they are currently working at. However as we have previously seen, pupils working as a group can scaffold each other and therefore develop their skills collaboratively. These groups would then benefit from being mixed ability as the higher ability pupil would be able to act as the expert. This would also help to motivate all pupils on task and provide responsibility. Reciprocal scaffolding, a method first coined by Holton and Thomas, is a method that involves a group of two or more collaboratively working together, as we see in assignment three. In this situation, the group can learn from each other’s experiences and knowledge. The scaffolding is shared by each member and changes constantly as the group works on a task (Holton and Clarke, 2006). According to Vygotsky, students develop higher-level thinking skills when scaffolding occurs with an adult expert or with a peer of higher capabilities (Stone, 1998). This is completely opposed to Paiget’s theory.

Another disadvantage is that unless properly trained, a teacher may not properly implement scaffolding instruction and therefore not see the full effect. Scaffolding also requires that the teacher give up some of the control and allow the students to make errors. This may be difficult for teachers to do, as teachers are required to plan their lessons and meet specific objectives, the lesson could progress in a completely different direction and therefore not meet that specific objective. So timing of the teacher’s imput is vital, to ensure children do not go too far off track.

Although there are some drawbacks to the use of scaffolding as a teaching strategy, I believe that the positive impact it has on the development of pupils, and therefore the success of the lesson, is vital to consider when planning.


Applebee, A. N. and J. A. Langer, 1983. ‘Instructional scaffolding: Reading and writing as natural language activities. Language Arts, 60/2.

Bransford, J., Brown, A., & Cocking, R. (2000). How People Learn:

Brain, Mind, and Experience & School. Washington, DC: National

Academy Press.

Bruner, J. (1960). The Process of Education. Cambridge, MA: Harvard University Press.

Bruner, J. 1978. ‘The role of dialogue in language acquisition’ In A. Sinclair, R., J. Jarvelle, and W. J. M. Levelt (eds.) The Child’s Concept of Language. New York: Springer-Verlag.

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student-centered classroom. Markham: Pembroke Publishers Ltd

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Recovery. Oxford Review of Education, 22, 17-35

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Maynard, S. (2006). Vygotsky and the Child Apprentice. 5/04/2011.

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Children and Adolescents with Special Needs (pp. 170-197). Upper

Saddle River, NJ: Prentice-Hall, Inc.

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Disabilities (pp. 169-201). Needham Heights, MA: Allyn & Bacon, A

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Vygotsky, L.S. (1978). Mind and society: The development of higher mental processes. Cambridge, MA: Harvard University Press.

Free Essays

History and Development of Miasmatic Theory in Homeopathy, from Samuel Hahnemann to Nowadays


It is the intention of this study to give an in-depth and clear understanding of the theory of miasms, in order to comprehend them and identify its practical application.

Homeopathy society has always been divided over the question of miasms. Since the time of Hahnemann, this theory has remained controversial (Bathia, 2007). The dissidents have taken the position that this theory need not be an essential part of Homeopathy as it is still possible practises it successfully without accepting this theory (Pitt, 2008). Author will make a discussion here to recognize what led Hahnemann to enunciate his chronic diseases theory and to determine if it is useful in the management of chronic cases in Homeopathic practice.

Next it would be discuss its development, exploring the fact that a large number of homeopaths believe that miasms of Hahnemann are nothing but bacteria and viruses (Bathia, 2007). Then there are spiritual followers of Kent who believe in the non-material nature of miasms and call it a predisposition or dyscrasia (Pitt, 2008). Lately an approach of how are Miasms classified from the new perspectives such as genetic and epigenetic, embryology, Facial analysis, prototypes, periodic table, as all of them claim to follow the teachings from the Master (Klein, 2009). The other controversial issue to be look at is the number of Miasms, with two clear tendencies the three way model of miasms (psora, sycosis and syphilis) and from this up to eleven miasms as Sankaran have identify. (Klein, 2009) So the main objective of this project is to attempt to clarify and identify the different currents on the theory since Hahnemann make public his discovery until nowadays.

What are miasms?

The word miasm originates from the Greek word “Miasma” which means a stain, pollution, defilement of a noxious atmosphere or infective material.

It was first used by Hippocrates to refer to a certain taint in the air (Kiple,1993)The term “miasm” was commonly in use in Hahnemann’s day and referred to some noxious, unseen influence in the air that made one sick. A quick look to an early dictionary definition of the term miasm, closer to the time of Hahnemann’s use, show the follow meaning “Miasm, is the effluvia or fine particles of any putrefying matter, rising and floating in the atmosphere, and dangerous to health: noxious exhalations, emanations, or effluvia: malaria: infectious substances floating in the air ”. (Casell, 1902)

Germ theory was further developed by Louis Pasteur in the 1860s and Robert Koch in the 1870s, but it is important to understand that there is an abyss between Hahnemann’s dynamic conception of disease and the more material one of Pasteur and Koch (conventional medicine) (Verspoor, 1999) Sterner (2007) clarifies that the germ theory after revealed it soon prevailed over miasmic theory.

Hahnemann, during his lifetime, discovered that a “noxious agent” was responsible for the persistence of the disease condition. He named this a miasm. The chronic diseases originate on chronic parasite miasms or germs, now referred to as chronic parasitic microorganisms. (Tyler, 2007). In other words it is a contagion that can provide the foundation for chronic disease (Choudhury, 2007).

The Master (2003 ed.) in his last edition of the Organon on aphorism 78, postulates that veritable chronic illnesses are the ones that emerges from chronic miasms. If they are not treated properly with homeopathy CD becomes greater and tortures the patient until his death, regardless of the patients’ habits.

In analysing Hahnemann’s writings, Dimitriadis (2005), emphasizes Master’s own definition of miasm; that is in fact an infectious agent, meaning any ainfectious substance dangerous for health. Taylor (2002) proposed that Hahnemann was using the term miasm in the inclusive rather than the particular meaning, in addition Dimitriadis (2005) clarifies that Hahnemann stated precisely the word infection in a wide implication particularly when he expressed that after the external stimulus impact on the body the vital force is primarily affected.

Is been stressed that Hahnemann point out in all his works that miasms are not diseases themselves, if not the causation (Sarkar, 1968) Hahnemann also describes the gradually diminishing virulence via increasing immunity (Dudgeon, 1989: 166). On the other hand Dimitriadis (2005) states that any propensity to use the word miasm to describe tendency to disease (dyscrasia, diathesis or taint) is mistaken.

Instead Bathia (2007) points out that although Hahnemann truly believed in the infectious nature of disease and considered miasms as infectious agent, conversely he also considered disease as dynamic, non-physical and its origin as a dynamic predisposition to illness. He goes on argue that Hahnemann shows confusion on his last writings on the 6th edition of the Organon, as in one hand is stating that Cholera is caused by living microorganism but on the other hand he is saying that nothing material could be found in ill persons due to illness come from the dynamic perturbation of the Vital force. Bathia concludes that this and other statements on master’s writing confuse the next generations and the world of miasms has become more chaotic.

Moreover Vithoulkas (1980) the classic well known homeopath, defines a miasm as a tendency toward chronic disease underlying the acute manifestations of a disease, which is spreadable from generation to generation, and which may respond beneficially to the corresponding nosode prepared from either pathological tissue or from the appropriate drug or vaccine.

Further research by Dr. Banarjea (2006) lead him to define miasm as “an invisible, dynamic principle” which is absorbed into the human organism. This causes a stigma in the constitution, which can only be removed by the correct anti-miasmatic medicine. He goes on to argue that without the correct treatment the miasm will continue and will be pass on the next generation.

Heudens-Mast (2005) concurs that miasms are the basis of all disease. Miasms can be inherited or acquired from contagion or suppression. She concludes that the only way to truly help the patients is by addressing the miasms.

Alternatively, Dr. Tomas Paschero (2000) defined miasma as a vibratory alteration of man’s vital force, which regulates the constitution and behaviour, conversely he negates the infectious aspect of miasms.

In fact the definition of miasms during the course of the homeopathic history has marked the practice application, dividing the profession in two major groups, those who believed in the bacteria origin and those who believed in the spiritual nature of the miasms. After evaluating Hahnemann’s conception of chronic diseases, the differences between these two majors groups would be analysed.

The Beginning: Hahnemann Conception of Chronic Diseases

The Relapses

Hahnemann formulated the miasmatic theory of disease in his 7th decade, documented in his book The Chronic Disease (Watson, 2009).

After formulating the Law of Similar and developing the provings, he enjoyed early success treating acute and epidemic illness, however he came across cases which the initial improvement cease (Tyler, 2007, Handley, 1997).

His cases were overshadowed by old symptoms, which didn’t respond to the apparently well choose remedy (Haehl, 2003). He also experimented the emergence of new symptoms, which reacted inadequately to the remedies, and finally he states that the remedies were not better than palliatives, as the acute attacks tended to become more frequent and more serious over the time (Klein, 2009). In other words Hahnemann admitted that the Law of Similar although carefully applied doesn’t not always lead to success. (Whichmann, 2006).

According to Choudhury (2006) Hahnemann thought it could be five reasons responsible for this failure, firstly referent to the law of similar which may not be of general application, next the number of medicines may be too short to cover all kind of illness, following a misuse of the law of similar, after an oblivion in the totality of symptoms, and last there might be some obstacles which previse perdurable recovery.

Consequently, Hahnemann expended day and night working on long term patient’s cases to arrive to the root of the problem (Tyler, 2007), until he reached the conclusion that there is an obstacle in the organism that cannot be removed with medicines or the healthiest diet or disappear by itself. He named this obstacle a “miasm”.

The Missing Link

Hahnemann is know as very self-critic, and this censorious part of him, prevented him to be indifferent to the problem, he didn’t console himself with the magnificent acute cures, or looking for more remedies as many on the contrary followers urged, on the contrary Hahnemann knew that the problem lay not in the quantity but in the quality, in his lack of knowledge of illness. And so he took a though task to understand the disease (Decker 1999)

Thereby at his 73 years and after 12 years of analysis of thousands of trials, cases, analysis, reflection and hard work, he discovered the reason why the homeopathic remedies did not lead to true cure of the chronic diseases (Dhawale, 2004).

Thus he arrived to a profound notion in the treatment of chronic illness, which he first communicated to two of his most deserving disciples, in 1827, Staph and Gross, (Haehl, 2003) which for his surprise react with embarrassment, they were horrified, fearing for a further negative reaction to homeopathy (Handley, 1997). Not much later he wrote a letter to Baumgartner, declaring that his system was imperfect and defective without this missing link. (Bradford, 2004)

The Cause: infectious agents

It have to be stressed before continue with the history of Hahnemann conception of chronic diseases, that Hahnemann initially used the word miasm to refer to what we would know as infectious diseases (Tyler, 2007), she also draws attention that by chronic diseases Hahnemann didn’t meant those consequence from continual inadequate environment, overindulgence or too much worries, because those will disappear in its own, without any treatment if the circumstances change, so it would be inappropriate to call them chronic diseases. Tyler light up that Hahnemann conception of disease was a microorganism, which will not vanish even with the most accurately mental and body habits.

Is often quoted that Hahnemann when referring to infectious agents was talking about parasites, bacteria or viruses, without the help of a microscope, remarks and statements which went in advance of bacterial knowledge of many illnesses more than fifty year before of Koch’s discovery of the cholera bacteria. (Sarkar, 1968) Recent authors stressed similar views and even believe hat Hahnemann should be claimed as the Father of Bacteriology. (Choudhury 2006; Kanjilal 1977)

However the preliminaries had already been set in place in many directions, scientist had been discussing the idea for some time. The existence of microorganisms had become recognized in medical science even 75 years before Hahnemann’s births and sources of specific contagion had already been put forward as a causation of diseases, at least 130 years earlier. (Ott, 1996) So for Klein (2009) it was an evident step forward to grasp and seize the word miasm and encompass his theory on the origin of CD.

In fact Hahnemann’s theory of masked chronic illness, was very similar to the theory of diatheses, contemporary at Hahnemann’s time. However the exceptional stamp that Hahnemann marked his theory made it genuine and turned many people away from it (Handley, 1990)

Another common critic make to the Master’s theory, is the allopathic approach, that some identifies on it. Watson (2009) on his examinations of miasmatic theory states that Hahnemann acquired an allopathic mode of rationale within his theory of chronic disease, looking for cause and fighting against it.

The Underlying Predisposition

The conclusions that Hahnemann drew from his profound study, allowed him to identify a profound level of diseases, or on other words the cause of an underlying predisposition. He observes that infections that patients contracted in the course of their life left a vital impact that led to relapses of the initial symptoms or the rise of more serious and chronic diseases. (Klein, 2009)

While looking for these underlying diseases, Hahnemann look through the medical records of his patients searching for common factors in order to explain the nature of their illness. This was the beginning of his understanding into recognizing patterns of symptoms. (Haehl, 2003)

This led him first to recognize the two known venereal diseases, which were chronic, infectious and inheritable in nature, syphilis and sycosis, as two of the masked causes of chronic diseases. He treated venereal diseases as an acute infectious diseases and saw chronic consequences to these illness, nevertheless, these two cannot be reckon as the cause of all the chronic cases, so Hahnemann comprehend that the cause of the other chronic diseases does not lay on the venereal miasmas. (Verspoor, 1999)

In this way his dwells were on the cause behind of all non-venereal chronic diseases, he realized that the original malady had to be of a chronic and infectious nature, as the chronic venereal miasm already defined.

The Original Malady: Psora and non-venereal chronic diseases

In his research on patients’ chronic cases, Hahnemann observed a common eruption of itch in their medical history; on top of that he proposed that this itch influenced the start of the evolution of the whole chronic disease process. (Dimitriadis, 2005)

He declared Psora as the most primitive, common and dangerous and misinterpreted miasmatic disease. According to Hahnemann Psora is the sole and unique producer of non-venereal disease. (Choudhury, 2006)

Can be suggested that what Hahnemann stated is that all these non-venereal chronic diseases are apparently separate parts of a single, sound rooted chronic disease process (Internal Psora), which develops after an infection from the psoric miasm (infectious agent, stimulus) (Dimitriadis, 2005, p.15-17) thus we come to the unavoidable deduction that the miasm is an external stimulus, and so Psora Miasm is not the same as Psora the disease, and is not a predisposition to disease quite the opposite is the diseased condition itself (Sarkar, 1968) However a predisposition to emerge a variety of disease is related to the suffer of internal Psora, but is not a dyscrasia or diathesis (Close, 2005).

Hahnemann claimed that 7 of eight of human disease originated from infection of the Psora miasm, and the rest arose from infection with sycosis and syphilis miasm. It needs to be mentioned, that this state is highly speculative on Hahnemann’s side, as Dimitriadis (2005) lights up Hahnemann could not know that fact, even himself change his opinion on whether Psora was the cause of all or most non venereal diseases.

Much of the initial criticism with the miasm theory came from, the fact that Hahnemann attributed too many chronic disease to just Psora.

The symptoms attributed to Psora in Chronic Diseases (Hahnemann, 1998) are generally assigned to “leprosy” and “Scabies” which were experienced in some form or another by every living person and flourished through centuries without healing or being suppressed, progressing to secondary symptoms. The treatment of this illness were suppressive with lead, arsenic, calomel equivalent to antibiotic and steroidal medicines of today, which never cure the underlying disease (Klein, 2009) In addition D’Souza (2005) states that this treatments never brought any cure to the underlying illness. Instead the effect of those suppressions cause a deep taint on the vital force, compromising and weaken the vital force. Hahnemann (1998) attributed all diseases expressions such as inflammatory responses of internal organs and its further development as due to the suppression and incorrect treatment of symptoms of the primary psora over the centuries.

Hahnemann identified Sulphur as the main remedy for Psora.

Opinions on The Theory of Psora

The reaction in front of the new theory, from his contemporaries was as negative as Hahnemann expected to be (Verspoor, 1999). Wolf, Giessen, Jahr, Trinks, Schron and many more refused and criticized the itch theory. However Stapf, Boenninghausen, Hering, were supporters of the master and followed the new doctrine with enthusiasm. (Bradford, 2004, Haehl, 2003) In 1836 Griesselich summarized the judgment of the contemporary homeopaths on the Psora doctrine in one sentence: “I have enquired from all homeopaths, if they recognized Psora as the original evil, and must confess, that I do not remember ” (Handley, 1990, p.84) Hahnemann remained firm to his strict doctrine after all the comments received and break off friendly relations, he was very furious about it and reject all non-believing. (Haehl, 2003)

The Categorisation of Illness

Table 1.1


Sycotic Miasm

The Inheritance Factor

Founder wrote that miasms could be transmitted from generation to generation. He makes this discovery much before the science of genetic appears. So when a baby is born, he is got certain dormant illness, which in function of triggers during life can be aroused. The follow direct quotations from Organon 6th edition, constitute evidence that Hahnemann postulated that miasms are inherited. (Klein, 2009, Verspoor, 1999)

§284 Since Psora is usually communicated through the milk of the wet nurse to most nursing infants if they do not already possess Psora by inheritance from the mother, they are then at the same time protected anti-psorically in the indicated manner by means of the medicinal milk of the wet nurse.

But the care of mothers in their first pregnancy is indispensable by means of a gentle anti-psoric treatment, especially by means of the new dynamizations of sulphur described in this edition (§270), in order to extirpate in the mothers and in the fruit of their womb the Psora (engenderess of most of the chronic diseases) already imparted to the mothers through inheritance, and almost always present in them, so that their progeny might be protected against it in advance.

First Publication of The Theory

He first published the ideas in Chronic Disease in 1828, in his 4th edition of Organon and on the new title Chronic Diseases, Their Peculiar Nature and Their Homeopathic Cure, and shortly afterwards he starts to use this theory on his prescribing methods, therefore were the result of the new theory. (Handley, 1997)

The reactions were several, many who followed Hahnemann simply thought that wasn’t enough remedies, but Hahnemann rejected this idea and considered as a mere subterfuge. (Tyler, 2007)

According to Verspoor (1999) Hahnemann didn’t expect his new discovery or himself to be accepted with affection or enthusiasm and much less to be understood, not even by his followers.

Reception and Contradiction

Klein, 2010 – 2009


The Results

It cannot be stressed enough that this must have been an enormous work for Hahnemann at his 73 years old, however the contemporaries and successors have not hesitate to make her critics both positive and adverse on his CD clinical outcome.

A Hahnemann expert, after investigating the patient’s records of the master from 1836-1842, wrote: “It is an open secret that the progress of Hahnemann’s patients was generally not convincing” (Reinhard, 2006)

On this line, Whichmann (2009) states that Hahnemann had had little time after the postulation of his new theory to practice it and so he suggest whether we have to use the first draft of the theory of miasms or we have to keep to developing or even withdraw. Hahnemann was very flexible and self critic as is being pointed already, he was always questioning himself and his results, as matter of fact on his first edition of the Organon Hahnemann presents his law of similar as the most important thing, and twenty years later he change his opinion, expressed on his Organon and chronic disease. (Whichmann, 2009)

Controversially Klein (2009) states that master was recompensed and recognized with more success in the treatment of his patient suffering from long-term diseases.

In spite of the consideration has to be made whether Hahnemann’s case taking was as detailed as is today, to reveal the true chronic state of the person and therefore the most accurate remedy.

Another point to considerer on the results of Samuel Hahnemann is the influence of the other two miasms, syphilis and sycosis. Hahnemann described them from the miasmatic infectious origin given a clear picture, however he doesn’t make the connection between them.

Free Essays

Application of demand and control theory to measure the well-being of care workers


Aims & Objectives: The purpose of this study was to understand the impacts of psychosocial factors on the psychological wellbeing of care workers in a care home setting. Design: The study employed a quantitative descriptive research methodology. Methods: The validated instruments used were Cope Questionnaire, the General Self Efficacy scale, Short form Social Support Questionnaire, Role Stress Questionnaire and the General Health Questionnaire. Participants: The permanent care staffs of an organization for residential elderly care with four locations in a rural area in the Croydon participated in this study (64.3% response rate). It took over 35 days from February 15th 2011 to March 22 nd 2011 to collect the data and was analysed using Bivariate analyses (t-tests, ANOVA, Karl Pearson’s co-efficient correlation techniques). Findings: The results indicated that role conflict significantly negatively correlated to the participants’ low psychological wellbeing. There was a significant negative correlation between the number of social support and role overload. The significant negative correlation between carer’s coping and general well being supported the study hypothesis 3. The demographic variables did not point out any significant differences in findings. Conclusions: The study in future may require the involvement of other relevant variables such as personality factors and organizational factors and consideration of biological consequences of those factors.


To meet the requirements of fragile older adults, 24hours care and service has become one of the most serious subjects inEurope. The main reason that paves a way to this controversy is the rapid progression of ageing group. According to the European Rural development project report, in the theme of “population and Society”, by 2050,Europewill have 173 million people age 65 and above (Heilig, 2002). InEngland, in the next twenty years, the people over 65 will raise two times. During 2007-08, on 1.75 million public of working age and older people used various social care services either offered by their local council or acquired on their behalf from private and third sector institutions inUnited Kingdom. In the similar time local establishments spent ?16.5 billion on social care for all adults (Department of Health; 23rd April -2009). The department of health has commissioned the centre for policy to develop national standards for nursing and residential home care services for older people.

A Care Home is a public or private institution or a distinctive part of an institution, authorised under section 1919(a) of the Social Security Act. It is mainly occupied in providing health care and service to individuals who are mentally or physically retarded. It also provides 24 hours care and service that can be offered to them only through institutional amenities but in turn they also focus on the point of not giving care and treatment of mental diseases alone (U.S. Department of Health and Human Services).

Stress, that had an effect on care workers, is now receiving greater attention than before (Wheeler & Riding, 1994 and Dunn et al, 1994; cited in Rout & Rout, 2002) as the social care labour force is one of the major work groups inUKat present. At the policy paper for the strategy for the Adult Social Care Workforce inEngland, department of health states that overall adult social care workforce stands at about 1.5 million workers. Since 2006-07 there has been a general raise of 8% in the social care workforce. Approximate size of the adult social care work force inEnglandin 2007-08 is 1,505,000(100%)… Out of this total, directly employed are 1,413,000 (94%) and agency workers and those not directly employed are 93,000(6%)” (Department of Health, 2009; Source: The state of social care in England 2007-08- Commission for Social Care Inspectorate: CSCI). A mass of care is carried by direct care workers. They attend to serviceusers’s every day needs, with assisting in the ‘activities of daily living’ such as dressing, eating, bathing, and toileting. They are also in charge for housekeeping, service of meal, laundry, providing skin care, distributing medication, and keeping records (Handerson, 1994; cited Chou and Robert, 2008; pp: 208).


Occupational stress in a care home setting (operational definitions & theories & research

Cox (1978; cited in Burnad, 1991) defined work stress as a discomfort experience of mind and body from exceed demands of environmental stimuli on person’s coping strategies. The official statistical survey report of European Foundation for the Improvement of Living and Working Conditions show that 35% of European labour force point out that their work negatively influence on their health (EFILWC, 2006). The inconsistency among individual’s perception of the sort of specific role and what is really being attained by the individual at present performing the particular role may create role stress ( Lambert & Lambert, 2001).

Kahn et al (1964) used the socio-psychological idea of role to examine work stress. They developed the methods of role ambiguity, role conflict, and role overload and demonstrate that all three were linked with psychological distress in higher levels. The Demands-Supports-Constraints model of Payne (1979; cited in Firth-Cozens & Payne, 1999) sum up the mixture of high demands, low control and poor support as the best predictor of stress.

Parasuraman & Alutto (1984) suggest that role stress comprises stressors. Those stressors have been characterized as environmental demands, control, and events that involve an individual’s role accomplishment. Role stressors drop in to the psychosocial realm of stress. According to the ‘person-environment fit’ theory (Caplan, 1983; cited in Cooper et al, 1988) “the stress associated with lack of ‘fit’ between the person and the job, either in skill, ability, capacity, needs and / or values will lead to job dissatisfaction, anxiety and depression”. Cohen-Mansfield (1995) has provided an exploratory model of how the factors concerned work together in the case of long-term stress of care workers in care homes. According to this model, work-related demands, individual needs and personal off-the-job stressors are considered as the sources of individual stress. The stressors and needs act together with ‘intervening variables’ to produce the person- job fit. These intervening variables are resources of work, an individual’s personality, and off-the-job resources. The physiological and psychological stress responses come from the lack of this person- job fit.

Stressors in Care Home work environment

The negative health outcome has linked with occupational stress (Jones, 2008). Larson (1987) and Callaghan & Field (1991) report that care workers who are stressed have high rate of absenteeism, low level of job satisfaction and are more likely to voluntarily leave the organization. Interpersonal conflicts have been considered to be a significant reason of stress for care workers (Farrell, 1999). Furthermore, Foxall et al (1990) added that they also experience psychological distress of feelings of inadequacy, self doubt, and lowered self esteem, irritability, depression, somatic disturbance, sleep disorders and burnout. Undoubtedly, it will have a negative impact on the quality of care (Janssen et al, 1999). The report above says remind the Hans Selye’s General Adaptation Syndrome of stress. According to Selye (cited in Cox, 1947; pp: 5)

“Stress is the nonspecific (physiological) response of the body

(the first phase is an alarm reaction; the second stage is one of

resistance or adaptation, and the final stage is one of exhaustion)

to any demand made upon it”.

Smith et al (2000; cited in Rout and Rout, 2002) sum up that high level of burnout were significantly related with more sick leave, and more reported absences for mental health reasons.

Cooper et al (1988; cited in Furnham & Bochner, 1986) suggest those psychosocial factors such as work place culture/relationships of poor communication, harassment, bullying and intimidation; job content of work overload, deadlines, work difficulty, and time pressures; organizational structure of redundancy threats; and work-home interface of child care issues and housing issues may cause psychological distress. It is a well known fact that ‘culture shock’ as a psychological reaction to unfamiliar environments, plays a major role in any person’s life when he/she enters a workplace initially. But this ‘culture shock’ varies from person to person, and from firm to firm, though it does not relieve anybody from its threatening claws. A person who joins a nursing home for the first time has to care for a range of service users with a mixture of problems and emotions. It can often be mainly stressful. And to work with people from different culture is also stressful as the level of individualism or collectivism in society will also influence the character and personality of persons in organizations. Work activities concerning bending, twisting, frequent heavy lifting, uncomfortable motionless posture and psychological stress are considered as fundamental factors for many physical problems (Karahan et al, 2009).Resident’s physical and verbal aggression might create psychological distress and lower job satisfaction among care workers. MacPherson et al (1994) have done a study related to this subject.

Night shift work is inevitable in a 24hours care and service setting. In night workers the normal circadian rhythm of blood corticoids generally remains distorted (Selye, 1956). A large cross sectional study has been done among 5419 Finnish adult men; report that the chance of coronary heart disease is very high among the participants who slept for more than nine hours or for less than six hours per night, as contrast to with those sleeping the more common seven to eight hours(Wheatley,1994). Job insecurity and incongruity in position can be created by career ceiling (Cooper & Mashall, 1978). In a care home setting lack of opportunities (blocked opportunities) for promotion of care workers appeared as a source of dissatisfaction with work.

Health-care workers are advised to wear gloves whenever there is contact to body fluids and assist service users for personal hygiene. Increased use of gloves creates latex hypersensitivity among health care workers (Zak et al, 2000). The research report 169 of Health & Safety Executive indicate that over workload, role ambiguity, absence of opportunity to use their skills ( under skilled works) and conflicting work and job role demands made stressful. A longitudinal study has been done by Revee J (2000) & Randle J (2003) along with care workers. They used unstructured and qualitative interviews for data collection which are as everyday conversations. The participants reported the experience of bullying from registered nurses in the form of exercising power and injure the dignity in front of other staffs. They complained physical and psychological symptoms of sleeplessness, anger, anxiety, stress, self hatred, powerlessness, loss of confidence, increase in sickness absence and intention to leave the profession as reaction to bullying. All branches of nursing such as adult, child, mental health and learning disability were represented in this study.

Coping theories and work related coping in care work sector

There is a key psychological model by Richard Lazarus (1966) to observe the correlation between stress and coping strategies of care workers is the cognitive-phenomenological-transactional model of stress and coping which contributes a theoretical support. This model demonstrates emotions as results to cognitively intervened transactions in the environment (actual, imagined or anticipated). Through the primary and secondary appraisal method, the individual organizes a sequence of coping strategies. These are intended either to problem-focused coping strategies or to emotion-focused coping strategies (Bailey & Clarke, 1989). For example, one care worker may consider the equipment such as ‘hoist’ as annoying; whereas another may find reassuring and encouraging that efforts are being made to assist service users. In an American study, by Yates et al. (1999; cited in Ronelle, 2005), used a representative sample population from the second phase of the longitudinal Massachusetts Elder Health Project, the results point out that the quality of relationship, support and mastery intervene the annoying outcomes of cognitive impairment, functional disability and behaviour problems of the disabled elders on care workers wellbeing. Moreover according to situational and relative variables care workers well-being is able to be improved or reduced.

While coping is supposed to mediate the consequences of burden on the well-being of the carer, from the point of view of Chappell et al. (2001) caring for a person with a life-threatening or prolonged illness like dementia and learning disability, carers efforts to actively problem solve may become more distressed as there is little that they can actually do to change service users’ mental health condition. Therefore it may be more useful for the carer to implement emotional coping strategies thus protecting their own psychological and physical health. The literature regarding coping usually specifies that females apply more emotion-focused coping than males (Lazarus & Folkman, 1984).

Stowell et al (2001) suggested that active coping was used more often than emotion coping (avoidance coping) and that active coping had more positive results on the immune system. From the point of view of Levesque et al (1999; cited in Ronelle, 2005) informal and formal social support reserved the psychological well-being of care workers.

Bailey and Clarke (1989) have opposed the cognitive psychological transactional model of stress and coping. According to them generally shared cultures and the relationship it has between care givers decisions that may have an effect on patient care. Both cognitive and behavioural strategies are coming under the subject of coping. In the case of ineffective coping, stress would prolong. Coping is subject to great individual difference. Efficient time management, team meetings, consultations, support net works and improvement in communications are considered as the primary methods of coping with stress at work place (Rout, 2000). Cultural factors play an important role in staff coping strategies, and thus influence methods of wellbeing.

Importance of Role Ambiguity: theories and applications

According to Beehr (1976) & Schuler (1980) role ambiguity is the lack of specificity and inevitability relating to an employee’s job or role tasks and responsibilities. Cooper & Pearce (1981; cited in Beehr & Glazer, 2005) suggest that role ambiguity is an objective condition at work in which there is inadequate, confusing, or limited flow of information relating to one’s work role. French & Caplan (1970; cited in Cooper et al, 1988) suggest that stress occur from unclear goals. This ambiguity leads to job dissatisfaction, lack of self-confidence, feelings of uselessness, a lower sense of self esteem, depression, and low motivation to work, absenteeism and plan to leave the job. In the words of Baldwin et al (2003) Care workers majority of the role concentrate on direct service user care. Lack of role clarification and different views of support workers and registered nurses in the care process is being underpinned with care plan. Insufficient preparation and following supervision of care workers would create role ambiguity. These indications remind that role clarification, appropriate preparation and a continuing development process need careful concern by managers if care workers’ contribution is to be fully recognized.

Importance of Role conflict; theories and applications

Kahn et al (1964) indicate role conflict as more than one set of contrary demands in relation to work issues. Peterson et al (1995) & Cooper et al (1988) high light the point of incompatible burden that may be among the expectations positioned on a worker by apprehensive parties or by the involvement of two or more roles of the same person. Rizzo et al (1970) suggest that role conflict might be present when organizational requirements collide with personal ideals and obligations to others (family members and other concerned people).

Frone (2003; cited in Beehr & Glazer, 2005) identified both work-to-family conflict and family-to-work conflict as a consequence on psychological distress (cited in Beehr & Glazer, 2005). French & Caplan (1970; cited in Cooper et al, 1988) describes that the role conflict is associated to the psychological distress of feeling of tension and anxiety. In the 24-7 (2008, published byCoventryUniversity) survey of work life balance centre, about 51.3% of the sample group accounted that they had suffered with work life imbalance. The respondents reported the symptoms of ill health of excessive tiredness (69.4%); sleeplessness (59.6%); irritability (54.9%); difficulty in concentrating (47.9%) and headaches/migraines (47.2%).

Importance of Role overload; theories and applications

In the words of Sofer (1970) role overload is the outcome of too much work, time pressures and targets. Bacharach (et al, 1990) and French & Caplan (1973) found that role overload is an incongruity between work demands and time obtainable for satisfying the demands. From the point of view of Kahn (1980) role overload is generally considered as the failure to complete the expectations of organization within the available time. All these role stressors are correlated to burnout (Anderson, 1991), low level of job satisfaction (Jackson & Schuler, 1985) and high anxiety (Srivastav, Hagtvet & Sen, 1994; cited in Beehr and Glazer; 2005). Hipwell et al, (1989) found that work load is the most considerable predictor of poor mental health. A combination of poor psychosocial factors and role overload produced the highest rate ratio for work related physical problems (Johansson, 1995). Controversially under load may also have been an effect on one’s psychological well being. Too little to do or boredom might make an employee in failing to respond appropriately during emergency situations (Cooper, 1988).

Essential theoretical frame work and research evidence of Social support

The hypothesis of social support indicates the significance of the quality and quantity of support rather than its character and source. This statement is supported by Adrian Furham and Stephen Bochner (1986) on the following way that the sum of social supports that perceived more vital than who offer it. According to Cobb (1976; cited in Rout & Rout, 2002) social support denotes the facilitation or support of members who may include spouse, family, friends, neighbours, colleagues and acquaintances. Individuals with social support regard themselves as being loved and cared for, and appreciated, and a part of a social net work that can provide guidance or services and protection during necessity.

Support from the family environment is very essential as night work/ shift work or long working hours stand for a major cause of stress. From the point of view of Larocco & Jones (1978), social support has playing a vital role to create a positive effect on stress. Davidson & Cooper (1983) suggest that the work/home interface is a major source of stress both males and females, even though differences be existing among the two sexes. In the care workers labour market, entrance of married women with young children is increasing. In UKemployment of married women is considered as the major cause of higher divorce rate. Managing multiple roles is highly stressful especially in the absence of social support (Lewis & Cooper, 1995 & Emmons et al, 1990; cited in Rout & Rout, 2002). Manlove & Elizabeth (1994) have done ahierarchical regression analysis study among child care workers proved that in perceived emotional exhaustion and depersonalization, social support defence the negative outcome of work role conflict and work role ambiguity. Improving organizational, supervisor, and co-worker support will be vital for enhancing job satisfaction of direct care workers. Social support would be having the form of instrumental assist, counsel or guidance, paying special attentive listening, redefining problems, developing alternative lines of actions, reaffirmation of friendliness and respect, and so on. Chappell and Novak (1992) set out to explore the hypothesis that social support operate as a buffer against different work-related and managerial stressors, including the number of service users in a setting with dementia, and challenging behaviours. But social support did not show any significance as a protection from threatening situations with residents. Caregiver research reveals that social support acts a significant role in the care giving practice. Caregivers describe lesser social networks and few contact with people, and they get less support than non-caregivers (Kiecolt- Glaser et al, 1991). Also, lower support is allied with high rate of depression (Bodnar & Kiecolt-Glaser, 1994; Tompkins et al, 1988), while the ties of strong social hands and more social support acts an important role in defending the caregiver from work stress (Williamson & Schulz, 1993) and is associated to general wellbeing (Quayhagen & Quayhagen, 1988).

Positive source of Self efficacy with a theoretical back ground

According to Jones (2008) Self-efficacy is an overall evaluation of one’s ability to achieve his/her essential tasks, roles, or actions and it is also closely related to the way he successfully performs his work. On the basis of investigational report, Salanova (2004) developed a model of increased psychosocial wellbeing and performance. A personal sense of control has positive effect on human functioning. If people have a self belief that they can take active solution for a problem, they become more apt to do so and feel more dedicated to this decision. Self efficacy of care workers is an important subject as it tolerates people to cope with challenging situations, observe their surroundings, or make innovative environments. According to Albert Bandura (cited in Schwarzer, 1992) with the cognitive, affective and motivational intervening self beliefs of efficacy apply their upshots on human implementation. In this sociocognitive point of view, individuals are observed as proactive and self regulating rather than as reactive and controlled by environmental and biological forces. Also in this outlook, individuals are implicit to hold self-beliefs that allow them to employ control over their feelings, actions, and thoughts.

Burrows & McGrath (2000) suggest that the stress experience is highly individualised. It is regarded as a situation with a noticeable inconsistency between the demands placed on a worker and that worker’s aptitude or perceived ability to respond. Individuals evaluate themselves incapable to fiddle with the situations due to their vulnerabilities and perceive situations as disturbed with danger. As a consequence they experience distress in cognitive functions and autonomic arousal. The fundamental implication of the theory of self efficacy in psychological wellbeing is that individual’s judgements on the subject of their capacity to cope basically establish the behavioural, cognitive, emotional and physiological reactions that characterise general wellbeing (Schwarzer 1992).

Role of socio-demographic variables – An out view from previous studies

Long and Porter (1984) believe that in the subject of ‘stress and women’, the highlight topics are role strain, dual role conflict, and role overload which supposed to affect more on married working women . Regardless of working fulltime, women are often likely to meet family commitments. Karasek et al (1987) sum up that working women reported high level of exhaustion, headaches, dizziness, depression, and respiratory problems than men. On the contrary some investigations indicate that on occupational stress and mental health outcome variables there is no gender differences (Kirkcaldy & Martin, 2000). Chesley et al (2006) have done a study to evaluate individual- and couple-level effects of care giving on changes in well-being. The researchers have followed the longitudinal survey data collection from dual-earner couples (N = 884). The authors found that care giving is related with well-being decreases for dual-earner (families with dual incomes) women and well-being increases for dual-earner men. The study proved that the women caregivers with flexible work conditions have high levels of well-being than caregivers without flexible work. But the size of this effect is small.

Age and marital status

In the study of stress, the demographic variable of age may take part of a moderating role. The research report of a study in job stress and satisfaction among nurses: individual differences, was done by Kirkcaldy & Martin (2000), indicate that older nurses are experiencing more stress and the younger nurses reporting better psychological health. National Centre for Health Statistics (1970) reported that separated, divorced, or widowed persons had considerably high rates of mental illness than married or single individuals (cited Rice, 1992).


From the point of view of Hofstede (1980), the critical cultural distinctions in attitude and behaviour of work set and management belonging to diverse countries are major subjects in occupational stress. These cultural differences had commenced regardless of barriers. Racial discrimination may support feeling of inadequacy, low morale, poor motivation and low self esteem which eventually will produce stress. Cole, Scott & Skelton-Robinson (2000) have done a study with respect of the effect of challenging behaviour, and staff support, on the psychological wellbeing of staff working with older adults. The result of the study reported that the Asian, African and Afro-Caribbean staffs were much more often employed in care home settings. It would seem because ethnic minority groups are more liable to work in low status career such as care assistants in care home settings. Some cultures having more patients and tolerating attitudes. According to Sharma (2007), individualistic culture and collectivistic culture can build variations in workers subjective perception as regards their work environment. On the other hand Kramer (1997) suggests that the demographic variables like gender, ethnicity, marital status, education have often failed as independent variables to affect well being.

General well being as a dependent variable.

In the previous studies, the researchers have observed the relationships between sources of stress and measures of outcome such as anxiety/ depression, social dysfunction and loss of confidence (Tylor, Carrol and Cunningham, 1991). Since Fengler and Goodrich (1979) caregivers’ psychological well-being has been widely considered. From that time a diversity of issues such as subjective and objective burden of care workers have been investigated (Zarit et al, 1986). In a large cross-sectional multicentre investigation, Bell et al (2001) suggest that care givers work related problems to be significantly correlated with the carers’ general health and their quality of life (cited in McConaghy and Louise, 2005).

Rational of this study together with aims and objectives

Rational of this study is based on theimportance of care workers psychological well being. It is a known fact that the care workers are under increased burden. Thus this will be affecting their biological and general well being. The subject is complex and multidimensional one as it is associated with subjective and objective burden of carers. At this movement economic recession is going on all over theEurope. Moreover unemployment problem is another worse thing. According to BBC One channel news (broad casted on 16-08-2009 at 15 hours) all over theEurope, 200.000 of people lost their job in the last economic year. In controversy employment opportunities are high in health departments as the number of fragile adults rises up. Many aspects of mental health policy and services are experiencing a revolution all over the European Region. Policy and services are motivating to attain a balance between the requirements and benefits of various mental health activities. So the demand for care workers is increasing. Even the care workers know the care giving job might have creating physical and psychological ill health and career ceiling; they might have selected this job (might be under skilled job) due to their financial strain or absence of selected carrier. InUKthe entrance of overqualified people in social care service is rise up. That might be creating lower skill utilization. In this context their psychological well being depends upon a variety of bio- psychosocial factors.

Aims and Objectives:

This study focus on the impacts of psychosocial factors such as coping, social support, self efficacy and role stress on the psychological well being of care workers in a care home setting. There are some realistic allegations of this study. The most prominent feature is its enhancing knowledge about ways to improve job satisfaction may help care workers to get better health and well-being. Since work is an important part of life, work satisfaction is a foremost determinant of quality and happiness of life. Understanding determinants of psychological well being among direct care workers will shed light on how to minimise work stress, enhance management support, reduce turnover, develop coping skills and thus help improve the quality of care of service users, promoting their best possible health and well-being.


The study was hypothesized that

1)Social support may be negatively correlated with role stress.

2)Work stress may be significantly negatively correlated with psychological well being.

3) Self efficacy may be significantly positively correlated with psychological well being.

4)Coping skills may be significantly positively correlated with psychological well being.

5) Age, Marital status, Work experience, Ethnicity and Gender may have effect on one’s psychological well being.



The study employed a quantitative descriptive research methodology. A cross sectional survey was conducted for this study. The study was approved by the Research Ethics Committee of London spectrum college. A package of questionnaire with introductory letter, consent form, demographic details, and 57 questions used to test dependent and independent variables. They have been administered individually with participants consent. The participants taken their own time to complete the questionnaires and drop it in the box that provided in the reception of the care homes. The study was entirely confidential and anonymous from start to finish. The individual data have been seen by the researcher and the supervisor. The questionnaires were distributed to 70 care workers, of which 45 people returned the questionnaires.

Independent Variables:

There are five socio-demographic variables are age, gender, work experience, marital status and ethnicity.

Coping skills with three subscales of Negative Impact Value, Positive Value Scale and Quality of Support

Role stress with three subscales of Role Ambiguity, Role Conflict and Role Overload

Social support with two subscales of Number of Support and Quality of Support

Self efficacy

Dependent Variables:

There is only one dependent variable of General psychological wellbeing with three subscales of Anxiety & Depression, Social Dysfunction and Loss of Confidence


The permanent staffs of an organization for residential elderly care with four locations in a rural area in the Croydon participated in this study. The agency staffs were excluded. The participants’ rate was 64.3%; 31 were female staff and 12 were male staff. Two of them have hesitated to enter their gender details. 15.5 % (n=8) of the participants indicated being single, 69% (n=31) of them reported being married, 4.4% (n=2) divorced and 1 participant reported as lesbian. 3 of them have not mentioned their marital status. In regard to Nationality 9% (n=4) of the participants were White and White British, 29% Black and Black British (n=13), 53% (n=24) Asian and Asian British. 2 reported as mixed. 2 of the participants have not reported their ethnicity.


Role stress questionnaire (Rizzo, J., House, R.J., & Lirtzman, S.I. (1970)

Role stress questionnaire comprises 17 items that divide in to 3 subscales of role ambiguity, role conflict and role overload.The measures used in sample were the 8-item Role Conflict scale (Ex: I know exactly what is expected of me), and the 6-item Role Ambiguity scale (Ex: I have to work under vague directions or orders) developed by Rizzo, J., House, R.J., and Lirtzman, S.I. (1970). The 3-item Role Overload scale (Ex: I have to work under vague directions or orders) developed by Seashore, S.E., Lawler, E.E., Mirvis, P. & Cammann, C. (eds.) 1982. . In these three subscales responses were made alongside a 7-point Likert scale (strongly disagree=1; strongly agree=7). In the short scales of role conflict and role ambiguity are perplexed with negative and positive item phrasing. Around 85% of the experimental studies approved on role conflict and ambiguity have used Rizzo, House, & Lirtzman’s (1970) Role Conflict and Ambiguity Scales (Jackson & Schuler, 1985).

Carers Coping scale (Easy care (2004), developed with the support of an education grant from Pfizer Limited)

Cares coping scale (Easy care., English version 2004)of 15 items load in to 3subscales of negative impact scale, positive value scale and quality of support section by scoring the items responses as Always=4, Often=3, Sometimes=2 and Never=1(Ex: Do you find care giving worthwhile?). A high score on the negative impact scale (6 items) may point out that the carer is being stressed by the care giving role (Ex: Does care giving cause difficulties in your relationships with friends?). The same, a low score on the positive value scale (5 items) may illustrate that the carer is attaining little satisfaction from the care giving role (Ex: Do you feel you cope well as a caregiver?). Other 4 remaining items (Ex: Overall, do you feel well supported in your role of care giver?) are used in order to build up a wide-ranging understanding of the carer’s potential needs. . There are no threshold scores for the Negative Impact and Positive Value Scales. On the other hand although there are some norms for this scale there is some indication of cut off scores as follows, less than 15% of cares scored more than 12 on the Negative Impact scale, and less than 15% of cares scored less than 12 on the Positive Value scale. Reliability and Validity of the Cope Index has not been specified.

Short form social support questionnaire ((Sarason et al, 1983)

Short Form Social Support Questionnaire (SSQR6) has been developed by Sarason and Colleagues (1987a) and is a 6 item edition of the original 27 -item SSQ (Sarason et al., 1983). Two scores are obtained from the questionnaire: the number of supports (Quasi – structural measure) and the level of satisfaction (Global functional measure) with these supports. For each question, the number of supports score will range from 0 (no supporting individual identified) to 9 (9 individuals identified) (Ex: Who do you know whom you can trust with information that could get you in trouble?). Thus the total score ranges from 0 to 54. This can be separated by 6 to provide a mean number of supports score. Sarason et al (1987a) explained the SSQ6 to demonstrate satisfactory psychometric properties, with high internal consistency for both the number and satisfaction subscales (alpha=0.90 to 0.93), high test-retest reliability and a single factor accounting for the majority of the variance in each of the subscales correspondingly.

The general self efficacy scale(Jerusalem, M., & Schwarzer, R, 1993)

The general self efficacy scale (English version by Jerusalem, M., & Schwarzer, R, 1993) reflects an optimistic self-belief, as part of a more comprehensive questionnaire. The scale was formed to measure a general sense of perceived self-efficacy with the objective to foresee coping with daily hassles as well as adaptation after experiencing all types of stressful life experiences. Preferably, the 10 items are mixed at random into a larger pool of items that have the same response format. Time: it requires 4 minutes on average. Scoring: Responses are made on a 4- point scale (1=Not at all true to 4= exactly true). (Ex: I can always manage to solve difficult problems if I try hard enough). Sum up the responses to all 10 items to yield the final composite score with a range from 10 to 40. The methods have been used worldwide with accomplishment for two decades. People under the age of 12 should not be tested. Reliability of the self efficacy scale has been proved from the sample group from 23 nations; the range of Cronbach’s alpha was from .76 to .90, with the greater part in the high .80s. In number of correlational studies with the scale of Self efficacy, Criterion-related validity is documented. The positive coefficients were established with positive emotions, dispositional optimism, and job satisfaction; negative coefficients were originated with depression, anxiety, stress, burnout and health complaints. The strength of the scale is its suitability as a pointer of quality of life at any point in time.

General Health questionnaire (Goldberg, D. & Williams, P.A., 1988)

In current years the 12-item General Health Questionnaire (GHQ-12) has been widely used as a short screening tool, producing results those are similar to longer versions of the GHQ 28. The validity of the GHQ-12 was evaluated with the GHQ-28 in a World Health Organization revises of psychological disorders in general health care (Goldberg, D. al 1997). General Health questionnaire has (Goldberg, D. & Williams, P.A., 1988) 12 item (Ex: Have you recently been able to concentrate on what you’re doing?). Each questions has 4 responses, the responses for each questions are different. GHQ-12 has been extensively used in lots of nations for identifying psychological morbidity. The 12-item GHQ consists 3 aspects, specifically Anxiety and Depression (4items), Social Dysfunction (6 items), and Loss of confidence (2 items). The total score is ranging from 0 to 36, with high scores representing poorer conditions.


The administration of the package of questionnaire has been started on 15th February 2011 and completed on 22nd March 2011. On the same day the drop boxes were provided in the reception of the care homes. Total 75 care workers have been accessed. Two of the care staffs rejected to participate in this study at the first approach of the researcher. 50% of the completed data were collected on 17th March and rest of them on 22nd March. There were three questionnaires, out of which one was blank and the others were incompleted. The researcher could not access the staffs that had been on their summer holidays and the ones who were not available during the test administration time. All data have been entered for analysis. Care’s coping scale could have been analysed with its subscales of ‘negative impact of care’s coping, positive value and quality of support’. But its reliability has gone down as some questions have been rephrased and two questions were taken out from the scale. So the coping scale has been analysed of its overall score as reliability is very high. Concerning the questionnaire of social support participants have been confused by the second part of battery of questionnaire which has asked questions about social support i.e. the number of supporters and level of satisfaction. The questionnaire had asked the relation with the supporters in order to find out from whom they are getting more support (from the family environment, social environment andmanagement). But most of the participants have not mentioned the relation as they just circle the numbers.

Statistical Analysis

Bivariate analysis (t-test, ANOVA, and correlation) are used to explain relationships among psychological well being, socio demographic variables, work stress variables, support variables, coping skills and self efficacy. Some missing values existed in many ways of variable, For example: there were missing values for some demographic variables, notably age (2 missing), marital status(3), work experience (2), ethnicity(2), number of support and level of satisfaction (4), general wellbeing (3), role conflict and role over load(1). Total number of participants was 45, mean age 36.5 (SD 10.5).

Ethical considerations

The first stage of the dissertation was the submission of research proposal. The research proposal was accepted and followed by the submission of ethical approval to the ethical committee ofLondonspectrum college. Regarding the Dissertation project, at the first time I got an appointment with the General Manager of the company of the residential elderly care homes on 20/01/2011 inBedford. On the same day I have submitted a copy of Research proposal. GM replied that they would go through and give reply.

After fifteen days i.e. on 04/02/2011, GM called me for the clarifications of some of the issues like about the question of ethical committee that “are there any NHS funded residents in the access nursing home? They enquired “are the questions prepared by the students? And they mentioned that “there are no hundred care workers in the company”. Lastly they informed that “they are too much concerned about the confidentiality of the company name in the project work”.

On the next day I sent a reply for clarifying all the above mentioned enquiries from Head Office. In the reply I mentioned that questionnaires are validated and extensively used for psychology research and ensured the confidentially of the company name in the study and conveyed the company’s rights to monitor the research procedure on ethical grounds and to refuse any future publications. On 12/02/2011 I have been asked to submit all the questionnaires for consideration. This was delayed due to busy schedule of GM. I collected the questionnaires of the Care’s coping, Role stress, Social support, Maslach’s Burnout Inventory scale and Physical symptoms of ill health.

On 14/02/2011 I got an appointment with the GM; in the gathering the package of questionnaire has been submitted. They went through each and every questionnaire. Necessary adjustments made based on their recommendations. Later GM informed me that they are quite interested in this study, but the company is in no way involved in this project. I discussed all the above mentioned matters with the supervisor. With the advice of the supervisor I selected the questionnaires of self efficacy and general wellbeing.

On 14/02/2011 a package of five questionnaires with introductory and consent letter which included all the required changes has been submitted to GM. On the same day I received a call from the GM stating that they have accepted the package of questionnaires and asked to clear some typing errors and some other amendments. GM sent an E- email on the same day stating all the above mentioned matter, they asked me to consider the same mail as permission letter for the dissertation activity. I forwarded this E-mail to the Department Chair of Ethics Committee inLondonSpectrumCollege. The committee replied that I would need to get a signed letter from the nursing home. They would be happy to contact the nursing home manager saying that I have permission to do the study from the college end and they are ready to request the GM to provide a signed letter. The committee advised me that I could write it myself and just ask them to sign it and mentioned that if I have any problems and may be able to accept the email of GM as a consent letter.

The committee advised me that ideally, around 100 participants are required for a correlation study. However, just try to get as many as I can. According to them removal of individual item from validated questionnaire is not advisable. I have again completed the ethical form and provided the supporting materials (i.e. introductory letter and questionnaire pack). On the February 15th 2011 I have received an E-mail from the committee with the information that my project now has ethical approval. They suggested me to retain all the items in the role stress questionnaire as it will invalidate it if I remove them.


Bivariate analysis (t-test, ANOVA, and correlation) is used to test the hypothesis and to explain relationships among psychological well being, socio demographic variables, work stress variables, support variables, coping skills and self efficacy.

(Descriptive statistics)

Table 1: Mean deviation, Standard deviation and Number of participants based on the variables investigated.

MeanStd. Deviation Number of participants
General psych wellbeingTotal Cares Coping

Role overload

Role ambiguity

Role conflict

Anxiety and depression

Social dysfunction

Loss of confidence

No: of support

Level of satisfaction

Self efficacy



Marital status

Work experience














































Table 2: Reliability of the questionnaires used in the study (General Health Questionnaire (GHQ), Self-efficacy, Carer’s coping, Social support and Role Stress..

GWQSelf efficacyCares CopingSocial supportRole stress
Cronbach’s Alpha.817.814.824.934.836
No: of items12 10 13617

All of the scales were high on internal consistency based on the Cronbach’s Alpha (?=.82, ?=.82, ?=.82, ?=.82, ?=.93, ?=.84 respectively).

Pearson’s Product Moment correlation co-efficient test results in link to the hypothesis:

H1– Social support may be negatively correlated with role stress.

The results indicate that there is a significant moderate negative correlation between the number of social support and role overload (r= -0.419, p=0.004). The correlation between the level of satisfaction and role overload is significant and negative but it is relatively weak (r= -0.266, p=0.049).

H2- Work stress may be significantly negatively correlated with psychological well being.

The result shows that the Role conflict is significantly negatively correlated to social dysfunction and loss of confidence (r= -0.53, p<0.001., r= -0.392, p=0.005). The correlation between role conflict and total score of psychological well being indicates significant negative correlation (r=-0.454, p= 0.001). There is a significant negative correlation between role overload and loss of confidence (r= -0.290, p= 0.031).

H3- Self efficacy may be significantly positively correlated with psychological well being

This hypothesis has been refuted.

H4- Coping skills mal be significantly positively correlated with psychological well being.

There is a significant moderate positive correlation between care’s coping and general psychological well being (r= 0.420, p= 0.003)

H5- Age, Marital status, Work experience, Ethnicity and Gender may all have effect on one’s psychological well being.

There is no significant difference in the socio-demographic variables of age, marital status, work experience and gender.

Table3: Significant Coefficient correlations in link to hypothesis

ROLE CONFLICT 0.454** 0.392**0.537**

NB: In the psychological well being questionnaire higher score indicates poorer condition (reverse relation).

Graph 1: Graphical Representation of the differences between cares’ coping and ethnicity

Graph 2: Graphical representation of significant negative correlation between Role conflict and Social dysfunction.

Graph 3: Graphical representation of ANOVA Test Result

There is a strong evidence of difference of ethnicity in the loss of confidence as p=.056

Summary of the results

The numbers of correlations were found significant. The results indicated that role conflict significantly negatively correlated to the participants’ low psychological wellbeing. There was a significant negative correlation between number of social support and role overload. The significant negative correlation between carer’s coping and general well being supported the study hypothesis 3. The demographic variables did not point out any significant differences in findings.


There is a significant negative correlation between number of social support and role overload. High levels of support diminish the negative effects of role overload (Sargent & Terry, 2000). Role conflict is significantly negatively correlated to social dysfunction and loss of confidence. French & Caplan (1970; cited in Cooper et al, 1988) describes that the role conflict is associated to the psychological distress. There is a significant positive correlation between care’s coping and general psychological well being. Coping styles are valuable in terms of directing to positive results such as better health and psychological well being (Jones & Bright, 2001). There is no significant difference in the socio-demographic variables of age, marital status, work experience and gender. Hypothesis-3 (Self efficacy will be significantly positively correlated with psychological well being) has been disproved.

The psychosocial factors measured in this exploratory study have been examined in a number of population studies. The researcher attempted to address these subjects among care staffs of an organization for residential elderly care with four locations in a rural area in the Luton andBedford. In the general well being subscales of anxiety/ depression, social dysfunction and loss of confidence the ethnic group of black or black British scored low. Lower score representing well condition. The score pointed out that Black or Black British group experienced more psychological well being than other ethnic groups. In the psychological well being there were no significant differences between black / black British and Asian/Asian British. This result was supported by previous findings of Cole, Scott & Skelton-Robinson (2000) as the Asian, African and Afro-Caribbean staffs were much more often employed in care home settings. It would seem this is because ethnic minority groups are more likely to work in low status career such as care assistants in care home settings.

The white and white British were more likely to be low psychological well being than other ethnic groups. Absence of horizontal and vertical integration is a common picture among the people from the individualistic societies (Baker, 1979). Asian and Asian British were seemed to be high coping skills and self efficacy than other ethnic group. From the point of view of Hofstede (2001) coping with conflict is a common part of living together as collectivist family. Loyalty to the family and financial obligations make them to develop a desirable character at both work place and family environment. Asian or Asian British group seemed to be high role ambiguity than other ethnic groups. It is not significantly proved in this study but have strong evidences. Language barrier of overseas people and absence of accurate job description and person specification from the part of management might have contributed to this problem. High role conflict has been reported by the white / white British. In the individualistic society family relations and work interferences are considered undesirable. They may lead to preferential treatment and conflict of interest. There is an interesting and noticeable result that white / white British group indicated higher social support but their level of satisfaction and psychological well being is still very low. Its major reason might be pointed out to a general view that in an individualistic society the employer and employee relationship is mainly considered as a business contract, as a calculative relationship among players on a labour market. The black / black British have reported high work load even though their psychological well being is higher than others. They might be having more management support in the form of emotional, informational and instrumental way which has not been tested in this study. The result did not show any significant difference in the other socio-demographic variables of age, marital status and work experience. The demographic variables have often failed as independent variables to affect well being in others studying as well (Kramer, 1997). So this study findings is online with that findings, but only for above variables.

The study among care workers cannot evade the other prevalent variables, which will make impact on psychological well being, such as personality, emotional intelligence, cultural variables such as collectivist/individualist, and organizational culture and so on. Due to the time limitations, the project study tried to avoid the above mentioned core factors. Individual’s personality characteristics have been playing an important role in the work stress (Cohen-Mansfield, 1995). The personality characteristics arbitrate the harmful influences of hostility, loss of confidence, irritability, anxiety and aggression (Sutherland and Cooper, 2000). In theoretical aspect neuroticism could source individual to respond more negatively to potential reason of stress and to recognize distress symptoms more readily (Eysenck, 1967). Australian Industrial and Organisational Psychology Conference meeting reported (page 145) that Emotional intelligence is positively correlated to several work place performances. Emotional intelligent and emotional management are positively associated to the ability to be creative or innovative at workplace. There is a positive correlation between emotional control and the ability to work with team members for the successful completion of task and success of the organisation.

Major limitation of this study was the low rate of sample group. Sample error ( skewness) was concerned as another limitation. In the case of ethnicity there were only three people to represent white and white British. So results of this group cannot be generalised. Some of the participants have hesitated to enter their socio demographic details. The researcher might have been misguided by the participants as the researcher was one of the participants at the same time with the intention to evade the probability of identification. Some of the questions in the questionnaire of work stress consisted about company policies and guidelines. Participants’ bias towards the company should be under possibility. The study did not test the perceptions, expectations, motivations and qualifications of care workers. Perhaps these elements should need to be look in detail. The study excluded the interference of physical or biological consequence of psychosocial factors in care home setting such as lower back pain (Karahan et al, 2009), musculoskeletal symptoms and neck / shoulder symptoms among care workers (Johansson, 1995) and burnout syndrome( Martin, 1998). The study required the involvement of other relevant variables with more representative sample group.


The study concludes with some significant findings. There is a significant negative correlation between number of social support and role overload. Role conflict is significantly negatively correlated to social dysfunction and loss of confidence. There is a significant positive correlation between care’s coping and general psychological well being. There is no significant difference in the socio-demographic variables of age, marital status, work experience and gender. Future research will concern other relevant variables to find out the impact of psychosocial factors on the psychological well being of care workers in a care home setting.


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Free Essays

The modern finance theory is based on the capital asset pricing model


As some anomalies are hardly explained by the traditional finance, the behaviour finance is introduced. It was first introduced by Kahneman and Tversky (1979), which they presented the prospect theory. In fact, investors’ behaviour often violates the expected utility theory, some of them trade irrrationally. Then Shefrin and Statman (1994) base on the CAPM, and put investor sentiment into the model to make the BAPM. They thought noise traders and information traders would interact and influenced the price setting, including the noise traders’ behaviour in the BAPM let the asset pricing more precise. Another important theory is the behavioral portfolio theory. The theory states that when investors choose portfolios, they on the one hand want to be security, while on the other hand they potentially also want to reach aspiration levels. So it lets BPT investors to choose bonds and lottery tickets together come true. According to these phenomenon which happen to investors’ portfolio selection, many researchers give their explaination. Generally speaking, bahaviour finance is based on two theories, which is limits of arbitrage and investor sentiment. DSSW model is based on the former theory while BSW model, DHS model and HS model are based on the latter one. There are also some more models in the behaviour finance area. These models can explain some anomalies, such as Closed-end fund puzzle and the equity premium puzzle. In this paper these two anomalies would be treated as examples to explain how behaviour finance explain these anomalies.


The modern finance theory is based on the capital asset pricing model (CAPM), Markowitz’s Portfolio Theory, Arbitrage Pricing Theory (APT). The model CAPM is introduced by Sharpe (1964), Lintner (1965), and Black (1972). It provides the pricing mechanism of capital assets and the decision factor of risk is?(the relationship between firm returns and market returns). These theories are based on the Efficiency market hypothesis (EMH) and the CAPM can be used to test the EMH.

While its analysis framework confined within the scope of rational analysis, when more and more anomalies arise in the market, they are hard to be explained by standard finance which is based on the EMH. In this situation, the questioning of modern finance beginned when the prospect theory is introduced by Kahneman and Tversky (1979). And then the behavioural finance is introduced to explain these snomalies. The definition of behavioural finance is that

“Behavioural finance- that is, finance from a broader social science perspective including psychology and sociology- is now one of the most vital research programs, and it stands in sharp contradiction to much of efficient markets theory.” (Shiller, 2003 p83)

It is a Marginal subject and opposite to the traditional finance, and it tries to explain the importance of investors’ emotion and mental mistakes, which would influence their decision-making process (Ricciardi and Simon, 2000). At first, behaviour finance is marginalized as “ anomalies literature” (Frankfurter and McGoun, 2000).it has been researched for a long time, and then it has been accepted after more and more journals focusing on the discussion of anomalies.

Section 2 of the paper explains three main theories of behaviour finance, which are prospect theory, behavioural capital asset pricing theory and behavioral portfolio theory. Section 3 presents some models which provided by the behaviour finance. Section 4 discusses the application of behaviour finance to explain anomalies. Section 6 concludes.


2.1 Prospect Theory

Prospect theory is the one of the most important theory in the behavioural finance. Investors usually do not perform rationally, and prospect theory handles this issue. Expected Utility Theory is a kind of desceiptive model which is used to make decisions under risks, and the result is a criteria for investors to choose. While a large number of experimental research shows that investors choices are inconsistent with the basic tenets of utility theory. Kahneman and Tversky (1979) classify these differences into some areas, which is certainty effect, reflection effect and isolation effect.

2.1.1Certainty Effect

Certainty effect is people often underestimate outcomes which are probable when compare outcomes which are received with certainty (Kahneman and Tversky, 1979). In order to demonstrate this issue, Allais (1953) gives a series of choice problems. On of the problem is that:

Option 1: 2,500 with probability 0.33

2,400 with probability 0.66

0 with probability0.01

Option 2: 2,400 with certainty

The question is which option would give you the best chance to maximize your profitsThe result shows that 82% people choose the option 2 among 72 people, most of them violated expected utility theory. According to the expected utility theory, the profit in option 1 (2500*0.33+ 2400*0.66+ 0*0.01= 2409) is greater than the option 2 (2400), while people prefer choosing the profit which is certain rather than choosing the profit which is risk.

2.1.2 Reflection Effect

While when gains are replaced by loses, the result would be that the risk preference of people is contrary to the positive prospects, it transfers from risk aversion to risk seeking, and this is labeled as the reflection effect. For example, 92% people choose a probobility of 80% to loss 4000 when they are offered another choice which is a certainty loss of 3000. This example also shows that not only the positive domain violate the expected utility theory, but also the negative domain violate it in the same manner.

2.1.3 Isolation Effect

When people choose one investment between alternatives, they usually exclude the common factors to consider, and focus on their different components. This division would lead to different reslults, for the same pair of investments can be divided into common and distinctive components in many different ways. This phenomenon is called the isolation effect. For example there is two-stage choice problem, the first stage is that people have a probability of 0.25 to go to the second stage, and in the second stage, you have to have a choice between the winning 3,000 of certainty and winning 4,000 of 0.8 probobility. The result states that 78% of 141 people choose the former one. While in this game, people should have had a choice between 0.25* 0.8= 0.2 possibility to win 4,000, and a 0.25* 1.0= 0.25 possibility to win 3,000, and this choice was demotrated by Allais (1953) that a marjor of people would choose a 0.2 chance to win 4,000. so in this situation, people ignore the first stage and based on the second stage to choose prospect.

Prospect theory divides the choice process into two phases, one is editing and the other one is evaluation. Editing phase is used to analyse the options in order to get the simplified result, evaluation is to evaluate the edited prospects and choose one which has highest value. Editing includes four operations which are coding, combination, segregation and cancellation.

According to the prospect theory, if a prospect is regular (p + q < 1, or x ? 0 ? y, or x ? 0 ? y ), which also means neither strictly positive nor strictly negative, the equation would be:

(1)V(x, p; y, q) = ?(p) v(x) +?(q) v(y)

In this equation, the total value of an edited prospect is denoted V, and it is expressed by two scales. The first scale?is connected with each possibility p and the decision weight is?(p), the other scale is v, which the outcome is v(x) with a number x. the value of prospect in Equation (1) is the same as the result of expected utility theory.

While if the prospects are strictly positive or strictly negative, they must use another rule. When prospects are in the editing phase, they are often divided into two parts, which is the riskless part and the risky part. The evaluation would use the next equation:

If p + q = 1 and either x > y > 0 or x < y < 0, then

(2) V(x, p; y, q) = v(y) +?(p) [v(x) – v(y)]

It means that the value of a strictly positive or strictly negative prospect is the same as the sum of the value of the riskless part and the value-difference between the outcomes multipling the weight associated with the more extreme outcome.

Investors evaluation base on the value function and weighting function (Kahneman and Tversky, 1979). Prospect theory uses value function to explain the same meaning of utility. There are two arguments in the value function, the first one is the asset position which can be treated as reference point, and the other one is the magnitude of the change from the reference point. Value function normally concave for positive outcome and convex for negative outcome, and the losses is steeper than the gains. When the value approachs to the reference point, the value fuction is steepest, and the whole value fuction is S-shaped. Decision weights are usually different from the probability axioms, investors often overestimate the small probabilities, this situation often happens in gambling and insurance. While for other situations, decision weights are commonly lower than the corresponding probabilities

However, there are two drawbacks existing in the prospect theory. Firstly, it uses the value function and weighting function to evaluate theory, while there are no specific functions and instead using examples to explain. It is a kind of experimental process. Secondly, there is no specific standard for reference point, it makes the theory not so pricise.

2.2 Behavioural Capital Asset Pricing Theory

The behavioural capital asset pricing theory is based on the capital asset pricing model (CAPM) and the difference is that the behavioural capital asset pricing theory consider the behaviour of traders. It focuses on the market which noise traders and information traders affect each other. Information traders are traders in the condition of CAPM, they obey the Bayesian learning rule to evaluate the returns and most importantly, they never make cognitive errors. However, noise traders are contrary to information traders, they commit cognitive errors and break the Bayesian rules. These two traders interact and determine the asset price. Market is efficient when information traders are dominant in the market, while if dominant traders are noise traders, market is inefficient.

What is the difference between markets in which prices are efficient and markets in which prices are not efficientThe main difference is that there is a single driver property existing the market which prices are efficient. As Shefrin and Statman (1994, p345) said, “This single driver drives the mean-variance efficient frontier, the return distribution of the market portfolio, the premium for risk, the term structure, and the price of options.” It satisfies the minimun information which required to cause the changes to the outcome distribution of the market portfolio. While a second driver is introduced to the market by noise traders, and it let the price far away from the price efficiency. They often creat some abnormal returns to particular securities. The expected return of security is determined by behavioural ?, which is the ? of tangent mean variance efficient asset portfolio. Noise traders’ action let the relationship between security returns and beta weaker. While at the same time, they built a positive relationship between abnormal returns and beta (Chopra, Lakonishok, and Ritter, 1992). When the prices are efficient in the market, price efficiency protects particular noise traders. At that time, the function of noise traders is to rise the trading volume. However, if the prices are not efficient, new information cannot be a sufficient statistic. Yet prices, volatility, the premium for risk, option prices and the term structure are still influenced by old information. Noise traders affect the return of securities through the term structure and they can arouse inefficient inversion which exists in the term structure.

The behaviour? is introduced by the behavioural asset pricing model (BAPM), when the noise traders are included in the model, the behaviour? represents a lower risk than the traditional?. The BAPM research a series of issues such as risk premium, the term structure, and option prices in the situation of existing noise traders. The BAPM not only considers the performance characteristics of value, but also includes the characteristics of utility, therefore, on the one hand it has to accept the market efficiency when considering the unbeatable market, on the other hand it must reject the market efficiency when consider the irrational behaviours. This contradiction lead the finance to further research.

2.3 Behavioral Portfolio Theory

The behavioural portfolio theory (BPT) is introduced by Shefrin and Statman (2000) and it is based on the SP/A theory (Lopes, 1987) and Safety-First Portfolio theory (Roy, 1952). Roy’s (1952) safety-first theory and Markowitz’s (1952a) mean-variance portfolio theory are introduced at the same year, however their opinion are different to the Friedman-Savage puzzle. The former theory is consistent with the puzzle while the latter one is not. SP/A theory is a psychological theory and it has been a choice framework. Security, potential and aspiration are the meaning of letters SP/A and they also reflect investors’ choice under uncertainty.

The efficient frontier of BPT is different from the mean-variance efficient frontier, and the optimal portfolios of BPT and CAPM are not the same. BPT investors think about the expected wealth when they select portfolios. On the one hand, they want portfolios to be security, on the other hand they potentially want to reach aspiration levels. So BPT investors combine bonds and lottery tickets together.

The BPT is classified into two versions, a single mental account version (BPT-SA) and a multiple mental account version (BPT-MA). Their differences are that BPT-SA investors use a single mental account to manage their portfolios while BPT-MA investors use several mental accounts to integrate their portfolios. So BPT investors are the same as investors in the Friedman-Savage puzzle, they both present risk averse and risk seeking. They buy risk-free investments for the low aspiration mental account and buy speculative bonds for the high aspiration mental account.

BPT-SA investors treat the portfolio as a whole like mean-variance investors, and they also take covariances into consideration. So the framework of choosing portfolio are similar between BPT-SA and mean-variance theory, the difference is that their efficient portfolios are not the same.

Portfolios in the BPT-MA is like layered pyramids, and every layer has its own aspiration level. The bottom layer is designed to protect investors from poverty and the top layer let investors have a chance becoming rich. BPT-MA investors are quite different from BPT-SA investors, they ignore covariances and treat portfolios separately in to different mental accounts. Because BPT-MA investors ignore covariance between layers, there is a risk that they may put the same security but with different positions into different layers. The similar evidence is provided by Jorion (1994), he finds that when investors invest globally, they put securities and currencies into different layers of the pyramid, while he thinks the overlay structure is not so useful, because it overlooks covariances between securities and currencies and it leads to 40 basis points loss of efficiency.

Some Models

3.1 DSSW Model

Behaviour finance is based on two theories, which is limits of arbitrage and investor sentiment. According to the tradition finance, arbitrage plays a key role in achieving the market efficiency. Its basic point is that even irrational investors exist in the market and let prices deviate their value, rational investors would eliminate their influence to prices, and finally prices and the value are consistent. However, behaviour finance thinks arbitrage is not unlimited, one of the reason is that arbitrageurs are risk averse and have resonably short horizons, its posibility to be dominant is small. For example, when arbitrageurs sell assets short, they first must know noise traders are bullish and they must be bullish in the future, And then noise traders would buy back the stock. While it is hard to predict noise traders thought, so arbitrageurs have to bear the risk and this would limit their willingness to take position against noise traders.

The model consists of noise traders and sophisticated investors. There are some investors not following economists’ advice to invest, and they only trust their own research. So Black (1986) called these investors who have no private information and irrationally act “noise traders”. Noise traders obtain lots of information which comes from technical analysts, economic consultants and stockbrokers and they falsely believe this information is useful to predict the future price of risky asset. So noise traders choose portfolios according to such incorrect beliefs Alpert and Raiffa (1982). On the contrary, sophisticated traders make use of noise traders’ irrational misperceptions. They buy stocks when noise traders depress prices, while they sell stocks when noise traders think prices would be bullish.

According to the risk of noise traders, the model can explain some financial market anomalies. These anomalies are the excess volatility of and mean reversion in stock market price, the Mehra-Prescott equity premium, the closed-end fund puzzles and some other anomalies. However, there is a drawback existing in the model, which is that it can not explain how investors make decisions. The assumption is that investors base on the behaviour portfolio theory to choose their portfolios, according to the different layers, they make different investment choices even for same assets.

3.2 BSV Model

A huge amount of empirical evidence have shown two kinds of pervasive phenomenon, which are underreaction and overreaction of stock prices. Underreaction means that investors predict higher average return than the actual average return when good news are announced. in other words, the stock underreacts to the good news. if the average return comes from a series of announcements of good news and it is lower when compared with the average return coming from a series of bad news announcements, it is defined as overreaction (Barberis, Shleffer, and Vishny, 1998). BSV model is introduced by Barberis, Shleffer, and Vishny (1998). Investors often present two phenomena, which is conservatism and representativeness heuristic. Conservatism can be defined that people often react slowly when people encounter new evidence (Edwards, 1968). When investors face evidence which has high weigh but low strength, they do not care much about the low strenngh and react moderately to the evidence. While if the evidence has high strength but low weight, they overreact it like representativeness. Representativeness heuristic is the second important psychological phenomenon (Tversky and Kahneman, 1974). It means that investors focus on recent patterns in the data while give little weight to the properties of the population which generates the data (Fama, 1998). In the situation of representativeness heuristic, if a company performs well in the past and has a high growth, investor would ignore the truth that this well perform would hardly repeat itself. The result would be that they overestimate the value of the company and be disappointed when the expected growth does not come true. The BSV model bases on the two phenomena, and explain how investors decision-making model leads to the market price deviating the efficient market. The model also deals with the problem why arbitrage is limited, the reason it that investors’ sentiment are hard to forcast. The more extreme of investors’ sentiment, the more further of price away from the actual value.

It is known that earnings are a random walk, while investors falsely classify them into two earnings regimes. They underreact or overreact to a change in earnings, these lead to short-term momentum in stock returns and long-term reversal. The BSV model perform well on the anomalies it was designed to explain, while the forcast of long-term return reversal is not so good.

3.3 DHS Model

Daniel et al. (1998) also provide a model which includes investor sentiment to deal with the situation of overreaction and underreaction. They try to use psychological theory to support their framework and classify investors’ sentiment into overconfidence and biased self-attribution. Overconfidence is defined that investors often overestimate their forecast ability when they have more significant information than others, so they often overlook their prediction errors. Biased self-attribution is investors feel confident when they find public information is the same as their information, but the confidence would not decrease proportionately when public information is opposite to their private information.

According to the DHS model, it has been known that investors overreact to private information, while on the contrary investors underreact to public information signals. When public information signals eliminate behaviour bias, this would lead to short-term momentum of stock returns while long-run reversal. The model can reconcile this situation, it transfers the wealth from imperfect rational traders (e.g. noise traders) to rational traders and then price setting is dominated by rational traders. While even in this situation, rational traders could not be predominance in the long term. De Long et al. (1991) state that noise traders are risk averse and they prefer investing more money to risky, high expected return assets, if they overconfident about the true information signals, they would obtain more profits than those rrational investors. The forcasts of DHS are similar with BSV, they share the same empirical successes and failures. And this comment can also apply to Hong and Stein (1997).

3.4 HS Model

The model is provided by Hong and Stein (1999) in 1999, it also called the unified behaviour model. The model is different from BSV model and DHS model, it classifies agents into newswatchers and momentum traders. Each of them are restricted rational. Newswatchers making investment dicisions base on private information signals of movement of future values. Their drawback is that they do not use the current or past prices to choose portfolios. While on the contrary, momentum traders mainly base on the movement of past prices changes to invest. However, they also have limitations, which their forecasts should be “simple” function of the history of past prices. In this model, there is one more assumption, which is private information would spread slowly in the newswatcher group. The underreaction and overreaction are based on the private information spread slowly across the newswatcher population. As first, newswatchers underreact to the private information, then momentum traders try to make use of it to arbitrage, while it leads to overreaction.


4.1 Closed-end fund puzzle

There are some anomalies existing in the financial market, one of them is closed-end fund puzzle. The definition of it is that:

“The closed-end fund puzzle is the empirical finding that closed-end fun shares typically sell at prices not equal to the per share market value of assets the fund holds” (Shleifer and Thaler, 1992, p. 75).

The puzzle is that closed-end funds are sold with 10 percent premium at first, while after around 120 days, the premium of 10 percent moves to a discount of over 10 percent (Weiss, 1989). And then discounts fluctuate over the period of funds, they would narrow and then disappear until the closed-end funds terminate.

This proposition has been researched in the past, they pointed out that the value of securities maybe overstate when compared with their true value of the assets. And they provided three explainations, which are agency costs, tax liabilities and illiquidity of assets. Generally speaking, agency costs are constant, it cannot let prices fluctuate. Moreover, it even cannot explain why rational invettors buy funds at a premium initially and finally sell them at a discount. Restricted stock and block discount hypotheses are two versions of asset illiquidity, they explain the reason to sell stocks at a discount, that is, trading fees are expensive. The tax liabilities’ explaination is that the gain tax has included in the funds, so discounts happen. while these three standard explanations cannot explain the puzzle together or separately.

Another explaination is provided by De long, Shleifer, Summers and Waldmann (1990) (DSSW). They develop DSSW model to explain rational investors and noise traders interact in financial markets, and the key point is that noise traders’ sentiment are unpredictable. So the noise traders’ sentiment influence the demand of closed-end fund shares and then influence the changes in discounts.

The model makes two hypotheses, they assume rational investors are short horizons, they focus on the interim resale of prices rather than the present values of dividends. The other assumption is that noise traders’ sentiment is stochastic and hard to predicted by rational investors. If investors are optimistic about the return of funds, funds will be sold at premia or only a little discounts. While if noise traders are pessimistic, it will result of a large discounts. There are two kinds of risk when investors hold closed-end funds, which are the risk of holding the fund’s portfolio and the risk of noise traders’ sentiment causing prices changes. If noise traders become continuously pessimistic about closed-end funds, this risk would be systematic. And then its influence will not be restricted in the closed-end funds. According to this aituation, it is easy to find that holding the fund is risker than holding its portfolio, and then prices of closed-end funds would be lower than their true value.

There is a fact that closed-end funds are mainly traded by individual investors. And individual investors also invest small stocks. According to the empirical evidence which researched by Shleifer and Thaler (1992), it shows that the performance of small stocks also influence the changes of discounts. If the small stocks do well, the discounts of closed-end funds would be narrow.

4.2 the equity premium puzzle

When researchers observed the economy of the United States during 1889 to 1979, they found that the annual return of stocks was seven percent, however, the return of treasury bills was less than 1 percent after 1926. Mehra and Prescott (1985) stated that this huge gap causes from the huge difference of risk aversion. They explained the high equity premium with having excess of 30 risk aversion. While the actual figure observed is only close to 1. so it is a problem that why is the equity premium so large.

Benartzi and Thaler (1995) gived two concepts which comes from the psychology of decision-making. The first one is loss aversion, and the other one is mental accounting. Loss aversion is similar with the Kahneman and Tversky’s (1979) descriptive theory. It becomes more sensitive to loss money rather than increase wealth. It is also opposite to the expected utility theory. Mental accounting is defined that “mental accounting refers to the implicit methods individuals use to code and evaluate financial outcomes: transactions, investments, gambles, etc” (Benartzi and Thaler, 1995, p.74).

Investors are loss aversion, so if they invest stocks, they would care about the security of portfolios. While stock prices are fluctuated, frequent performance evaluation would make investors feel loss. So stocks are less attracted by investors. Only when the return of stocks keeps a high level, investors would replace bonds with stocks.

Barberis, Huang and Santos (2001) explain this puzzle in another aspect and they introduce a model. The model not only bases on the onsumption but also bases on fluctuations of investors’ loss averse. As it is known to all, investors are sensitive to their decrease of wealth rather than to increase. And The changes of loss aversion depends on investors’ prior investment performance. If investors are profit in the prior period, they would become less loss averse. While if the loss is over the profit, or there existing loss in the prior period, investors would become more loss averse. According to this situation ,it needs a large premium to let investors hold stocks.

However, the conclusion is made under some conditions. Firstly, researchers only use a single risky asset to do research for the sake of simplicity. So in the real economy which has lots of risky assets, it is not easy to identify what investors are loss averse about. Another one is that it is not clear to what range the preferences can interpret financial data and risky gambles.


The behaviour finance as a Marginal subject has been developed quickly during the recent years. It combines the finance, psychology, sociology and anthropology to explain finance. According to the empirical research of the finance market, some anomalies cannot be explained by the traditional finance. While the behaviour finance use a unique aspect to systematically explain these anomalies, such as Closed-end fund puzzle and the equity premium puzzle. compared with the traditional finance, the behaviour finance does not have a complete systematic theory. However, the prospect theory (Kahneman and Tversky, 1979), the behavioural capital asset pricing theory (Shefrin and Statman, 1994) and the behavioral portfolio theory (Shefrin and Statman, 2000) constitute the fundamental systematic behaviour finance theory. They introduce an evidence that investors not always perform as rational traders, there are a part of traders perform irrrationally. Traders do not obey the expected utility theory. Then talking about the prices setting, the original CAPM model which is used to set prices of asset is not appropriate, noise traders often commit cognitive errors and their actions would influence the price setting. So the BAPM model which includes the investors influence can make prices more real. The main point of BPT theory is that investors choose portfolios basing their different layers of needs. The bottom layer is designed to protect investors from poverty and the top layer let investors have a chance becoming rich. In order to explain anomalies, some models have been introduced. For example, DSSW, BSV, DHS and HS models. They investigate the influence of investors’ sentiment from two aspects, which are limits of arbitrage and investor sentiment.

However, the behaviour finance has its inherent drawbacks. As Fama (1998) states that even the behaviour finance can explain some anomolies existing in the capital market, it does not mean market efficiency should be abandoned. The data shows that the frequency of overreaction of stock prices is the same as underreaction, so it can be seen that anomalies are chance results in the market efficiency hypothesis. Moreover, anomalies existing in the long-term return are fragile, they tend to be a reasonable changes. Behaviour finance is the sum of anomolies which EMH and CAPM cannot explain, And it does not have its own independent evidence. So the development of behaviour finance needs further research.


Shiller, R. J. 2003. From efficient markets theory to behavioral finance. Journal of Economic Perspectives 17, pp. 83-104.

Ricciardi, V. and Simon, H. K. 2000. What is behavioral finance. Business, Education and Technology Journal, fall.

Frankfurter, G. M., McGoun, E. G. 2000. Market efficiency and behavioral finance: the nature of the debate. The Journal of Psychology and Financial Markets 1, pp. 200–210.

Allais, M. 1953. Le Comportement de 1’Homme Rationnel devant le Risque, Critique des Postulats et Axiomes de 1’Ecole Americaine. Econometrica 21, pp. 503-546.

Kahneman, D. and Tversky, A. 1979. Prospect theory: an analysis of decision under risk. Econometrica 47(2), pp. 263-292.

Chopra, N., Lakonishok, J. and Ritter, J. 1992. Performance measurement methodology and the question of whether stocks overreact. Journal of Financial Economics 31, pp. 235-268.

Shefrin, H. and Statman. M. 1994. Behavioral capital asset pricing theory. Journal of Financial and Quantitative Analysis 29(3), pp. 323-349.

Lopes, L. 1987. Between hope and fear: the psychology of risk. Advances in Experimental Social Psychology 20, pp. 255-295

Roy, A. D. 1952. Safety-First and the holding of assets. Econometrica 20, pp. 431-449.

Markowitz, H. 1952. Portfolio selection. Journal of Finance 6, pp. 77-91.

Jorion, P. 1994. Mean-Variance analysis of currency overlays. Financial Analysts Journal 50, pp. 48-56.

Shefrin, H. and Statman, M. 2000. Behavioural portfolio theory. Journal of Financial and Quantitative Analysis 35(2), pp. 127-151.

De Long, J. B., Shleifer, A., Summers, L. H. and Waldmann, R. J. 1990. Noise trader risk in financial markets. Journal of Political Economy 98(4), pp. 703-738.

Alpert, M. and Raiffa, H. 1982. A progress report on the training of probability assessors. In Judgment under Uncertainty: Heuristics and Biases, edited by Daniel Kahneman, Paul Slovic, and Amos Tversky. Cambridge: Cambridge Univ. Press.

Samuelson, P. A. 1958. An exact consumption-loan model of interest with or without the social contrivance of money. J.P.E. 66, pp. 467-82.

Black, F. 1986. Noise. Journal of Finance 41, pp. 529-543.

Edwards, W. 1968. Conservatism in human information processing. In: Kleinmutz, B. (Ed.), Formal Representation of Human Judgment. John Wiley and Sons, New York, pp. 17-52.

Tversky, A. and Kahneman, D. 1974. Judgment under uncertainty: heuristics and biases. Science 185, pp. 1124-1131.

Barberis, N., Shleifer, A. and Vishny, R. 1998. A model of investor sentiment. Journal of Financial Economics 49, pp. 307-343.

Fama, E. F. 1998. Market efficiency, long-term returns, and behavioral finance. Journal of Financial Economics 49, pp. 283-306.

De Long, J. B., Shleifer, A., Summers, L. H. and Waldmann, R. J. 1991. The survival of noise traders in financial markets. Journal of Business 64, pp. 1-20.

Daniel, K., Hirshleifer, D. and Subrahmanyam, A. 1998. Investor psychology and security market under and overreactions. Journal of Finance 53(6), pp. 1839-1885.

Weiss, K. 1989. The post-offering price performance of closed-end funds. Financial Management Autumn, pp. 57-67.

Shleifer, A. and Thaler, R. H. 1991. Investor sentiment and the closed- end fund puzzle. Journal of Finance 46(1), pp. 75-109.

Mehra, R. and Prescott, E. R. 1985. The equity premium puzzle. Journal of Monetary Economics, pp. 145-161.

Benartzi, S. and Thaler, R. H. 1995. Myopic loss aversion and the equity puzzle. The Quarterly Journal of Economics 110(1), pp. 73-92.

Barberis, N., Huang, M. and Santos, T. 2001. Prospect theory and asset prices. The Quarterly Journal of Economics February.

Hong, H. and Stein, J. C. 1999. A unified theory of underreaction, momentum trading, and overreaction in asset markets. Journal of Finance 54(6), pp. 2143-2184.

Free Essays

Discuss the argument whether Freud’s theory of psycho-analysis is falsifiable or not


This essay will discuss the argument whether Freud’s theory of psycho-analysis is falsifiable or not. The ways in which Freud himself tried to view his theory as errorless are going to be explained and Karl Popper’s approach to the pseudo-science is going to be discussed. Contradict opinions to Popper’s theory are going to be referred to also.

Sigmund’s Freud psycho-analytic theory had been very influential in the course of psychology. His ideas had been generally considered as correct and fundamental for newer theories. Many assumed so because it was always able to provide explanation to any state and therefore thought of psycho-analysis as unfalsifiable. Webster (1995) mentions that what theorists firstly considered as an advantage of Freud’s theory was the fact that he discovered a way of proposing his own hypothesis and therefore finding theoretical solutions on a pseudo-empirical basis. In fact, Freud firstly made assumptions about phenomena which were not previously observed and then suggested that he is the only person capable of investigating this entity.

Karl Popper (1963) stated that in order for a theory to be scientific, it has to be testable. This can be a problem for the psycho- analysis. Popper assumed that this theory provides explanations for any possible situations and cases and therefore it is, especially by its supporters, considered as flawless. It is important to note that, by Popper, this is not seen as an advantage of Freud’s theory. He disagreed with such opinions and supported these ideas by stating that Freud’s theory, or psycho-analysis as whole, is not refutable. However, he thought that this makes the theory not stronger, but much weaker, as it does not take any unpredictable scenarios into consideration. Popper’s suggestion was to test the theories while one gets to a point when this theory is viewed as refuted. He also mentioned that psycho-analysts suppose they can explain every case in terms of their theory. It is also necessary to say that Popper did not consider those theories, which were found to be non-scientific as not valid or insignificant. He simply supposed that such theories cannot be supported empirically but only can be outcomes of observation.

When it comes to the theories of personality or also other hypothesis, every one of them is always tested in a process of acceptance. If it does not provide a satisfying explanation, newer and different solutions are looked for and tested again. A prove of such testability is that the theory offers explanations for unexpected finding and it does not only adjust the findings to itself. But Popper’s idea might have been slightly different from this. Although he should get credit for reasonable doubting of Freud’s theory, in general, he thought that everything needs to be testable in order to be scientific. And this might conclude in testing and therefore refuting and rejecting every idea which is not scientific. Constant testing of theories does not bring them closer to being proven right, by contrast, many might provide proofs of being falsifiable, but this won’t be noticed as further tests of falsification will follow.This would most probably conclude in rejecting most of the psychological theories. However, Webster (1995) emphasised that this is something Popper was aware of.

Many theorists, mistakenly, supposed that the way how to show that the psycho-analysis is not a pseudo-science is to prove that is it testable (Cioffi, 1998). Grunbaum (1986) disagreed with Popper and he supported his opinion by saying that Freud was open to provide explanations to situations which were not predicted by his theory, but no such instances were found. Grunbaum therefore stated that psycho-analysis is a testable theory. He supported his arguments by using an example from Freud’s 1925 paper in which he admits finding of an individual who contradicts his theoretical assumptions. But what Grunbaum had not predicted was that Freud did not admit the failure of his theory to describe such situation and later explained also this unexpected finding (Robinson, 1993). This fact proves that Popper’s statements about the unfalsifiability of psycho-analysis as relevant. But Grunbaum also stated that the Popper’s criterion is not relevant as there are many different and more appropriate ways to test the differences between pseudo-sciences and real sciences (Eysenck, 1985).

Eysenck (1985), have also disagreed with Popper’s statements by pronouncing that the criterion of falsifiability is irrelevant. In order to support his opinion, he provided some instances in which it is clearly showed that Freud’s theory can be proven false and therefore is testable, despite thinking that such criterion is not decisive.

Freud’s ideas have been widely accepted in the twentieth century. It is surprising that there are still many supporters of Freud’s theory among the psychologists as his assumptions have not been scientifically proven and are often compared to the myths. As one of a very few theories, psycho-analysis is still very favoured, although many valid criticisms have been found. Those, who support this theory, will find its ideas always relevant, even if it can conclude in lowering its status among other theories. Although this finding should be, according to Popper (1963), perceived as weakness, it could be also noted that the psycho-analysis is always going to be viewed as very influential, regardless of criticisms.


Cioffi, F. (1998). Freud and the Question of Pseudoscience. USA: Carus Publishing Company.

Eysenck, H. J. (1985). Decline and Fall of Freudian Empire. United Kingdom: Harmondworth

Grunbaum, A. (1986). Precis of The Foundations of Psychoanalysis: A Philosophical Critique. Behavioral and Brain Sciences, Vol. 9, 217-284.

Popper, K. (1963). Conjectures and Refutations. London: Routledge and Keagan Paul.

Robinson, P. (1993). Freud and His Critics. Berkeley: University of California Press.

Webster, R. (1995). Why Freud was wrong: Sin, Science and Psychoanalysis. United Kingdom: Harper Collins Publishers

Free Essays

Explore the Evaluating internationalization theory of Johanson and Vahlne


The term Internationalization is significant for the firms, but the knowledge of the companies which are new in this global market is quite limited. Now days we all listen and read a lot of things about Internationalization and globalization, but what these terms exactly mean‘‘Internationalization is basically planning and implementing the products or services in other countries according to local habits and choice, and it is quickly changing economic landscape, with growing supply of science and technology. (Kim, Daekwan, journal of international marketing, 2010)This essay is to determine acceleration of internationalization and how it affects organization, Economy, and customers, also identify and analyse factors that attracts company towards internationalization, based on incremental and knowledge based internationalization process (by Johanson and vahlne 1977)

In economical terms expansion of business in international market is called as Internationalization, but there is no particular definition for it, it is very important for a company to understand the pattern of Internationalization, where the Internationalization comes after ‘‘stage approach in which company starts selling their products in home countries’’ and once settled in the market expands in different countries. (Elgar, Edward (2003). Learning in the Internationalisation Process of Firm)

According to Uppsala Internationalization Model, by Johanson and vahlne,“Enterprise gradually increases its international involvement”, which means the company that plans to expand internationally first enters in neighboring countries, where the political systems, culture and language is not very different, known as ‘‘psychic distance’’. Once company gains knowledge and experience to work in different country then it can gradually approach new market, according to this view, we get two different types knowledge one objective and other experience based, company initially starts with occasional export and then once settled in the market gradually enters in regular exports, Johanson and vahlne, consider the experience based knowledge to be more relevant, they says that ‘‘to built and understand commitments it is important to discover and make opportunities by involving other companies in their business’’. A firm process like ‘‘rings in the water’’ it is not only that firm settles business in home country but it expands in other countries steps by step. This stage model it identify four stages which are taken by a company for internationalization,

1. A company do not prefer regular export; 2.this export is done through an agent, 3.believes in offshore productions, 4. The offshore sales are not very important.

Since many years companies are committing themselves to internationalization, even though it give easy availability of labour and growth in market and other opportunities, it is not a very easy process. When any country expands in other than their home country they need to understand the national as well as commercial culture, company must understand the reason of the cultural barriers (if any).this stage model theory can help company to gain vital information and resources.

Joint venture also comes under Internationalization in some cases, as many big companies when enters new country it is been observed that they prefers to start in joint venture, for example. Walmart being world’s largest retail industry opened their first international store in Mexico in joint venture with Cifra, and they implemented this strategy in UK starting in joint venture with ASDA both these companies were the best retailers in their respective countries, and for almost every new country they started, this was the main strategy. Another example is, Finnish SME’S (small and medium enterprises). Study shows that some companies in Finland apply Uppsala internationalization model by first starting business in Sweden and then expanding in other countries, which helped them to expand smooth and steadily . So before internationalization a company needs to understand company’s world wide which can help them for further expansion. Keeping all these factors in mind I feel that the stage model theory by Johanson and Vahlne, can help a company to understand every aspect of internationalization, and before taking any step further, company will get time to think over their decisions which will prevent firm from facing any huge loss.

Even though Uppsala internationalization theory by Johanson and Vahlne (stage model) do not cause any loss for any firm, it is being applied in some companies and also been avoided by some.

It is said that this stage approach seems to be very parsimonious, and it has also been challenged and criticized about the data being limited to Scandinavian market. It was also questioned about theoretical validity about stage model and it claims that the theory has unnecessary repetition of the same statement and focus only on market knowledge, (Andersen 1993). There are also some studies which contradicts stage model, as many companies which do not follow stage model for internationalization, and their profit is much quicker than explained and expected by stage model. According to study of ‘‘OECD 1997 (Organisation for Economic Co-operation and Development)’’ the stage model was unable to explain different pattern use for internationalization or the early international expansion of the companies which is also known as ‘‘born global’’ (That is when company expands internationally from the beginning and do not follow any steps), (FRONTIERS OF E-BUSINESS RESEARCH 2004).

These particularly argue and appose incremental internationalization. The study of 87 US states shows that a company prefer to take risk than applying stage model, these ‘born global’ firms are most of the time technology based, and rises questions on stage model. It has not been proved that a company must have market knowledge to be successful internationally; concept of psychic distance was also accused as it is observer that many companies go for the risk where they can increase number of foreign market and gain profit.

As we know, With time views and demands changes, and same applies with stage model theory, even though it is not harmful for any organization to expand or to take any decisions in steps, but now a days this theory is not considered to be a best way of expansion, though internationalization is considered to be complex and involves may dimensions it is accepted by many companies these days. There are many reasons for company to go international, the basic reason is growth or expansion, but companies also expand internationally for alternative source of employees, resources, ideas etc.

Born global companies are “a business organization that, from inception, seeks to derive signi?cant competitive advantage from the use of resources and the sale of outputs in multiple countries” (Oviatt & McDou- gall, 1994, p. 49). This born global concept was carried out in 1997, data was collected for some medium size Danish firms and the study proved that these born global firms had maximum foreign sale which was around 70%.

Today Company seeks internationalization or rather to be born global more than before, ‘‘it is due to the fast growing economic integration and independency of countries worldwide’’. There are many companies that began their business with the traditional approach but now they follow born global strategies in business. For example Nokia which is a communication corporation (mobile manufacturer) is Finland based company but serves worldwide, with annual revenue more than $42 billion from their international market, and $2 billion, do not apply stage model theory and is one of the loved brand in India.

Emirates airlines which is one of the latest airlines in middle east, this airline operates one of the worlds non-stop commercial flights, a very good example of a company which totally implements born global strategy. Emirate airline has a very attractive business model, which is a key factor for company’s international growth. with great emphasis on quality company has also moved into resorts and tourism space, as 2004 it was one of the highest profits earning company. (Gang, yu. 1997 operation research in the airline industry)

Australian export manufacturer small and medium size firms are on the top list of the born global companies, they have proved that it is not impossible to succeed internationally without an established domestic base. These companies didn’t achieve their success in steps but they are born global. Their growth rate is growing 25percent throughout five years.

There are many examples in favour of born global concept, but some companies still believe in stage model due to some financial losses faced by them in internationalization, for example Starbucks as they closed 200 shops in US due to loss.

Even though we have entered a stage where there is very less cross border trade barriers and due to transportation and telecommunication it is not very convenient to go global. With all of this information discussed above, we understand that internationalization is a long and demanding process, which needs management and resources to be successful in market. A company needs to be totally committed towards their resources as the degree of commitment is higher the more resources are expected and if not then there will be a risk of shut down, there has to be a different business model to understand international market. In born global concept there may occur some cross culture issues, language barriers especially for small firms. Being born global a firm needs to consider, huge financial back up, which is not practically possible for a small firm, and franchising may result in less control and there is always risk about maintaining quality. (Branding capability of technology born global, 27th June 2010)

There are advantages and some disadvantages in the theories, Johanson and Vahlne (stage model) and born global concept. according to stage model theory a company should expand step by step, which will help company to understand the market conditions, cultural differences, and then expand in countries which are physically not very far,(geographically near). Which sounds fare enough, because any company whether it is small, medium or huge in size do not want to face any loss. On other hand with rapid growth in internationalization every company is trying to be global. Some of them are born global firms, where firm starts business internationally from beginning or within two years, without any practical knowledge about the market. This may or may not lead to success.


From the above discussion about internationalization which is been discussed in two parts, Johanson and Vahlne (stage model) and born global concept with reference to many journals ,I understand that accelerating economy, technology, information, manufacturing process ,and global competition are forcing companies for internationalization and is considered to be one of the most important factor to grow in industry.

Considering both stage model and born global model can built a good foundation for a company. Application of stage model will give knowledge about the market, time to understand the culture, company can learn from their competitor’s mistakes, foreign business drawbacks and opportunities can be gained by other firms experience, it is very important especially for a small firm because it is been observer that when a small firm enters global market it faces more loss than any profit. As being a global company it involves huge amount of investment.

Since it takes time to gain knowledge about international business environment it will be a slow n steady process but on other hand where new market conditions demands fast growth and quick internationalization, if a company want to star as born global, it needs to study all these points which affects growth of business. If a company starts analysing market conditions before entering global market it can prevent them from facing cultural, technological and overall issues which can affect sale.

So combining both the theories together in a convenient way for every individual company, keeping market knowledge, history, demands, environment, culture, language in mind a company can built a strong foundation even in international market. I strongly believe that if conditions of knowledge and experience specified in Uppsala model is considered before being born global company can be at the top in international market.

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Free Essays

Do you agree that Indian law on offer and acceptance favors the acceptor whereas English common law does not? What do you consider are the reasons for the difference in the English and Indian law? What is the relevance of this distinction? Discuss with the help of contract theory.


The Indian Contract Act traces its roots back to the English Contract Law. But the Indian Contract Act shows some deviation from the English Contract Law. This deviation is propounded in the treatment of the acceptor i.e. the offeree wherein the Indian law on offer and acceptance seems to favor the acceptor more than the English Contract Law.

The Mailbox rule, as the name suggests governs the communications taking place through post in English common law. According to this, a contract is formed as soon as the acceptor sends his letter containing the acceptance to the post office. This is a deviation from the usual rule involving other modes of communication like telephones, telex, etc. wherein the contract is formed only when the offeror is intimated of the acceptance of his offer by the offeree.

The Indian Contract Act, 1872 differs with regard to communications by post. Section 4 of the India Contract Act deals with the communication when complete and reads as follows:

“…The communication of an acceptance is complete. –

as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor;

as against the acceptor, when it comes to the, knowledge, of the proposer…”

This means that the offeror is bound when the offeree posts the letter of acceptance so as to be out of the reach of the offeree and the offeree is bound when the offeror receives the letter. This is discriminatory against the offeror as the offeror will be liable even if the letter of acceptance fails to reach him. But the offeror will not be liable if the mistake is committed by the offeree.

Dunlop v. Higgins, an English case demonstrates the reasons behind the conception of the mailbox rule which happens to be disadvantageous to the offeror. In this case, Higgins enquired about the price of iron and after subsequent communication, on the 28th of January Dunlop offered to sell iron to them at a specific price. Higgins received the letter on the 30th of January and sent their letter of acceptance on the same day but erroneously mentioned the date of posting as 31st January. Dunlop received the letter on the 1st of February and replied stating that they could not sell them the iron because the offer was not accepted in time. Higgins realized their mistake and wrote to Dunlop regarding the same. Upon the refusal of Dunlop to sell them the iron, Higgins sued them for breach of contract. The court decided in favor of Higgins and held that the contract was formed the moment Higgins posted the letter of acceptance. The court reiterated the reasoning used in Adams v. Lindsell which was that it is practically impossible to have a contract by post if the parties were not bound when the letter of acceptance is posted because if the offeror was not bound until he received the letter of acceptance, then it is only fair that the offeree is not bound until he has knowledge of the fact that his acceptance had reached the offeror. This would lead to infinite number of communications resulting in the contract not being formed at all.

The other reason is that the post office is considered to be the agent for both the offeror and the offeree dealing with the dispatching of the offer and receiving of the acceptance. Giving it to the agent is as good as giving it to the principal and that’s the reason why the contract is formed when it is posted. Another reason is that it is difficult to prove receipt of the acceptance as compared to proof of the posting. The mailbox rule prevents the offeror from falsely denying the receipt of the acceptance.

The reasons mentioned above validate the mailbox rule and even though it is against the offeror, it doesn’t seem to favor the offeree. There is another reason which specifically favors the offeree. If the offeror mentions a certain date before which the offeree should send his acceptance, then because of the mailbox rule the offeree has more time to think about the offer and decide whether he wants to accept it. In the absence of this rule, the offeree would have to hurry and post his acceptance such that it reaches the offeror before the last date. The time of receipt is not considered in the mailbox rule; it is enough if the acceptance is posted before the last date.The mailbox rule shows that even though the Indian law blatantly favors the offeree, the common law also favors the offeree in a subtle way.

The offeree getting more time to think about the modalities may seem to be beneficial to him and detrimental to the offeror but there is another way of looking at the same. The rule may lead to immense loss for both the offeror and the offeree. For example, if the offeror offers to sell perishable food items like coconuts, he would want the offeree to hurry and send his acceptance so that he can ship the coconuts to the offeree. But if the offeree delays and posts his acceptance on the last date, then there is a possibility that the coconuts would have already spoilt. The offeror would then be held liable. There is another possibility that the items may get spoilt within no time of delivery. The offeree might have wanted the coconuts for a ceremony. This would lead to hardship and loss for the offeree as well.

Section 5 of the Indian Contract Act deals with the revocation of proposals and acceptances and reads as follows:

“…A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.

An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards…”

This favors the offeree. The offeree has the ability to revoke his acceptance as long as the revocation reaches the offeror before the acceptance.The offeror cannot revoke his offer once there is an acceptance. On the other hand, the common law does not favor the offeree since both the offeror and the offeree are contractually obligated once the letter of acceptance has been posted by the offeree. The offeree also cannot revoke his acceptance. This aims at preventing the offeree from having an edge over the offeror. The offeree if allowed to revoke his acceptance would keep the offeror waiting for his acceptance but he could also choose to revoke it through other means like telephones, telex etc. which is unfair to the offeror. Though the common law seems to be unbiased, it has been held that the revocation of an offer before acceptance is valid only when it reaches the offeree while the acceptance is valid once posted. This clearly favors the offeree because there will be a contract even if the offeror decides to revoke his offer.

There is another instance apart from the mailbox rule where the offeree is favored. Section 6 of the Indian Contract Act deals with the modes of revocation of offer. The Indian law enunciates that in case the offeror wants to revoke his offer before the acceptance, he should either personally give a notice of revocation or should do so through his agent. This is as opposed to the common law which doesn’t require the offeror to personally or through his agent inform the offeree about the revocation before the acceptance. The revocation is complete when the offeree gets knowledge of the revocation through any source.The Indian law seems to be favoring the offeree as it mandates that the notice of revocation should come from the person who makes the offer. The legitimacy of the source cannot be verified in the common law. Other people may not have the right information about the revocation of the offer. Both the offeror and the offeree will lose out and the contracts will not be formed due to reliance upon the words of a layman.

Under common law, a promise to keep an offer open is not binding on the offeror unless accompanied by consideration by the offeree. By paying the offeror the offeree creates an option contract due to which the offeror is bound and has to keep the offer open for that time frame. He is liable for any breach on his part.This is applied in Routledge v. Grant. But in Indian law, a promise to keep an offer open is enforceable even without consideration. The Indian law is favorable to the offeree because in this case, the offeree need not make any additional payment in order to keep the offer open.

Contracts once formed cannot be cancelled without being sued for breach of contract. But common law under the Consumer Protection (Distance Selling) Regulations 2000 allows for the cancellation of a contract by the consumers within a particular time limit called the cancellation period without any liability arising from the same. This is called the cooling off period and usually lasts for around 7 days. The Indian law also has the cooling off period. The offeree in cases involving insurance policies is immensely benefitted because he has the choice to reconsider the contract. This is especially useful in situations involving a large amount of money. The offeror is at a disadvantage because he loses out on the contract. The doctrine of caveat emptor which has evolved from the common law translates to let the buyer beware. It is as opposed to the above rule which permits contracts to be cancelled within a particular time period. Caveat emptor is used more often in India and preferred to the cancellation of contracts. Common law though doesn’t encourage the usage of caveat emptor. So, the offeree benefits more in the common law system than the Indian law.


I agree that Indian law on offer and acceptance favors the acceptor. I also feel that English common law favors the acceptor but to a minimal extent. The reasons behind India’s inclination towards the offeree can probably be because the offeror controls almost all aspects of the contract. The offeror mentions the last date of acceptance, the mode of communication and the offeree is bound by this. The offeree is at the mercy of the offeror and in order to prevent the offeree from reaching a pitiable position, some aspects of the formation of a contract are favorable to the offeree.

Free Essays

Critically evaluate the empirical support for Piaget’s theory of the stages of cognitive development


Cognitive development overlooks the way children learn which Piaget (1896-1980) has had a great influence on. Piaget observed children throughout activities by interacting with them verbally and active listening. Piaget (1952) believed that children move through various stages in order to develop. In order for children to develop they had to pass the four stages, Piaget (1952) names the stages as follows, sensorimotor, pre-operational, concrete operations and formal operational. However there have been many criticisms made by many theorists such as siegler, case, Lewis etc. In this essay I will be evaluating Piaget’s theory stages of development critically and coming to a conclusion.

Piaget had a broad horizon on cognitive development. He felt that in order for a development to be passed a child creates schemas. Piaget (1951) schemas are senses of experiences gained by a child from birth. A schema represents a child’s physical and mental capability, for an example a new born child begins to grasp, suck, blink etc. In order for a child to go through the next stage he should be intellectually and mentally fit. The first stage is the sensori-motor, this stage start from birth to 2 years. During this stage children begin to use their senses to create senses in order to develop such as see, hear, touch etc. Piaget (1952) did a task with children ages 8 to 12 months. He called this task “object permanence”, where he hid an attractive toy away from the child. The child responded by pushing objects away to find the toy. His findings showed him that children began to problem solve and have an understanding.

The second stage is the preoperational stage. This stage occurs from 2 to 7 years. Piaget (1936) felt that children were not intellectually capable as their perception was dominating the way they saw situations. He believed that there were many limitations to the way children will think during this stage. The first limitation was egocentration where their own perceptions are being dominated by themselves. Piaget felt that young children are unable to express their views other than their own. In order to prove this he created a task called “three mountains task”. He came to the conclusion that children up to the age of seven could not identify what the doll could see as they would only answer what they could. The second limitation to this stage is centration which Piaget (1936) believed that children could only focus on one situation going on at one time ignoring others. Piaget (1952) created a task called “conservation”, this task involved objects which were transformed into different lengths, shapes etc. From this task he found out that children cannot focus or understand the concept of height while concentrating on the width.

Robert Siegler (1981) replicated Piaget’s (1958) “Balance Beam” task to see why children could not solve conservation tasks. However Siegler (1981) believed that there are some strategies which children use in order to complete tasks. From his experiment he found that children below 5 could not use the first strategy but used strategy 2 and 3.

The third stage is concrete operations. This stage starts from 7 to 12 years. This stage strongly focuses on reasoning. At this stage children are able to see and understand conservation tasks, size, height etc. There are 4 areas which consist within this stage conservation, classification, seriation. Conservation involves children to problem solve mathematically. Classification is for children 7 to 10, Piaget (1967) has said classification is what children in those ages should be able to understand and group objects relating them to their characteristics. Seriation is children able to put things in order for example in size, colour shape, numbers etc. This stage is allowing children to experiment with real objects in order to explore and problem solve. Piaget (1967) did an experiment for seriation with sticks where he found out that, children can put into series of order but make many mistakes. He found that above 6 years can put in order in no time and correctly.

The final stage is formal operational. This stage occurs in children around 11 according to Piaget (1958). At this stage children are thinking like adults where they can easily problems in their head with ease. Piaget (1958) constructed a task called “pendulum”. From this task he found out children do little mistakes but learn from them and all three stages pre- operational, concrete and formal operational are concurred and passed. Lewis (1981) did an experiment to show that not all teenagers at the age of 11 can think like adults, he found out that 50-60% teenagers used formal operations. This shows that not all teenagers including adults use this stage.

However Bryant (1974) had criticised that tasks that Piaget (1936, 1951, 1952) did to prove his theory were very hard for children to do. Bryant (1974) proved that Piaget was a bit harsh in tasks with children so he constructed a task where he found out that children under 5 were able to do the tasks without any hesitation. This shows the Piaget (1952) did have a good theory but didn’t have the right task for the age group which the children didn’t answer correctly. Robbie case (1992, 1998) did an experiment to see that a child’s development is not just about schemas or to see their cognitive development, but it includes information processing, which is internal capacity of a child. Cases’ (1992, 1998) theory shows that children have not got enough memory capacity to help them process and develop. So as children grow older they concur the stage.

This essay has come to the conclusion that Piaget’s theory has a good source of empirical support to prove his theory. Piaget himself has underpinned numerous tasks such as 3 mountains task, pendulum, object permanence, in order prove his stages of development. However other theorists such as Bryant (1947), Case (1992), Lewis(1981) and Siegler (1981) have proved that there more to the stages of development for example case (1992) has showed that information processing has an equivalent contribution. Nevertheless Piaget had a great impact on cognitive development whereas as many theorists have been inspired.


Berk. E. L. (2009). Child Development. United States: Library of Congress Cataloging-in- Publication Data pages, 22-24,224-257,278, 280-281, 293.

Birch, A. (1997). Developmental psychology. London: Macmillean Press LTD, pages 65-80,111-113.

Piaget, J. (1955). The Childs Construction of Reality, trans. London: M. Cook.

Piaget, J. (1959). The Language and Thought of the Child. London: Routeledge and Kegan Paul.

Siegler R. S. (1998). Childrens Thinking 3rd edition. New Jersey: Prentice Hall, pages 44, 66-67, 74-78.

Free Essays

Aesthetics and cultural theory


Subjectivity is the starting point of Hegel’s statement. His lectures on aesthetics give the significance of art within his philosophy while the German period of romanticism is being explained and critiqued. Recent theorists such as Theodor Adorno, Paul Guyer and Arthur Danto based their views on aesthetics from Hegel’s outlook on art. All support that Hegelian idealism was introduced with a poor consequence of personal subjectivity.

The idealistic philosophers argued that only our conscience has real status and that the physical world is only a product of consciousness. The idealism (or utopianism) is closely linked to the religion either directly or indirectly and all philosophies based on this term are supporting the existence of a superior power that can not be interlinked with human’s capability. The most effective way of understanding the whole concept of idealism is to study directly the forefather of all theorists. Plato in his book, ‘The Republic’, gives an allegory (the ‘cave’) to represent idealism in it’s simpler form.

He describes men sitting in a dark cave who are chained in such a way that they can look in only one direction. Few meters behind them, light comes out of a fire which casts their shadows towards a wall they cannot see. Plato asks us to imagine those men in that specific position for their entire life. Having no experience of anything else, these men understand what they have experienced before reality is being represented to them. The philosopher continues with his metaphor and asks us to visualise that those prisoners got unchained and faced the existence of the fire and the shadows. They begin to have a sense of the environment they lived in. The allegory ends, with Plato explaining that those men in the cave are us. As a consequence, we experience the world with our only five senses, but as a matter of fact ‘our world’ is made with images and three-dimensional shadows. He claims that our mind has absoluteness perfection (‘absolute mind’). As we look into sun and turn away for protecting our eyes, thats how we turn back into the cave, in our safe place of sense perception. Now, modern idealism puts forward a cognitive human activity and attributes to a self-determined reality, such as the ‘absolute truth’ and creativity. Two German recent idealism theorists, J. G. Fichte and Friedrich von Schelling, which came to a climax in an absolute idealism of Hegel, started giving their explanation with a refutation of the uncertain thing-in-itself.

However, Hegel formulated a complete structure of thought about art and the world. Most importantly, he hold up that reality should be logical, so that it’s eventual framework will be shown by our own thoughts. He did not think that symbolic, so by extension, conceptual art, has the ability to surpass the high nature of classical Greek art and its representational/imitative abilities. This is because, as he explains, since symbolisms, depend on the knowledge of man of the earth and society, and because, we can never know everything about the human psyche, trying to represent it with symbolisms, is just not enough. Hence, imitative art, which is what classical Greek sculptures, are of a much higher regard to Hegel, than symbolic art. He describes it as ‘the sensuous presentation of ideas’. It is in the communication of ideas excluding the connection between our reason and our sensory faculty and is distinctive successful. Modern aesthetic theorists turn first and foremost to Kant, an 18th century German philosopher, and the historical convention of German romanticism to utilize the role of ‘pessimistic’ art. Hegelian view comes to support that art does more than sabotage the non?aesthetic. Thus, modern art can preferable take in contemporary artistic practices. Both theorists connect that art is superior to the external world, both opposed to appetite and enjoyment.

Hegel gives his philosophy on art that is, as a whole, his main philosophical system. For us, to comprehend his philosophy of art we must understand his philosophy as a whole. Similar with Aristotle’s way of thinking, Hegel believes that the investigation of logic could lead to a key system of reality. Thus, logic is being characterised as dialectical. Poetry for Hegel seem not to have something physical as a sculpture. In that way, music according to him is the least spiritual form of art. On the other hand, Kant stated as an important matter that a generic explanation of the world could lead to an opposite observation. But Hegel explained that those two notions could be integrated by a move to a different way of thinking. Consequently, our mind moves from thesis, to antithesis, to synthesis[4]. This could be seen in history, nature and cultural progress. All the thinking consists by the idea (thesis), which antithesis is nature, while combining (synthesis) the two it forms the spirit.

This could also be named as the ‘absolute’ itself and is examined in more detail in Hegel’s ‘Phenomenology of Spirit’ as a transformation from subjective to objective to the absolute spirit.

He is examining the organised structures in humanity giving absolute freedom and self determination to be essential. Those vitals principles include the practice of right, having a family and being part of a civil society (state). The most developed and sufficient perception of spirit is achieved by philosophy. It provides a conceptual understanding of the nature of reason while it describes why reason must take the form of time, space, life, matter and self-conscious spirit. In Christianity, however, the procedure which the ‘idea’ or ‘reason’ turns into self-conscious spirit is symbolised with metaphors and images as the procedure where God turns into spirit lies within humans. This is the process we place our belief and faith rather our notion of understanding. Hegel supports that humans cannot live with just the hypothesis of things but also need to trust the truth. He asserts that ‘is in religion that a nation defines what is considers to be true’.

According to Hegel, art is different from religion or philosophy and it’s purpose is the formation of beautiful objects in which aesthetically pleasing indication is coming through. Therefore, the main target of art is not impersonate nature but to give us the opportunity to look at images being made by non-materialistic freedom. In other words, art exists not just for the purpose of having ‘art’ but for beauty.

This union of freedom and beauty from Hegel shows his obligation to two other theorists, Schiller and Kant. Kant goes further to analyse that our understanding of beauty is a form of freedom. He explains, by judging an object or a piece of art as beautiful, we are discernmenting about a thing. By this we are declaring that the ‘thing’ or object has an effect on us, thus everyone will have the same effect. This results to a comprehension and vision in ‘free play’ with each other, and it is this delight that comes from the ‘free play’ that guides us to our judgment if something is nice or not.

Schiller comes in contrast with Kant which explains beauty as a belonging of the object itself. He stress that freedom is independent from our mind (Kant describes as ‘noumena’).

‘Freedom in appearance, autonomy in appearance […] that the object appears as free, not that it really is so’’

However, in Hegel’s view on beauty, is being described as the complete manifestation of freedom. It can be seen or sound like a sensory expression. Hegel moves a step further to explain that beauty can be created by nature but as he calls a ‘sensuous’ beauty’ it can only be found through art which can be produced by people. For him, beauty has symmetrical qualities. It has elements that are not organised in a framework but are joined organically. We were told, as he explains, that the Greek outline is beautiful, because the nose is flawless under the forehead while the Roman human profile has more sharper angles between them. Nevertheless, beauty’s importance is not only the shape but also the content. Modern art-theorists disagree with Hegel’s theory of beauty and art. They claim that art can include any content. This content is described in religion as God, then a beautiful art could be seen as angelic. Nonetheless, Hegel insists that Godly art is through a humankind form as freedom. He understands that piece of art could consists of nature such as plants or animals but he thinks that art is responsible to show the angelic form, as mentioned before. Only a human can represent reason and spirit through colors and sounds.

Art, in Hegel’s eyes, is metaphorical. Not because it always comes to copy what is in nature, but the main motivation of art is to communicate and represent what he explained as a ‘free spirit’. It can mostly be attained throughout humans and images. Particular, art exist to remind our mind that us, as human beings, have freedom and try not to forget the truth within ourselves. It is the only way the ‘freedom of spirit’ could be seen in it’s simplest form. The contradiction with art is that it links truth all through romanticised images made by someone. As mentioned before, according to Hegel, this spirit and beauty could be found through ancient Greek sculptures (Aeschylus, Praxiteles, Phidias and Sophocles).

The German philosopher explains that are a lot of things we can be named as ‘art’, such as the Greek sculptures mentioned before, Shakespearian plays, but not everything is entitled to be called like that. This is because not everything represent what ‘true’ art really is. He sets some standards that a piece of work has to meet in order to be beautiful art.


BBC magazine, A Point of View: Why are museums so uninspiring(London, BBC, 2011) [accessed 11 mar 2011]

Hegel G. W. F., Hegel’s Phenomenology of Spirit, (Oxford: University Press, 1977)

Hegel G. W. F., Hegel’s Aesthetics: Lectures on fine art, Know, vol.1 (Oxford: University Press, 2010)

Hegel G. W. F., Hegel: Lectures on the Philosophy of Religion: Volume II: Determinate Religion: Determinate Religion v. 2 (Oxford: University Press, 2007)

Immanuel Kant, ‘Kant: Religion within the Boundaries of Mere Reason: And Other Writings’

(Cambridge, University Press, 2004)

Jason M, Miller, ‘Research Proposal’ (unpublished doctoral thesis, University of Notre Dame, 2004), p.2

Robin, Waterfield, ‘Plato’s Republic’ (Oxford: University Press, 2008)

Stephen, Houlgate, ‘Hegel’s aesthetics’, (The Stanford Encyclopedia of philosophy, 2009) [accessed 15 Mar 2011]

Schiller, Friedrich, ‘Kallias or Concerning Beauty: Letters to Gottfried Korner”, in Classical and Romantic German Aesthetics’, (Cambridge: Cambridge University Press, 2003)

Free Essays

The development of social theory (Soc 2001) goffman and foucault


Social theory has developed from a classical approach to a more modern sociological approach, characterised by a rise of functionalism and the introduction of interpretive sociology. Swingewood (2000) states that “the heart of sociological thought is.. to redefine concepts and to rediscover them” (Swingewood, 2000:9). Both Goffman and Foucault have contributed to the development of social theory and this essay will critically compare their influence in particular focusing on their analysis of institutions, power and their use of research methods. In order to understand how social order was possible, Goffman analysed the ways in which humans are constituted in face-to-face interactions, Foucault examined society through practises and local circumstance, he didn’t analyse the ‘subject’, but the ’embodied subject.’ Goffman and Foucault are distant in some aspects, for instance in their research methods and approaches on power but are similar in the more important aspects such as their analysis of experts and expert judgement within institutions. This essay will also compare the influence of other theorists in the development of their theoretical approaches.

One of the main problems from classical sociology is the inadequate notion of self. The dominant trend of late nineteenth-century and early twentieth century social theory was towards developing a concept of action. None of the major sociologists constructed an adequate notion of self. The self was defined anonymously as a “disembodied actor assimilating norms and producing meanings in relation to the wider, macrosociological system” (Swingewood, 2000:165). Only Simmel’s sociology with its basis in sociation and interaction approached an adequate theory of the living, active social subject. Mead later developed Simmel’s theory of the self, he argued “Human society as we know it, could not exist without minds and selves” (Mead, 1972:227). He studied the social interaction process and concluded that individuals are constructed over time due to how they interact with others. He argues, “a self only exists, when it interacts with itself and the other selves of the community” (Mead, 1934:138). Blumer (1937) extended many of Meads ideas to refer to action as Mead failed to explain how meanings were actually produced. Blumer attempted to analyse the situational and contextual basis of action in relation to the development of the self, outlining in Symbolic Interactionism that “meaning.. arises through the ways individuals interact with each other as they utilise and interpret the symbolic forms” (Blumer 1969). Goffman’s work is sometimes viewed within the context of symbolic interactionism (Baret 1998) due to the fact he focuses on the interaction patterns between individuals and their ability to reflect on their actions and therefore influence the environment. Goffmans interpretive perspective focuses on the everyday interactions between individuals and the subjective meanings behind these actions Rawls (1987). believes that Goffman’s analysis offers a solution to the agency and structure debate with “the idea of an interaction order which is constitutive of self and at the same time places demands on social structure” (Rawls, 1987:136).

However, Foucault rejects the search for a ‘true self.’ Rather than offering an account of the real self that is being regulated as in Goffman’s account of the performing self, Foucault is interested in how we come to think, feel and act as certain kinds of selves and he wishes to examine the effects of this behaviour.

A new social theory has emerged since the 1950s which looks at human society as an organised system of relation, governed by laws and is self-regulated. It defines reality in terms of the relations between elements, not in terms of objectively existing things and social facts. Foucault examines this concept and takes a stance mid-way between structuralism and post structuralism. Although he claims, “I have never been a structuralist” (Swingewood 2000:194). However he shares the structuralists’ dismissal of theories based on individual choices and the effects of human action. Yet his work was primarily about the self. Foucault was concerned with the status and role of the human subject, the concept of human beings in history and in the human sciences. Foucault shares with the structuralists a desire to displace the human subject and its consciousness from the centre of theoretical concern.

Foucault explores how meanings are temporarily stabilised or regulated into a discourse. This ordering of meaning is achieved through the operation of power in social practice. For Foucault discourse unites both language and practice and is effectively a form of power. Foucault believes discourse gives meaning to material objects and social practises and therefore produces knowledge through language. Foucault outlines in The Archaeology of Knowledge the relations between knowledge and power, “power and knowledge directly imply one another… there is no power relation.. without a field of knowledge” (Foucault 1979:100). By outlining this Foucault shows that truth does not exist, outside power.

Goffman too was concerned with discourse for instance in 1981 Goffman introduced the concept ‘footing’ which is a similar concept to an interactive frame which became rather influential in discourse analysis. Goffman was also concerned with concrete conversation; he noted the social exchanges between individuals not only the words but also the tone, body language and accent. Similar to Foucault, Goffman recognised the influence of the structure of the social world in how we interact, however he places greater emphasis on the creative role of the agent in producing and sustaining the norms and values underpinning the social world (Swingewood 2000). Goffman suggests in The Presentation of Self that “when an individual appears before others his actions will influence the definition of the situation which they come to have” (Goffman, 1969:5). Goffman developed a notion of the individual as a dramaturgical actor, viewing social life as a dramatic performance. He suggested that individuals spent much of their time framing their ‘true self’ from the view of other people. Goffman believes that “behaviour may change from place to place, but the ways in which it changes as well as the situations for which it changes, are usually constant” (Goffman, 1969:68). He feels that individuals behaviour may change when the structure of situation changes, due to different rules which govern how they interact with others. Goffman looks at the rules within institutions, outlined in his work Asylums where he studied the experiences of inmates in a mental institution. He found that patients view of self was modified by their experience within the institiution (Goffman, 1969:78). Similarly Foucault had a concept of rules within a social system, however unlike Goffman he analysed the concept of rules and interactions in terms of a prison institution and how these institutions shape and regulate individual behaviour. (Swingewood 2000) He found that prisons produced distinctive modern forms of identity because individuals came to think of themselves in certain ways due to constant surveillance and monitoring (Foucault 1980:155). These studies aimed to show that even in situations of apparently irrational behaviour there are rules and order.

Both Goffman and Foucault questioned the humaneness of therapeutic institutions. To Goffman, knowledge developed at mental asylums did not serve the interests of patients, instead the institution itself created deviant behaviour in the inmates and then used this to control them (Goffman 1961:104). He emphasised in Asylums how the organisation structure and dominant ideologies of the mental hospital shaped the self of the mental patient through the mortification process. He argued that “mental patients suffered not from mental illness’s but from ‘contingencies’ by which term he meant the actions of others” (Goffman 1961:135). In Asylums, It is recognised that Goffman uses the word ‘inmates’ to describe both the staff and patients. This is a word we use to describe those who have been confined to prison, similar to Foucault’s analysis. Goffman suggests that there are basic similarities between many of the social processes which occur in other institutions, so his study was widened to include organisations which share certain characteristics with mental hospitals such as prisons. He refers to these institutions as ‘Total institutions’ (Goffman 1961:147).

Foucault’s study therefore compliments Goffman’s, as he analyses interactions within a prison institution and seeks to show how those subject to the unremitting discipline are pressured into conforming to the external demands placed upon them. Foucault resurrected Jeremy Bentham’s prison design, the panopticon and described it as a mecahnism that coerces by means of observation. In discipline and punish, he writes “one sees everything without ever being seen” (Foucault, 1995:202). He claimed that visibility in the prison constituted people as individuals who came to regulate their own behaviour. Foucault details how, within the walls of the prison, pervasive and penetrating regimes for monitoring the conduct of inmates aims to induce a form of reflexive self monitoring of conduct. Foucault asserted, “he who is subjected to a field of visibility..becomes the principle of his own subjection” (Foucault, 1975:223). Foucault’s study is similar to Pat Barkers Regeneration Trilogy where she describes how prisoners modify their behaviour due to believing they are being observed by an ‘eye in the wall’ (Carter and Grieco 2000). Prisoners therefore self-disciplined themselves which is similar to what Foucault found.

Similarly to Goffmans analysis of mental institutions, Foucault asserted that the prison institution forced individuals’ identity to change as the inmates’ thoughts of themselves changed. Goffman illustrates this through admission procedures to total institutions, this involves the removal of many items from their identity. Goffman gives examples of admission procedures of prisons. In Asylums, he writes how clothes are replaced by ‘prison uniforms’ and appearance is changed by ‘prison haircuts’ (Goffman, 1961:134). Goffman argues that changes in these aspects are specifically stating that they are no longer the person they were (Goffman, 1961:135). Admission procedures and future interaction with total institutions not only tend to change, but also to mortify the self. Goffman writes “The inmate… is systematically, if often unintentionally mortified” for instance, searched and fingerprinted (Goffman 1961:134). Such experiences tend to break down the inmates former self-concept. The self is then slowly rebuilt, partly by means of rewards and punishments administered by those in authority. Goffman gives and example of a privilege within a prison, ‘extra hours recreation’ (Goffman, 1961:135).

However for Foucault, the similarity lies in the fact that each of these institutions is a place for experiments in the control of individuals and they may learn from experiments conducted elsewhere and techniques of discipline and surveillance invented elsewhere. For Foucault the notion of a ‘total institution’ is too separate from the outside world. The techniques used in asylums or prisons can be understood only by the linkage of those institutions with practises and discourses external to them and to the history of the borrowing and deployment of disciplinary techniques and ‘techniques of the self’ (Jordan, 2003:239).

Both theorists are interested in the mortification process through social control as well as the stigmatised body selves. In Stigma Goffman states, “Persons with a stigma are considered less than fully human and subject to all manner of discrimination which reduces their life chances” (Goffman, 1986:102). He explained that persons with a particular stigma tended to share similar experiences and chances in conception of self, which he termed the ‘moral career’ (Goffman, 1986:102). Stigma is also evident in Foucaults work, due to inmates’ identity changing through the mortification process which strips inmates of the various supports which helped to maintain their former self-concepts, their identity is also changed through constant surveillance which results in the inmate being their own overseer and exercising this surveillance over and against themselves (Foucault, 1980:155). Inmates in both institutions are therefore not prepared for life on the outside once they’re released, they have accepted the institutions definition of themselves and are stigmatised, this results in the inmates being treated as outsiders.

Foucault offers a history of the present in which power and knowledge intersect and understandings of ourselves are produced. Power and knowledge operate in mutually generative fashion and are not reducible to each other. Foucault explained that disciplinary power shaped and trained the body (Foucault, 1975:294). He gave an example at Mettray Colony for juvenile delinquents where the combination of observation and exercise made training ‘an instrument of perpetual assessment’ (Foucault, 1975:295). The example of Mettray illustrated Foucault’s argument that subjectivity is produced ‘around, on, within the body’ by the working of a correctional mode of power (Valier, 2002:154). This conception assumed a symbiotic relationship of power and knowledge which required a direct hold on the body. However Foucault’s studies departed from the perspective of standpoint feminists, who held that power was wielded by a particular group. Smart pointed out, Foucault demonstrated more interest in how the mechanisms of power worked than in who had power (Smart 1989). Indeed, Foucault stated that the panopticon was “a machine that any random individual could operate” (Valier, 2002: 155). He argued in Discipline and Punish that “power was not a possession or a property but should be understood to be a strategy” (Foucault, 1975:296). This is what might be called a shift from a substantive to a relational concept of power. Instead of focussing on the primary oppression of women or the working class, Foucault thought it important to theorise the ways in which every inhabitant of modern societies was subjected to certain forms of subjection (Valier, 2002:155). Foucault therefore focused on power relations instead of the subjects.

Critics of Foucault objected what in his focus on the workings of power there seemed to be no space left for resistance. However in The Will to Knowledge Foucault clarified his position in stating that resistances were “inscribed in power as an irreducible opposite” (Foucault 1976:96). Nevertheless, Lois Mcnay stated that “Foucault’s emphasis of a corporeally centred disciplinary power produced a conception of subjectivity that was ‘impoverished” (Mcnay, 1994:122).

In contrast to this, Goffman’s notion of power is more limited, although he was interested in questions of power he tended to approach this topic as a neutral observer rather than a witness. Several critics have faulted Goffman for his failure to articulate the structures of power that determine every experience. In The Coming Crises Gouldner argues that Goffman pays no attention to power and his microsociology fails to explain how power effects the individuals abilities to present selves effectively (Gouldner, 1974:347). In addition to this May Rogers takes up the critique in Goffman on power, hierarchy and status that Goffman’s analysis is poor in understanding power relationships. Roger argues that power relationships are present, but are treated almost entirely implicitly. Individuals use power to affect the behaviour of other actors in society, by the use of resources (Rogers 1981). According to Rogers, it appears that for Goffman, Power is a form of combination between people who have minimal stigma against others who are unable to accept the definition of the situation (Rogers, 1959:30).

Goffman studies the interactions between individuals through specific microanalysis, following Durkheim’s social theory, he tries to show how the sort of large scale phenomena Durkheim analysed is produced and reproduced in interpersonal interaction. Although Goffman provides insights into the working of places where individuals experience problems, it does not reflect the macro-institutional order, for instance Goffman gives little consideration to the inmates’ experiences in the outside world before they entered the total institution. The possible significance of this omission can be seen from John Irwin’s study of prison life in California, Irwin argues that an understanding of particular inmates’ responses to imprisonment requires a knowledge of their pre-prison experiences. Irwin suggest that this may have important influences on modes of adaption within a total institution (Irwin 1980). Goffman states in his essay The Interaction Order, that his preferred method of study is ‘microanalysis’ (Goffman 1983:2). Some theorists suggest links between the apparent micro-sociology, ethnomethodology and Goffman’s interaction order. Swingewood (2000) argues that ethnomethodology provided an empirical basis for Goffman’s interaction order and shares many features in common with his theoretical approach, for instance both emphasise how social order and predictability are skilful accomplishments of the actor involved. Foucault’s theoretical approach can be exemplary for ethnomethodological investigators as it clearly identifies how material architectures, machineries, bodily techniques and disciplinary routines make up coherent phenomenal fields (Lynch, 1997:131). Foucault who was not a micro-sociologist did however obtain an interest in micro-processes such as the micro physics of power, power exercised in interaction and the resistance to power that also takes place continuously in interactions and micro-environments (Garner 2009:147). Swingewood (2000) argues Foucault believed that all totalising theories such as Marxism reduce the autonomy of the micrological elements. Foucault suggests the term ‘archaeology’ to describe a method of analysing micro elements and the concept of ‘genealogy’ to rediscover all micro-logical forces. Foucault does this as he feels it’s essential to reactivate local, minor knowledges (Swingewood, 2000:195). Foucault initiated the concept ‘genealogy’ in order to investigate the historical events that led people to understand themselves in particular ways.However, Reminiscent of Goffman’s studies it’s apparent that Goffman included nothing about history in relation to the social practices he described or about the history of the ‘total institution.’ Nevertheless to understand how such institutions came to exist, one can turn to Foucault’s archaeologies and genaelogies. Although Hacking (2004) found they are not completely accurate historical analyses and tend to over-generalise on French examples. For instance Hacking states, ‘the great mutations of Foucault’s first books coincide under different names, with Descartes and the French Revolution, neither of which is noticeably mentioned’ (Hacking, 2004).

Goffman and Foucault both contribute to our understanding of how society functions, although writing from a different theoretical perspective they both supplement each other; Goffman analysed the ways in which human roles are constituted in face-to-face interactions within a total institution and how patterns of normality and deviance work on individual agents. Foucault’s archaeologies established the preconditions for and the mutations between successive institutional forms.Due to their different theoretical approaches, there are some conflicting views, for instance Goffman developed a theory of ‘self’ that brackets institutions and looks only at social action as strategic conduct. In contrast to Foucault, Goffman doesn’t develop an account of history or structured transformation. However in contrast to Goffman, Foucault erased the subject and attempts to de-centre the subject, Foucault depicted the subject as essentially passive and unable to act in a way that would have an effect on society. However I believe that both are essential in understanding the making of individuals (Giddens 1979). offers the idea of Foucault and Goffman developing the theory of ‘structuration’ which suggests that rather than looking at self and society as a dualism, they should look at them as a duality of structure, constantly being stucturated in the interactions between the individual and society (Giddens, 1979:56). Although the theoretical approaches of Goffman and Foucault differ I believe that their approaches on both structure and agency are complementary ways of viewing the social world and if they were brought together, a theory such as Gidden’s suggested could be produced and work successfully.


I feel goffman’s approach is ‘bottom up’ because he starts with individual face-to-face exchanges and develops an account of how such exchanges constitute lives, I feel Foucault’s approach is ‘top down’ because he starts with a mass of sentences at a time, dissociated from the human beings who spoke them and used them as the data upon which to characterise a system that determines discourse and action.

Free Essays

Using cultural capital theory to study racial inequality: A case study of Hays



In European society, resources, opportunities, and rewards continue to be allocated unevenly by race, and a substantial body of sociological research has endeavoured to explain these disparities. The current discourse on racial inequality is generally dominated by work located at the macro and micro ends of the theoretical spectrum. The former is concerned with structural, societal-level explanations for racial inequality, while the latter focuses more on discrimination and racism in individual experiences. However, researchers are beginning to pay more attention to the middle-ground explanations centered on the importance of culture in racial inequality, particularly in regard to how racial boundaries and hierarchies are constructed between whites and blacks (Anderson, 1999, 29).

Cultural capital theory has emerged as a powerful framework for inquiry into the reproduction of social inequality. This framework considers how certain forms of knowledge, behaviours, and preferences help individuals gain an advantage in specific social contexts. Despite the theory’s demonstrated power for the research on inequality, it has been used primarily in the study of adolescents, and has rarely been applied to the study of racial disparities (Compton, 2006, 81). In this dissertation, I demonstrate the relevance of cultural capital theory for the study of racial inequality by using interview and participant observation data to examine racial inequality inside a major corporation. This dissertation contributes to our knowledge by examining how race affects the reproduction of inequality via the company’s informal cultural and relational processes. In other words, how are some employees disadvantaged or advantaged by their sociocultural behaviours and preferences, and how does race affect this relationshipThis dissertation is part of a larger research project that explores the impact of race, gender, class, and culture in the reproduction of inequality in the corporate workplace. By situating this research in a major corporation, I seek to gain insight into these processes in an institutional context that affects the lives of millions, while also contributing to our broader understanding of how culture is involved in the reproduction of inequality.

Research Questions

This project, while covering a wide range of sociological territory, attempts to answer three sets of research questions. Along the way, it asks important questions about how individuals are evaluated according to the informal standards of an institution. The first question documents the specific forms of cultural capital that are valued at Hays, and illustrates how employees who possess this type of capital convert it into advantage. In the process, it states the case for why cultural capital is an appropriate theoretical framework for the study of race and gender inequality in the workplace, despite it having been rarely applied in this manner. The second question demonstrates how cultural capital theory is appropriate for the study of racial inequality. It examines how race affects individuals’ possession and activation of cultural capital in the workplace, and how some employees are disadvantaged or advantaged in this regard. It also addresses the intersection of race and class in Hays informal culture. The third question examines how Hays dominant culture is gendered, and how this culture affects the career prospects of men and women differently.

In the three substantive chapters, the reader will find three common themes regarding my use of cultural capital in this project. First, I contend that cultural capital offers a powerful framework or the study of inequality that enables researchers to consider both structure and agency. Second, I demonstrate that this framework is useful for identifying the mechanisms that underlie the reproduction of race, gender, and class inequality inside an institution at the everyday, interactional level. Third, I argue that cultural capital provides more explanatory power than the frameworks, such as homophily and stereotyping, that are usually employed in this type of research. The dissertation closes with a discussion of this study’s sociological contributions, the implications for future research, and a few concluding thoughts.



The Chinese philosopher Confucius once said that by nature all men are alike but by practice they have became far apart. Differences in language, race, religion, behaviours and habits often lead to misunderstandings when two or more diverse groups are involved. In order to achieve organizational effectiveness and competitiveness HRM department must develop a strategy where diversity should be an opportunity to the company to retain good employees based on a fair employment system (Edelman, 2001, 1641).

Especially as a result of the globalization of the economy, in the last decades the role of workforce in the development of companies is vital. Studies all over the world (USA, UK etc) have shown that the majority of managers have limited notions about diversity and as a result believe that diversity training is done only for ethical and social reasons. Moreover, Johns, Hyde and Barton (2010) argue that planning a fair employment system among diverse groups is not possible as equality and diversity are contradictory notions. On the other hand, Putnam’s research (2007) demonstrates that diversity has a positive impact and helps companies to save money and meet the expectations of their existing customers and win new ones. The first theoretical approaches of diversity started to arise on 90’s in USA and gradually the discussion moved lately to whether and how a diverse group can increase the effectiveness and competitiveness of a company (Cox, 1993; Robert and van Dick 2010, 95). To begin with Kandola and Fullerton (1994) state that diversity includes the variety of demographic characteristics of people such as personality, gender, religion, language, culture etc. Moreover, Jackson and Joshi (2001) believed that an explanation of diversity management (DM) is the rising of domestic multiculturalism. Furthermore, Edgar and Geare (2004) support that DM should be flexible and use a range of strategies, starting from employment moving to training, empowerment, commitment etc. According to Robert and Dick (2010) team performance is a crucial element of HRM literature and is related with effective communication, group trust and sense of sharing a common task. However those theoretical approaches are not connected with the development of companies (Bell&Virick, 1998, 75).

Racial Theories of Inequality

Four decades after the passage of important Civil Rights legislation, race continues to be a major differentiating factor in American society, with whites holding a clear advantage over blacks in income, wealth, health, education, and many other important resources (Compton, 2006, 81). Theories that attempt to explain racial disparities tend to focus on racism at the macro- or micro-level. Current discourse on race is dominated by macro theories – such as the “racial formation” framework and the theory of “colour-blind racism” (Bonilla-Silva 1997; 2003, 475) that blame structural, socially-embedded racism for racial inequality. Micro theories, on the other hand, concentrate on the causes and effects of racism at the everyday, individual level (Feagin and McKinney, 2003, 75).

More recently, scholars have begun to consider more closely the middle ground by examining what cultural sociologist Michele Lamont describes as “the cultural territories of race.” This literature centers on the importance of culture in the construction of racial boundaries, the preservation of racial hierarchies, and the reproduction of racial inequality. In doing so, this work strives to understand the complex role that cultural factors play – going beyond, for example, more simplistic arguments such as the “culture of poverty” thesis (D’Souza, 1995, 136) – while recognizing the importance of both structure and agency. Exemplary studies include examinations of the status and stigma associated with fast food industry jobs for Harlem’s working poor (Newman, 1999, 75), the ways in which black and white working class men understand social class and conceptualize the relationship between socioeconomic status and moral worth (Lamont, 2000, 75), and the sociocultural experiences of black executives in the corporate world (Anderson, 1999, 29).

Cultural Capital Theory

Despite the promise of this renewed attention to cultural factors and racial inequality, relatively little attention has been paid to the relationship between race and cultural capital, which has emerged as a powerful theoretical framework for understanding culture and inequality. The concept of cultural capital, developed by Pierre Bourdieu as part of a broader theory of the reproduction of class-based power and privilege, concerns the role culture plays in the reproduction of inequality. Bourdieu’s model seeks to encompass both structure and agency, as well as power, domination, conflict, and legitimating (Bourdieu, 1990, 130).

Cultural capital refers to the role cultural tastes, behaviours, practices, attitudes, and goods play in the reproduction of social class and inequality (Bourdieu, 2001, 125). In other words, it is the particular forms of knowledge (both formal and informal) and associated behaviours that enable individuals to gain advantages in given social institutions or contexts. Cultural capital is often valuable for leading to additional social capital – i.e., the resources and knowledge gained through one’s social networks.

An important concept is the activation of cultural capital. That is, cultural capital is a resource that must be activated by individuals in social interactions and social networks. Merely possessing a valued form of cultural capital is of little use if an actor cannot activate or use it in an appropriate manner in front of the gatekeepers or decision-makers in a given social context. For example, discussing obscure rock music with a corporate vice-president who prefers classical music is unlikely to gain one currency. Likewise, there is little benefit, in cultural capital terms, of activating this form of capital with a peer who cannot facilitate the conversion of one’s cultural capital into additional resources. Thus, actors must skilfully activate their cultural capital at the right times, in the right places, and in front of the right people.

Cultural Capital and Race

Relatively few researchers have studied the relationship between cultural capital and race, despite the framework’s promise for the analysis of racial inequality. While a number of studies of educational inequality examine racial differences in cultural capital ( Lareau, 2003, 75), I am aware of just one study of race and cultural capital set in an adult context. Kaplan’s research found that black architects are unable to influence popular styles and trends in the same manner as white architects, despite relatively equal professional credentials; a lack of cultural capital also constrains black architects’ abilities to score high-profile design projects. Scholars have advocated the use of cultural capital to study racial disparities in medical treatment and the workplace. I concur and contend that, despite the scarcity of research in this area, cultural capital is an appropriate framework for the study of racial inequality in mainstream American and European institutions – a major corporation, in the case of this paper – for three related reasons.

First, a key aspect of the cultural capital framework is that this form of capital is used by dominant groups to exclude others from jobs, privileges, and other key social resources (Bourdieu , 1984, 96). Whites, as the dominant race in American society in General (Bonilla-Silva, 2003, 480), and the corporate sector in particular (Reitman, 2006, 75); set the normative standards for appropriate values, beliefs, and behaviours. In other words, whites generally have more influence over the dominant culture in mainstream American institutions, and some scholars contend that whiteness itself is a privileged form of cultural capital. The extant research generally finds racial differences in mainstream cultural capital, although there is some evidence that socioeconomic differences explain much of the racial gap (Roscigno, 1999, 75).

Second, as noted earlier, cultural capital is a resource that must be activated by individuals in social interactions and social networks. As such, research finds that race and sociocultural interests play key roles in the formation of social networks that, in turn, lead to workplace success. Homophily research finds race to be a strong factor in the formation of networks in the workplace, and the most salient factor in the structuring of social networks overall (Cook, 2001, 75). Studies of corporate culture and the workplace underscore the importance of homophily at work. Kanter, for example, found that managers seek to hire employees who are similar to them culturally and socially, and evaluate managerial candidates based on their performance at social outings outside of work time, including activities that often require demonstrating certain cultural abilities (e.g., playing golf and hosting dinner parties). This creates a cycle of social closure which leads to the exclusion of those with different backgrounds. Indeed, workplace social networks tend to have a high degree of homogeneity in terms of race, class, and sociocultural factors. Importantly, social familiarity affects success within the workplace, particularly in situations where social ties are important for the accumulation of knowledge and skills (Blair-Loy, 2001, 78). Further, studies have found a backlash against Affirmative Action policies and, thus, successful blacks in the corporate sector, which could lead to further exclusion from important workplace networks (Pierce, 2003, 80). Collectively, this research suggests that black (or anyone who is more socially distant from the dominant group in a social context) may be hampered in their ability to activate cultural capital in relevant social contexts.

Third, cultural capital is heavily influenced by social class, which is highly intertwined with race in American society (Wilson, 1987, 75). More specifically, Bourdieu contends that cultural capital is attained through two sources: one’s family (i.e., habitus: a set of internalized dispositions developed through one’s family socialization) and education (Bourdieu 1984). Race shapes both sources in a significant way (Smelser, 2001, 75). Thus, cultural capital provides an excellent framework for examining racial inequality, as well as the intersecting effects of race and class.

Racial Inequality in the Workplace

The corporate workplace provides a promising site for the application of cultural capital theory to the study of racial inequality for two reasons. First, while many occupations remain segregated (McTague, 2006, 80), the workplace is likely the site of much interracial contact, given the extent of social and residential segregation in American society (Vallas, 2003, 382). Second, the work sector remains a site of much racial inequality, and I contend that this framework offers a compelling alternative to existing explanations for racial disparities inside the workplace. Racial inequality persists in the workplace. Blacks earn less than whites in the short term and over the life course (Smith, 2001, 81), face a “glass ceiling” that limits opportunities for promotions , are more likely to suffer downward mobility from white-collar occupations during shifts in the economy (Wilson,2004, 99), possess less workplace power and authority than whites (Smith ,2002, 77), and are likely to receive lower performance ratings from their supervisors than white men and. Significantly, black workers also still face hostility, discrimination, and negative stereotyping in the workplace (King 2005). Despite arguments that find class to be a more significant factor in inequality than race, blacks are clearly disadvantaged at work.

Research on racial inequality at work has mostly focused on the broader social forces that affect how jobs, wages, promotions, and other work opportunities are allocated by race. These factors include: job- and occupation-level segregation, organizational composition, job availability in urban centers (Holzer et al. 2001, 77), companies’ hiring strategies, and job seekers’ social networks and social capital (Smith, 2005, 89).

While this literature is essential for revealing patterns of racial inequality at work in England, it fails to explain much about how racial inequality is reproduced in the workplace. These studies – generally structural in theoretical approach and quantitative in method – are largely unable to identify the social and interactional mechanisms underlying racial disparities at work, leaving researchers to speculate about important relational processes (Reskin, 2003, 88). The movement toward more structural, survey-based research has occurred for a number of reasons, including a lack of access to corporations, and an inclination, inspired by the work of William Julius Wilson (Wilson, 1996, 91), to focus on the social forces that affect the availability of work for urban blacks. In short, we have learned much about why racial inequality exists in the workplace, but know little about how it is produced and reproduced. Prominent sociologists of work and organizations lament this gap in knowledge and have drawn attention to the need for more innovative, qualitative approaches that investigate relational, interactional processes at work and focus on the mechanisms that produce inequality (Reskin ,2003, 79), including an examination of cultural capital (Vallas, 2003, 398). In particular, sociologists need to examine how race (and gender and class) are “done” or performed (Jackson 2001) at work, and affect workplace relations and individuals’ opportunities for inclusion, success, and promotion. By looking inside the workplace, and by examining sociocultural interactions that occur once individuals are employed in a firm (as opposed to research on job acquisition), this dissertation answers the call by identifying an important mechanism in the reproduction of racial inequality.

The literature on racial inequality inside the workplace generally focuses on three complementary causes. The first is occupational- and job-level segregation. Blacks are often channelled into radicalised jobs, positions that are frequently marginalized and devalued because they have ties to the black community and/or are not occupied predominantly by whites (Williams, 2004, 96); spatial segregation within the workplace may exacerbate these effects (Vallas, 2003, 385). The second is homophily, the tendency for people to associate with others like themselves (Cook, 2001, 70). Homophilous processes lead managers – very often white males – to hire and promote workers similar to them socially and culturally; which leads to the exclusion of minorities from vital internal resources and networks (Drakulic, 2000, 96). Third, blacks are often stereotyped or stigmatized in the workplace, leading to a host of negative consequences including black workers feeling isolated and alienated, and being viewed as only fit for certain types of radicalised jobs (Nkomo, 2001, 85). In short, job segregation, homophily, and stereotyping combines to limit blacks’ chances for workplace success, mobility, and access to internal networks.

While studies on these three causes have added much to our understanding of racial disparities at work, they suffer from a common weakness that limits their explanatory power. In short, this literature fails to explain the interactional, relational mechanisms underlying job segregation, homophily, and racial stereotyping, leaving unanswered a wealth of important questions in the process. What happens to black workers once they are in radicalised positions, and what happens to those whose are in more mainstream positionsWhat is the sociocultural substance that drives homophily, especially given that, for example, all white males are not alike as the research seems to assume?

In other words, workers do not interact in a vacuum, nor do they respond to each other solely based on ascribed characteristics. It is important to know the substance and context of work related social interactions in or outside of the workplace – i.e., what are individuals talking about with their co-workers and where are they interacting– especially given that research has noted the role culture plays in connecting individuals at work (Erickson 1996) and in society in general (Lizardo, 2006, 79). By not exploring the substance of workplace interactions, what is left is basic racial discrimination, an explanation that some leading scholars in work and organizations are trying to move away from (Reskin, 2002, 93). Similarly, others argue that discriminatory processes in the workplace are subtle and progressively harder to document, and that the very nature of racism is changing and becoming less overt. A cultural capital approach that centers on the content and context of sociocultural interactions at work corrects for these limitations in the literature.

Further, this literature falls short on both ends of the structure-agency debate. Research on homophily and stereotyping generally struggles to offer a critique of the racial workplace inequality at a structural level. While homophily and stereotyping imply a larger structural bent – i.e., racial stereotypes are rooted in structural inequality – larger issues of social class, exclusion, and power, as well as the interplay between structure and agency, are neglected. Conversely, arguments based on segregation into radicalised jobs fail to recognize the agency of black workers, and are unable to explain those who are successful and/or upwardly mobile. This is particularly important given that studies suggest signs of progress for black men in terms of obtaining management positions, and note the successes of certain types of diversity programs for black men and women in management (Kelly, 2006, 93). A cultural capital approach takes structure into account by defining the dominant institutional culture and how it is constructed, and considers agency by examining how employees activate their cultural capital in certain social contexts.

As noted earlier, the cultural capital framework holds promise for the study of racial inequality in general because of its emphasis on exclusion and power, dominant cultural norms and values, social networks, and social class; these points of emphasis make it a compelling approach to the study of racial inequality inside the workplace as well. Further, previous cultural capital research has shown that individuals’ success in mainstream institutions, such as the school system, is not due solely to quantifiable performance (Lareau, 2003, 82). Rather, actors are rewarded for knowledge and behaviours related to informal standards and expectations favoured by the dominant culture of the institution – these informal standards are generally influenced by class, race, and gender. Likewise, research has found that workplace success is determined in part by certain cultural competencies – playing golf or knowing the appropriate manner in which to act at an expensive restaurant, for example – that enable some employees to be evaluated more positively (Kaplan, 2006, 96). Notably, the higher employees rise in a work hierarchy, the harder their performances are to quantify on an individual basis. Approaching workplace inequality from a cultural capital perspective facilitates the examination of these other pathways to workplace assessment and success, and provides insight into a key mechanism of work inequality.

In summary, cultural capital theory provides a robust and flexible model for examining mechanisms of workplace inequality that involve race and culture – importantly, this model goes beyond previous explanations of racial inequality at work (job segregation, homophily, and stereotyping) in explanatory power. The extension of cultural capital to a study of workplace inequality is supported by Lamont and Lareau, who specifically noted the potential of this framework for studies of work inequality, as well as leading scholars in the sociology of work and organizations (Vallas, 2003, 100).



Research Design

Qualitative Research

Qualitative research is much more subjective than quantitative research and uses very different methods of collecting information, mainly individual, in-depth interviews and focus groups. The nature of this type of research is exploratory and open-ended. Small numbers of people are interviewed in-depth and/or a relatively small number of focus groups are conducted.

Participants are asked to respond to general questions and the interviewer or group moderator probes and explores their responses to identify and define peoples’ perceptions, opinions and feelings about the topic or idea being discussed and to determine the degree of agreement that exists in the group. The quality of the findings from qualitative research is directly dependent upon the skill, experience and sensitivity of the interviewer or group moderator.

This type of research is often less costly than surveys and is extremely effective in acquiring information about peoples’ communications needs and their responses to and views about specific communications. It is often the method of choice in instances where quantitative measurement is not required.

Literature Search Criteria

The relevance of the research topic and the publication year has been the criteria for the selection of appropriate literature. The usage of public, private and the online libraries has been made for the collection of the most valid available information. A few online databases for the gathering of data accessed are: Questia, Proquest, Phoenix, Ebsco and so on.


Some of the keywords that were used to conduct the search are: Workplace Discrimination, workplace diversity and discrimination, workplace race discrimination, workplace gender discrimination, racial theories of inequalities, capital culture and so on.

Research Questions

In this dissertation, I examine how race affects the possession and activation of cultural capital in the corporate workplace. Specifically, are black employees disadvantaged in terms of cultural capital and if so, howDo white employees have an advantage in these processes because of their raceIs there an interaction between race and classAn examination of these questions is important for understanding broader processes of racial inequality, as well as adding to our insight of workplace disparities.

Additional Methods Notes

When discussing the results, I note the interaction of race and class in my findings. I determine social class through a combination of self-reported education, family income, current occupation, and family class background. Individuals that I identify as middle-class have college degrees and family incomes over ?50,000, and generally come from at least a lower-middle-class background; most have at least some managerial experience at Hays. In one instance, an interviewee did not have a college degree and was not in a managerial position, but was married to a physician and described herself as middle-class. I define working-class employees as those who do not have a college degree, have family incomes less than ?50,000, and who are employed in positions in the lower one-third of Hays hierarchy; all of these employees come from working-class family backgrounds as well.

Culture and Race at Hays

The company struggles with diversity. Although official demographic reports of Hays employees were not available to me, reliable internal estimates placed the company’s percentage of professional jobs filled by blacks at roughly 5%. (I define “professional jobs” as those that require a college degree or significant professional experience, which includes most of the white collar jobs at Hays with the exception of positions in the call centre and customer service departments. For the most part, these jobs do not offer much in the way of a career path at the company.) The majority of Hays non-professional jobs are occupied by blacks – likewise, the majority of Hays black employees work in these positions. There are just two blacks in the top echelon of Hays upper management, which is comprised of roughly 30-35 executives.

Two years ago, the executive management team announced increasing diversity as a major goal for the company, creating committees to study the issue, and issuing a directive that a “diversity candidate” must be included for interviews of any position above a lower middle management level. Significantly, while the company officially defines diversity broadly – i.e., in terms of ethnic background, management and communication styles, and personal differences – it is operationalized in hiring processes and company events strictly in racial and ethnic terms. Hays employees I interviewed were forthright with criticisms of the company’s handling of diversity, with their complaints taking three forms. First, black participants expressed frustration with the lack of blacks in upper and executive management positions, as well as insincere or poorly handled attempts at dealing with diversity (e.g., “ethnic” lunches to celebrate black or Asian culture). Second, blacks and racially progressive whites criticized Hays’s minority recruitment, stating that the company does not endeavour to attract quality minority candidates. This induces frustration when employees feel forced to interview diversity candidates that do not appear qualified, thus dooming efforts to increase diversity to failure. Third, some white employees believe that the company’s emphasis on diversity gives too much latitude to blacks who are unqualified or perform inadequately. Despite these issues, race relations overall at Hays appear to be mostly positive.

Defining Cultural Capital at Work

An important aspect of cultural capital theory is that different types of cultural capital are valued in different contexts – what is valued is determined by the dominant group in a given institution or “field,” to use Bourdieu’s terminology (Lareau and Horvat, 1999, 100). For example, while knowledge about the fine arts might serve as cultural capital among societal elites, Erickson found this to be less useful in a work setting than knowledge about popular, mainstream culture, which was important for connecting employees across class and managerial boundaries. Lamont and Lareau contend that before discussing the effects of cultural capital in a given context, researchers must first document its valued forms: i.e., what are the various ways in which individuals are evaluated in a particular context (with a focus on informal methods of evaluation), and how does an individual’s social location affect their ability to meet these expectations?

In this dissertation, I documented three forms of cultural capital that are significant for success and advancement at Hays, a large, multinational corporation headquartered in the Midwest. The first form is knowledge about informal expectations and an understanding of the importance of the company’s sociocultural realm. From executive management down to entry-level workers with college degrees, there is a consensus that employees cannot succeed at Hays without knowing about and participating appropriately in certain sociocultural activities. Knowledge about the importance of the informal culture, as well as the rules that govern it, is vital: one cannot play or win a game when one is not aware that it exists or is worth one’s time.

The second form of cultural capital valued at Hays is the ability to participate in and navigate a range of informal social events, including happy hours, loosely organized nights at local pubs or restaurants, and co-ed sports teams. These informal activities are important for increasing visibility and access to supervisors and decision-makers, sharing informal knowledge about the company, and demonstrating more of one’s personality and “real self” outside of the workplace. Third, knowledge about a variety of mainstream, popular culture topics (i.e., being a “cultural omnivore”) serves as an important form of cultural capital at Hays. Being conversant in a wide range of topics is necessary for getting along with co-workers and for navigating social interactions with supervisors and key decision-makers. Topics that dominate conversation at this company include sports, parenting/family issues, reality television shows, fashion, and exercise/nutrition. Whereas cultural capital research began with a focus on high-status culture in France (Bourdieu, 1984, 96), more recent in European settings confirms the importance of knowing something about a range of culture, particularly in regard to popular culture topics (Lizard, 2006, 81).

Possessing and activating cultural capital can lead to important advantages. Hays employees report that participating in the company’s informal culture can help increase one’s visibility and access to supervisors and decision-makers, a particularly important aspect for those in low-visibility positions or who report to an unsupportive supervisor. In addition, informal social activities serve as a setting where informal knowledge about the company is shared, and where employees have opportunities to bond and demonstrate more of their “real self” outside of work situations. In short, the company’s informal culture realm is composed of sites where work gets done, introductions are made, impressions are formed, networks are expanded, and information is shared. Employees without the types of cultural capital valued at Hays fall behind.




Based on my analysis of the data, I find a strong relationship between race and cultural capital at Hays. This relationship varies by social class for blacks: black employees are disadvantaged in cultural capital-related processes at Hays, but the form of disadvantage depends on their class and location in the company hierarchy. Middle-class blacks are disadvantaged primarily in terms of activating the second and third forms of cultural capital noted previously (participating in social events and being a cultural omnivore), whereas working-class blacks tend to not possess the first form (awareness of the importance of the company’s informal culture). Whiteness, on the other hand, is a clear advantage in terms of cultural capital at Hays.

Middle-Class Blacks at Hays

Middle-class blacks at Hays possess cultural capital but face obstacles in its activation. That is, middle-class black employees firmly understand the importance of the company’s sociocultural domain – the first type of cultural capital described above but often feels unable to activate their cultural capital. These employees are limited in their ability to activate cultural capital by two related processes: (1) a white-dominated corporate culture that requires assimilation in order to succeed; and (2) methods of exclusion that are both overt and subtle. First, black middle-class employees feel that to succeed at Hays they must assimilate to Hays’s dominant corporate culture – which, as I explain shortly, is dominated and maintained by whites and cross a personal line that they are not willing to cross. Blacks must assimilate primarily in terms of ways of interacting and communicating, as well as partaking of the sociocultural interests and activities that are preferred at the company. Subsequently, they feel that their social and cultural styles of interacting are not appreciated or rewarded at Hays. This result in a form of race-specific sociocultural exclusion that disadvantages black middle-class employees at the company, particularly in regard to the second form of cultural capital valued at Hays: the ability to participate in and navigate a range of informal social events.

Black middleclass employees defined assimilation in a variety of ways: being involved in work-related social outings rather than spending time with their families, eating lunch with people “that you really don’t like, just because you know it’s an important thing to do;” working out at the company gym; not challenging Hays’s leadership; interacting at work in a more restrained manner (which one participant explicitly noted as a “more white way” of acting, as opposed to black being “more emotional and outgoing”); modelling the actions and attitudes of the company’s upper management; and steering clear of controversial social or political issues during discussions.

An older black, middle-class professional who works with outside clients – attributed the whiteness of Hays’s culture to the fact that whites are clearly in the majority at the company. She noted that her department was completely white for years until she joined; she also commented that despite Hays’s stated goals of diversity in her nine years there, that many departments are still mostly or completely white and that race “is not equally distributed throughout the company.” Other participants observed that Hays is no different than most other major corporations in this regard, and that this is simply the state of corporate England.

Significantly, some whites I interviewed echoed these sentiments as well, observing that their black peers have larger challenges than themselves in terms of interacting and fitting in with Hays’s dominant culture. In short, there is a consensus that the valued cultural capital at Hays is dominated by the styles, attitudes, and preferences of white management, and those who wish to succeed must conform and blend in. This leaves black middle-class employees feeling uncomfortable and unwelcome in certain social settings at the company. Conversely, not one white participant noted feeling uncomfortable because of their race.

Second, black middle-class employees are often excluded from key sociocultural processes by both overt and subtle means. A black female worker went on to discuss the importance of cultural capital at Hays while also noting the mystery behind it, describing it as an “X-factor. She provides evidence that middle-class blacks are not only sometimes excluded from important cultural capital-related activities at Hays, but the substance and rules of the “X factor” are kept secret from them as well. She is interested in upward mobility in the company and is willing to do things (to a point) to advance, but is unsure of what is required in terms of the informal expectations. She knows there is a game to be played, but she is not told the informal rules and is not sure if she understands them correctly – hence, her ability to compete is hampered. What is particularly compelling about her is that she struggles to learn the rules despite her background: she was raised in an upper-middle-class family by parents with graduate degrees and professional jobs, and her parents made a concerted effort to increase her general cultural capital by having her, for example, study abroad, take piano lessons, and learn to play tennis. Clearly, black middle class employees with less cultural and human capital than her might struggle even more.

The cultural capital framework has been criticized as simply another form of a deficit model, such as the “culture of poverty” argument, that can ultimately be used to blame the disadvantaged (Crompton, 2006, 85). However, this framework clearly considers the structural nature of the reproduction of inequality through its emphasis on power and exclusion. Middle-class blacks at Hays are not lacking in cultural capital – rather, they are often unable to activate these resources in the appropriate contexts, particularly the informal social settings I have found to be important, because they are excluded, either actively (i.e., simply not being invited or included) or covertly (i.e., being made to feel unwelcome).

The subtle, covert characteristic of these processes is particularly important to note, as very few of this study’s black participants accused the company of outright racism or discrimination. Rather, they found the exclusion to be indistinct and often hard to put into words. This is precisely what makes cultural capital, with its emphasis on informal knowledge and expectations, such a difficult process of inequality to document, particularly for researchers who are not focused inside the workplace.

Management: how are boundaries drawn?

A careful distinction must be drawn in regard to how access to important informal knowledge is protected by those in power. At times, this knowledge is guarded proactively i.e., while white male managers at Hays have intentionally rebuffed a black female’s efforts to join their social ranks, they invited a young white man to join their social and exercise circles. Although the race/gender calculus is not always simple – e.g., a white male participant complained to me about his exclusion as well – only black middle-class employees claimed race as a cause for their exclusion. At other times, informal knowledge remains off-limits through what I would describe as “benign neglect.” That is, some managers simply assume that employees know the informal rules, and appear genuinely unaware that some individuals may not understand the importance of the informal culture. Thus, employees who understand and participate appropriately in Hays’s informal culture are rewarded, and those who do not are assumed to be less interested in success and upward mobility. An executive management team member emphasized that the informal cultural rules and “fine line advice” are very important for success, but are also not openly explained. Jane agreed that blacks (and women) “have a tougher time” finding managers or mentors to explain the informal culture, largely because of the white male dominance of the culture, but she was unwilling to attribute these differences to racial discrimination or overt exclusion on the part of Hays managers. Rather, she believes that upper management’s stated emphasis on diversity is genuine, but feels that they struggle with implementation. The company’s ineffective diversity program leaves many managers uncertain as to what is required to help minority employees, or possibly unaware that they need to do anything at all. (This issue is complicated by Hays’s weak recruiting efforts for quality minority candidates, a complaint echoed by both black and white Hays managers.) Further, she feels that that white men are more likely to enter the company with some knowledge of the informal rules, leading white male managers to find it easier to work with them. Although she believes that blacks face more difficulties at Hays than whites, she believes that it is possible for blacks to succeed, especially if the company continues to refine and strengthen its efforts toward greater diversity.

A white male senior manager in his thirties is a prime example of the uncertainty and lack of awareness. He is “the future of the company” according to one executive I spoke with, and was promoted to one of the most visible positions in upper management during the course of this project. He has a reputation of being one of the most progressive, fair, and friendly members of upper management, and I found him to be engaging and sincere when discussing diversity and ascriptive inequality at Hays. Yet, as I will describe next, he was quite surprised by issues related to cultural capital and inequality that arose near the end of our formal interview. He recognized the importance of Hays’s informal culture, but also argued that there are alternate means of connecting with or impressing managers.

Again, he seemed sincere in expressing his willingness to help and advice employees who are lower in the company’s hierarchy. However, he was taken aback when I noted that lower-ranked employees might be hesitant to ask a high-ranking manager such as him for his time and advice. I explained that even with his positive reputation, employees might not be aware that it is acceptable to ask a superior, especially one outside of his or her department, for help (this is an important form of cultural capital in the corporate sector). I also described my observations on why many black employees felt excluded or unwelcomed in Hays’s informal culture, and thus felt uncomfortable approaching white managers without the connections and familiarity gained in those settings. He expressed his surprise over these observations, and vowed to do better in this regard, while asking for my advice on how he might proceed. Employees: an example of the “X factor”

The intangible aspects of social interactions can be difficult to discern and describe. Although black respondents gave a firm sense that black middle-class employees are made to feel excluded through various means, what remains unsaid is exactly how this exclusion occurs. What makes the black middle-class employees I interviewed feel unwelcome or excludedWhat are the verbal or nonverbal cues that signal their exclusionFirst, it is important to recall that cultural capital consists of a range of sociocultural behaviours, attitudes, and styles – for example, Bourdieu’s early research identified how displaying certain styles of communicating and speaking favoured by middle-class teachers positively affected the educational outcomes of privileged students in France (Bourdieu, 1990, 85). Likewise, certain styles of communication are valued at Hays, and this provides a strong example of how blacks come to feel excluded or unwelcome at the company.

A certain manner of comportment is valued at Hays, and middle-class blacks feel that their willingness to speak frankly and challenge opinions harms them in this regard. All but one of the middle-class blacks in this study feel that their frank, outspoken manner of communication is not received positively by white managers in the company. Ultimately, this impairs the ability of middle-class blacks to participate freely in informal sociocultural settings (the second form of valued cultural capital) and to display cultural omnivorism (the third form). While it is possible that white managers perceive the communication styles of middle-class blacks to be too assertive or not deferential enough, it appears more likely that middle-class blacks are simply going against the grain in terms of the company’s predominant styles of communication. Thus, the communication styles of middle-class blacks, which might serve as capital in other settings, are not valued as cultural capital at Hays. This also serves as an example of how blacks feel they need to assimilate to succeed at the company.

These examples provide a glimpse into the mechanisms behind the exclusion of middle-class blacks at Hays. By possessing a communication style and orientation that is not favoured by the mostly white management, black middle-class employees are perceived as lacking in a key aspect of the dominant cultural capital at Hay: i.e., the manner in which successful, team oriented employees are expected to act.

Working-Class Blacks at Hays

Working-class blacks are disadvantaged at Hays, but for a different reason than their middle-class peers. These employees suffer from a lack of knowledge about the company’s informal expectations and the importance of the sociocultural realm. The response of a young, black, working-class clerical worker – demonstrates this lack of awareness. She stated that she does not like to associate with co-workers outside of work and does not feel the need to do. She recognizes that some of her co-workers may get involved in social activities in order to be seen, but does not feel that one needs to be active in sociocultural interactions in order to succeed. When I asked how she plans to advance at Hays, she responded by describing traditional means of doing so: through hard work and possibly taking college-level classes or additional training; getting more involved in the company’s sociocultural realm was not part of her plan.

Black working-class employees are further disadvantaged by working in primarily radicalised jobs that are segregated socially and physically from the company’s mainstream. As described earlier, Hays displays the job segregation patterns typical of large corporations: most of the black employees are in lower-ranked positions, including a large call center that is mostly black and is located in a separate facility from the rest of Hays’s main offices; these positions are clearly radicalised. Thus, not only are working-class black employees unaware of the importance of Hays’s informal culture, but they are also less likely than other employees to come into contact with potential mentors or guides, or to be in sites where they can learn by following the examples of others. To be clear, it is difficult to decompose the effects of race and class on this issue, as I lack a clear comparison group to my working-class black participants. I was only able to interview three whites in lower-ranked positions (i.e., in the bottom one-third of the company’s hierarchy); all three are women. Two of the three do not have college degrees, but are from middle-class backgrounds, have educated spouses, and appear to be middle-class in the present; the third is from a working-class background, but has a college degree, and is far well-versed in social and cultural issues than the black working-class participants. Also, as opposed to blacks working in radicalised, dead-end positions, whites who have lower-ranked positions often have college degrees, and have either a clear plan for advancement or are not interested in upward mobility because they seek a low-stress job with fewer demands.

White Employees at Hays

To this point, I have focused my attention on the circumstances of black employees at Hays. This is due mainly to my finding no evidence whatsoever of whites being disadvantaged in the possession or activation of cultural capital because of race. Other factors outside of the focus of this dissertation such as gender, class, work/family conflicts, and sexual orientation sometimes prohibit white Hays employees from succeeding in cultural capital-related processes, but not the colour of their skin.

The majority of this study’s white participants claimed that race does not matter, with many following up this claim to add that Hays’s diversity efforts insure that blacks get a fair shake. Very few whites acknowledged that whites have an advantage at the company. These views those are typical of whites, who generally do not recognize the privileges that accompany the colour of their skin (Bonilla-Silva, 2003, 471). Some whites interpreted my question, “how does race matter at Hay?” in negative terms, pointing to “diversity candidates” who did not perform as strongly as their white counterparts. Further, some felt that Hays goes too far with emphasis on diversity.

However, whiteness is clearly an advantage at the company. Claims by whites that race does not matter at Hays are countered by the responses of black employees and some white managers, as well as the reality that management at the middle and upper levels is heavily dominated by whites. Only one of Hays’s 11 senior executives is black; out of roughly 20 to 25 executives at the next step down of upper management (vice-president and senior-vice-president positions), just one is black. As noted earlier, roughly 95% of Hays’s professional jobs are occupied by whites. A white senior executive commented on the difficulties blacks face at Hays (while also noting the combined effects of race and gender).

Experiencing Hays’s White-Dominated Culture

In sum, Hays’s white-collar sector and leadership are predominantly white, and although some white respondents claim that race has no effect at the company, other whites, including some in middle and executive management, recognize that Hays’s culture is dominated by the cultural attitudes, styles, and preferences of whites. But what does this mean in terms of lived experienceHow is this “white-dominated culture” experienced by employeesMy participant observations experiences help illustrate the whiteness of Hays’s culture. Significantly, every informal company outing I participated in took place in settings that were overwhelmingly white in terms of their geographic location and crowd. These social outings occurred in bars or restaurants in three parts of the large metropolitan area where Hays is located: the white, upper-middle-class suburb in which Hays’s offices reside; the downtown business district area; and Parktown, an affluent neighbourhood located within the city limits that is populated primarily by white, young professionals. The bars and restaurants tended to be moderately upscale and were populated mostly with young professionals dressed in the business casual clothes they wore to work (if it was a happy hour) or nicer casual clothes (no t-shirts and jeans) if we met later in the evening. The crowds in these establishments, generally 50-100 people on average, were usually almost completely white – in fact, when black Hays employees were there, they were frequently the only non-whites there.

It is true that many of the cultural topics that are discussed at Hays’s informal gatherings reality TV shows, family events, and the local professional and college sports teams are not clearly radicalised; although as a recent ESPN/ABC News poll showed, even seemingly benign topics, such as black professional baseball player Barry Bonds’ chase of the career home run record, can engender a racial divide (, 2010). But it is also true that cultural products, artists, and interests more associated with black culture – including even well-known, more mainstream examples such as Jay-Z (hip-hop), Wynton Marsalis (jazz), Dave Chapelle (comedy), or an entire league such as the National Basketball Association – are less likely to be discussed (and viewed as a form of cultural capital) in Hays’s informal sociocultural settings. Jay-Z may be more famous and artistically relevant than white singer Dave Matthews, but the latter is certainly more likely to come up in conversation in these settings.

It is not as if blacks at Hays are particularly surprised by the company’s culture: many made comments along the lines of “it’s corporate world, its white, and it’s what you would expect.” But they also continue to sometimes feel alienated in this culture, a feeling that is exacerbated by the company’s ham-fisted attempts at promoting diversity (such as featuring black-eyed peas, cornbread, and other traditional African-American dishes during specific festivals and their white co-workers’ apparent unwillingness to meet them halfway and learn more about, for example, black authors or performers. The “default whiteness” of Hays’s informal culture becomes tiring. In short, blacks’ feelings of alienation – combined with whites’ numerical dominance at Hays and the tendency to host informal gatherings in exceedingly white settings – produce a level of social distance and strain that whites do not have to negotiate on a daily basis at Hays. This is a classic example of white privilege (McIntosh, 2001, 101): Hays’s whites simply do not have to be concerned with their race, while blacks are confronted with it on a regular basis, particularly in the company’s informal culture. It also lends support to Bonilla-Silva’s notion of a white habitus, a radicalised socialization process, caused by whites’ social and spatial isolation that influences whites’ perceptions and feelings about racial matters. Whites do not have to face or even recognize the reality of being the only person of their race in a pub, a pub one feels to be compelled to be in for work reasons; blacks do. Nearly every employee at Hays has impediments that keep them from participating in the informal culture as much they might want or need to. As I noted above, participants noted how gender, class, work-family commitments, and sexual orientation all affect their ability to participate in Hays’s informal culture. Race is clearly important in this regard, and thus, whites at Hays have one less significant barrier to negotiate than blacks while navigating the informal sociocultural settings that are important for success and mobility at the company. This barrier reflects a dynamic that Hays’s diversity efforts are not equipped to address, thus leaving quite a gap between the company’s stated goals and the reality of its culture.

It is important to note that in Hays’s informal culture, the conversion of cultural capital into actual benefits or resources (e.g., a new node in one’s work network, information gained about an important new project, an opportunity to impress a member of upper management) is rarely instantaneous. In other words, discussing the Chicago Bears with an executive will seldom result in an immediate promotion. Instead, conversion is an ongoing process requiring repeated displays of cultural capital in front of decision-makers or key peers at strategic moments. In this sense, Hays’s black middle-class employees are disadvantaged by their diminished presence and involvement in the company’s informal culture, which is due to overt exclusion or their reluctance to participate in an uninviting social context. Notably, I observed black middle-class employees participating in Hays’s informal social outings, but rarely with the frequency and duration of the whites who were most successful at activating their cultural capital and “playing the game.” Consequently, Hays’s black middle-class employees continued to be disadvantaged in this regard. Previous research has suggested that whiteness may be a cultural resource whites can draw upon in certain contexts (Reeves, 2001, 112), and that race affects the cultural capital that is valued in adult work contexts (Kaplan, 2006, 151). This study’s findings provide further evidence for the influence of race on cultural capital, a resource that has previously been explored almost exclusively in terms of social class. I find that whites determine the cultural knowledge, styles, behaviours, and attitudes that are favoured at Hays, and that the whiteness of Hays’s culture clearly disadvantages blacks in terms of activating cultural capital.


In this dissertation, I used data from interviews and participant-observations to demonstrate that cultural capital theory is a useful theoretical framework for inquiry into racial inequality. By situating this study in an institutional context such as the headquarters of a major corporation, I was able to first identify the forms of cultural capital valued in this context, and then examine how race affects the possession and activation of this form of capital. In doing so, I demonstrated how cultural capital theory allows for considerations of both structure and agency.

I found that black corporate employees are disadvantaged in terms of cultural capital, and that the form of disadvantage varies by class. Middle-class black employees are limited in their ability to activate their cultural capital by working in a corporate culture that is defined and dominated by whites, and that necessitates their assimilation in exchange for success. Black middle-class workers are also excluded from important sites where cultural capital is activated through means of exclusion that are sometimes subtle, other times overt. Working-class blacks, on the other hand, are disadvantaged in the possession of cultural capital, particularly in regard to knowledge about the company’s informal culture and rules. It’s a classic case of “not knowing what you don’t know” – i.e., these workers are mostly unaware of the importance of participating in Hays’s informal culture. I also found no evidence that whites are disadvantaged in cultural capital sites and processes because of race; rather, whites are clearly advantaged in this regard in the corporate setting. Some critics of the cultural capital model have argued that it is simply another way to blame the disadvantaged, similar to the manner in which the “culture of poverty” arguments were used to blame poor, urban blacks. This criticism, however, overlooks the structural aspects of this theoretical framework: cultural capital is used by the dominant group in a particular setting to exclude others and preserve rewards for others like them. In Hays’s case, white members of middle and upper management define the cultural capital valued at the company. The success of blacks’ efforts at agency hinges, in large part, on their ability to traverse and negotiate this white dominated cultural structure. While the majority of cultural capital research has focused on the role of class in exclusionary processes, this paper shows that race is a factor as well.

Some would argue, for example, that Hays’s middle-class blacks are to blame for not being willing to “cross the line” and do whatever it takes to be successful. But this also begs the question of why and how workers are evaluated for non-performance issues – that is, a meritocratic institution such as the workplace claims to reward workers for their quantifiable performance, and not for how they behave at a happy hour, blend in to the organization’s culture, or demonstrate knowledge about sports. The black middle-class workers I interviewed are regarded as solid performers and, in some cases, were openly recruited by Hays’s management. If an employee’s performance is adequate or better, why should she or he be forced into participate in sociocultural situations in which s/he is not comfortable or feels excludedWhite employees do not face this dilemma, at least for racial reasons – black employees do.

It is interesting to consider the effects the white-dominated culture has on white managers. I provided evidence that while some managers may not have malicious or exclusionary intentions; the reality is that they are ill-equipped to recognize how their whiteness affects their decision making and evaluations as they apply to Hays’s informal culture. White managers are also unaware that some employees – black employees, in this case – may struggle with cultural capital at the company. This leads to a profound gap between Hays’s stated emphasis on diversity and the reality as it exists within the company. As such, this echoes Reskin’s contention that sociologists concerned with inequality should focus on the internal mechanisms that generate inequality rather than the motives of those in charge. In short, the motives of managers appear to matter less than the embedded culture of the company.

Regardless, it is important to ask why company managers do not take a more active role in mentoring the working-class individuals who report to them, particularly when they are keenly aware, at least in some cases, that these workers do not “know the rules.” Black working-class employees are further disadvantaged at Hays by working primarily radicalised jobs that are segregated socially and physically from the company’s mainstream. Not only are they unaware of the importance of the company’s informal culture, but they are less likely than others to come into contact with fellow employees who may guide or mentor them, or to be in sites where they learn by example, because of job-level segregation. It is important to note that most employees, both black and white, feel that Hays provides a positive environment and is a good place to work. It seems fair to say that even Hays’s harshest critics are driven not by a disapproval of the company, but rather by frustrations over wasted potential – this is particularly true in regard to the fact that Hays states that diversity is a priority, yet its efforts have resulted in few clear improvements for blacks and other minorities. Further, few black employees find the company or their co-workers guilty of outright racial discrimination. Thus, my findings may understate the impact of race and cultural capital at less racially progressive companies. There are some limitations to this study. First, my findings are based on a relatively small sample from just one company. Thus, the generalisability of the dissertation’s findings is difficult to assess. This is particularly true in regard to discussions of race and class intersectionality, as I had a somewhat unrepresentative sample of white working-class employees. However, it is worth noting that some seminal studies in the sociology of work and organizations were based on similar research sites and samples. Second, my findings are based primarily on interview data, and I was not able to observe employees in their actual work environments. While I made every effort to triangulate my findings through interviews, observations, and discussions with my informant, the fact remains that I was unable to observe employees at work. Last, I do not have access to measures of work performance, but this form of data may not have helped, as cultural capital affects how employees are evaluated, and the higher one goes in the hierarchy, the harder it is to quantify an employee’s performance and disengage it from the performance of the larger organization.

This dissertation makes significant contributions to the literature in three areas. First, it demonstrates the usefulness of cultural capital for the examination of racial inequality, as well as its relevance for studying contexts involving adults (as opposed to the adolescent, educational settings in which it is generally applied). Identifying the valued cultural capital in various adult institutional contexts is imperative to the future of cultural capital research; this dissertation has accomplished this in a large corporate setting. Second, this dissertation adds to our understanding of racial inequality by applying a previously neglected framework. Examining the impact of race at the sociocultural level is particularly important in an era of colour-blind racism, when racial discrimination has become more covert and harder to document (Bonilla-Silva, 2003, 465). Last, this study contributes to the Sociology of Work literature by focusing on a key set of mechanisms that generate inequality inside the workplace. In doing so, this dissertation corrects for the limitations of research that relies on explanations focused on homophily or stereotyping processes. While cultural capital and homophily are certainly complementary processes, I contend that the former offers a more rigorous theoretical framework for the study of inequality inside institutions. While this dissertation touched on questions of race and class, a more robust examination of cultural capital and the intersectionality of race, class, and gender are vital. Further, this study’s findings should be extended to a larger, more representative sample involving multiple corporate sites and cities. My findings also suggest future research avenues that lay outside the confines of this project. For example, how is the dominant culture of an organization arrived at and how does it changeWhat forms of resistance are possible by its members?

This dissertation also points toward the promise of marrying cultural capital theory to research on boundaries, particularly in regard to the reproduction of inequality. My findings suggest that race, class, and gender sometimes affect how significant sociocultural boundaries are drawn; other times, sociocultural matters appear to influence boundaries drawn by race, class, and gender. The promise of boundary research has been demonstrated for race and class issues (Molnar, 2002, 193), and suggested for the examination of racial inequality at work (Vallas, 2003, 379), but I am unaware of research that combines considerations of cultural capital and race/class/gender intersectionality. Focusing on the use of cultural capital in boundary creation would strengthen both research traditions. It is imperative to continue research of this type. I began this dissertation by noting the extensive racial disparities that persist despite the advances gained during the Civil Rights Era over forty years ago. Sociology has learned much about the causes of these disparities, but there is much work to be done. Research that focuses on the impact of culture, particularly in regard to the currency it carries, shows great promise for the understanding of racial inequality. It is bitterly ironic that the things that are supposed to enliven our lives – cultural interests and social relations are often the very things that divide us. My hope is that deeper examinations of racial divisions in the sociocultural domain will eventually help lessen our profound racial disparities.



Cultural Capital and Meritocracy

It is important to note that Hays’s employees cannot succeed solely on cultural capital – the consensus among this study’s participants was that an employee might be able to advance through the corporate hierarchy mainly on cultural capital for a brief time, but that he or she would eventually be discovered as unsuitable for the demands of the position. But it is equally important to note that one cannot succeed and advance up the corporate ladder without cultural capital. Concentrating solely on work will generally result in career stagnation and being passed up for opportunities and promotions, regardless of how skilled an employee is.

Consequently, this study raises important questions about the European ideal of meritocracy as well as the ways in which individuals are subject to informal, often unspoken methods of evaluation within organizations, institutions, or other social contexts. Significantly, these informal methods of evaluation, which are typically subsumed in the cultural capital framework, are determined by the dominant group in a social context. This provides insight not only into the reproduction of inequality, but also the accumulative nature of inequality. This study’s participants clearly exemplify how whites, men, and those from a middle-class (or above) background will have an easier time grasping and traversing the informal corporate culture than blacks, women, and those from a working-class background. The former group, particularly white, college-educated men, typically enter the company at a higher rank, and then use their cultural capital and position within the corporate hierarchy (which is key for cultural capital activation) to advance upwards more quickly and to higher positions than their less privileged peers. In the process, their initial advantages are multiplied – hence, the accumulative nature of inequality. “To the victors go the spoils,” indeed.


There are three limitations common to the larger project that is more appropriate to address here. First, while Hays served as a tremendous research setting with many positives, the company employs an exceptionally low number of black men in professional positions (fewer than eight out of roughly 900 professional positions). I was able to talk with just two black male employees. Similarly, I would have liked to interview whiter, working-class employees at the company. Both of these issues limited my ability to fully analyze questions about race/gender/class intersectionality.

Second, this study might have benefited from a more thorough analysis of habitus. Having more information on my participants’ habitus might have provided insight into the ways in which they activated (or did not activate) their cultural capital in social contexts. But habitus can be extremely difficult to measure in this type of study. Research that fully considers habitus generally takes an ethnographical approach, where habitus is assessed by researchers who live with a family for a period of time (Lareau, 2003, 75) or a quantitative approach, where habitus is operationalized via several survey items (Dumais, 2002, 66). I hope to rectify this research in future efforts.

Third, the employment status of my informant changed and altered my planned strategy for exiting the field. Whereas my informant planned to leave the company during the course of this study, she has decided to remain at Hays. As a result, I feel somewhat restrained from offering more vivid, complete descriptions of individuals, their work-related situations, and the company itself. While I have endeavoured to protect the identity of my participants, as well as that of Hays itself, I fear that more detailed descriptions would endanger my promise of anonymity. On the other hand, my informant’s decision to remain with the company will provide further access to Hays for follow-up interviews and observations. In the face of the limitations noted here and in the previous chapters, it is important to reiterate that Hays is a progressive company that has been recognized nationally as a top place to work. Nearly every employee I interviewed or interacted with expressed their overall satisfaction with the company and their work environments. When participants spoke negatively about Hays, it was usually in terms of being frustrated that an otherwise positive workplace still had its issues. Notably, none of the study’s participants planned to leave the company in the near future. Thus, my findings might be more conservative than I would find in a less progressive company (such as companies in the software, legal, and banking industries at which I have worked or observed).

Policy Recommendations

Although I have little experience in making policy recommendations, I feel comfortable making four brief recommendations for Hays, based on my research (which would likely apply to similar corporations as well). First, upper-level managers need to recognize the importance of Hays’s informal culture, particularly as it relates to official efforts to improve diversity. While major companies emphasize formal methods of evaluation –Hays, for example, has a complex annual evaluation that encompasses ten areas of competency and rates employees on a 500-point scale – they generally do not explicitly recognize the importance of a company’s informal culture (some participants noted their frustration over scoring high on their annual evaluations while being repeatedly passed over for high-profile projects or promotions). Yet, as this study’s findings demonstrate, the informal culture is a key setting for the exchange of information, the making of impressions, and the broadening of networks. Hays’s upper managers seem genuine in their desire for greater workplace diversity, but also seem oblivious to how the white male dominated informal culture dooms much of the diversity push to failure. In fact, their official diversity efforts have not addressed the role of the informal culture at all. A greater awareness of its importance is a necessity for future diversity programs.

Second, Hays must incorporate a formal mentoring program. A senior executive observed how women and minorities often struggle when entering the company due to their lack of knowledge of the informal rules, observing that it is “sink or swim” for them. As noted earlier, women and blacks often suffer from a lack of mentorship, compared to their white male counterparts. Mentors can be significant for giving advice and guidance on how employees can successfully navigate an organization’s informal culture.

Third, if Hays is sincere about its efforts to increase racial diversity, it must make a serious effort to attract more high-quality minority candidates. Managers, both black and white, expressed their frustrations over the lack of quality minority candidates, especially in the face of the company’s stated calls for greater diversity. Hays require that every job opening above a certain level (essentially the lower end of middle management) must include at least one “diversity candidate” in the interview process. Yet, managers feel as if they are wasting their time because the company has not made the effort to attract qualified interviewees. This, too, dooms Hays’s diversity efforts to failure.

Last, Hays must establish a system of accountability and responsibility for their diversity efforts. Recent research indicates that organizations that include accountability and authority in their diversity efforts – via affirmative action plans, diversity taskforces, and managers responsible for tracking and managing diversity efforts – are the most effective for retaining women and blacks in their employment ranks (Kelly, 2006, 75). Without a system of responsibility and accountability in place, diversity training efforts aimed at reducing managerial bias and mentoring programs are far less effective. A genuine effort at increasing diversity at Hays must address all four of the recommendations noted here.

Future Research

The findings of this project suggest a wealth of future research questions, many of which have already been addressed in the last three chapters. I would like to expand upon two of them here. First, this study should be extended and replicated using both quantitative and qualitative approaches. A multi-city, multi-company survey would test this study’s questions in multiple corporate and geographic settings, and help explain if my findings are generalizable to a larger sample. Further ethnographic studies should attempt to document the valued forms of cultural capital in other types of companies – e.g., how would the cultural capital of a hip design firm in London compare to a large insurance company in ManchesterWould there be commonalities, if not in content, then at least in formIn-depth qualitative approaches could help answer these questions.

This study’s findings also suggest the value of extending cultural capital research with research on boundaries, which shows promise for the analysis of race and class inequality (Molnar, 2002, 75), and has been suggested for the examination of racial inequality at work (Vallas, 2003, 396). Research that investigates how sociocultural boundaries are drawn by race, gender, and class – and likewise, how race, gender, and class boundaries are affected by sociocultural interests – could provide insight into the reproduction of inequality, especially within organizations or institutions. This approach would be particularly helpful for studies of intersectionality, given that forms of culture may bond individuals across certain characteristics, while creating divisions among others. For example, sports may bond men across race and class, while alienating women in the process. Focusing on how cultural capital affects boundary creation would provide insight into such questions.

In closing, I am convinced that more research of this kind is vital. If sociology is to gain a greater understanding of race, gender, and class inequality, researchers must gain access to the institutions where disparities are so often reproduced, in hopes of observing the daily, interactional processes that house the mechanisms of inequality. We must learn more about how the dominant culture of institutions are formed, and provide greater answers on how the less privileged can resist or gain access to them. We must focus on structures while not losing sight of agency. And in the end, we must never forget that understanding and overcoming inequality is perhaps our discipline’s most important empirical task.


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Appendix A: Distribution of Participants

Free Essays

Purchasing power parity, theory of exchange rate determination.


The objective of this paper is to better understand one of the key concepts of real exchange rate determination and building blocks of macroeconomic model, ppp. The main reason to focus on this topic is due to the fact that most of the large companies are working beyond the national boundaries and are trying to expand their business at international levels, so it becomes vital for managers and investors while making international investment decisions to gauge the impact of fluctuation of consumer goods prices, tradable and non-tradable goods could have on the profitability of their businesses.Although the term “purchasing power parity” was coined as recently as 80 years ago (Cassel, 1918), it has much longer history in economics[1].PPP is generally attributed to Gustav Cassel’s writings in the 1920s, although its intellectual origins date back to the writings of the nineteenth-century British economist “David Ricardo”. Probably, it is the oldest theory of exchange rate determination.

In section 1 of this paper, I will define the concept of ppp, discuss the theory behind it, and elaborate its practical implications in real world development. The section 2 will clarifies the nuances between absolute ppp and relative ppp and tests of the validity of the ppp theory over the time period. The section 3 elaborates Why is more preferable to say that ppp holds in the long run than in the short run. The section 4 explains why ppp does not hold in the short run, what are the economic factors lies behind it in deviating ppp from actual exchange rate. It distinguishes between those factors which would prevent absolute ppp from holding, but would not necessarily prevent relative ppp from holding, and those which clearly prevent relative ppp too. It also explains those factors which would lead to ppp failing in the long run. In section 5, there are concluding remarks.


In thissection, I will define purchasing power parity by using the examples to elaborate how it works in the real world and discuss it how it relates to real exchange rates.


The purchasing power parity exchange rate is the exchange rate between two currencies’ that would equate the two relevant national price levels if expressed in common currency at that rate, so that ppp of a unit of one currency would be the same in both countries.The basic concept underlying ppp theory is that arbitrage forces will lead to the equalization of goods prices internationally, once the prices of goods are measured in same currency. As such theory represents an application of the ‘law of one price’[2].


The fundamental idea behind this theory is the law of one price.LOP[3] refers to identical products which are sold in different markets will sell in the same prices when expressed in terms of a common currency in the presence of competitive market structure and absence of transportation costs and other barriers to trade. Thus, it provides a framework to relate currency in one market (the domestic market) to currency in another market (foreign market).In algebraic form, LOP posits that for any good I: p

Free Essays

Is midlife the prime of life or time of crisis? Asses these claims with reference to theory and research.


This essay will explore the following aims; it will determine what is meant by midlife; identify some of the issues associated with the concept of midlife, evaluating evidence for and against some of the claims associated with this concept and finally it aims to identify some of the common difficulties of midlife.

Midlife is seen to be one of complexity with the ‘juxtaposition of peaks and valleys across the social, psychological and physical domains’ (Lachman, 2004). With the transition in to midlife come physical ailments, such as high blood pressure, high cholesterol and although these can be treated with medications, they do trigger distress as they signal ageing which is neither desirable nor valued in our culture. This can be seen to contribute to the concept of the ‘Midlife Crisis’. However, the psychological and social changes experienced in midlife are usually associated with positive changes. These may include increased wisdom and practical intelligence (Baltes et al., 1999), better emotional regulation (Magai & Halpern, 2001) or a strong sense of mastery (Lachman & Bertrand, 2001). This adds to the debate of whether midlife is the prime of life or the time of crisis?

One of the most common expectations of midlife is that there is a crisis. Rosenberg et al. (1999) identified the characteristics of a midlife crisis. These include the following; midlife only applies to males, it involves dramatic personality changes and life review, an increased introspection, a realisation of time passing and finally the mourning of lost opportunities. Similarly, recent research shows that major life events such as divorce or illnesses are the most common sources of crises, although these are not necessarily associated only with the midlife period (Lachman et al. 1994, Wethington et al. 2004). It has also been found that one third of the time a midlife crisis is described by events such as job loss, financial problems, or illness (Lachman & Bertrand 2001, Wethington et al. 2004), which supports Rosenberg’s characteristic of the mourning of lost opportunities. However, although events such as job loss, divorce and illnesses can occur at any time in adulthood, these events seem to be more prominent during the midlife period as maybe the midlife crisis is driven by a fear of impending death according to Jacques (1965). On the other hand, another explanation for adults experiencing a midlife crisis may be down to personality, which has been identified as a key factor predisposing some to experience crises at transition points throughout the life course. It has been found that individuals who are more neurotic are more likely to have a midlife crisis (Costa & McCrae 1980, Lachman & Bertrand 2001, Whitbourne & Connolly 1999).

Furthermore, turning points have been found to contribute or trigger a midlife crisis. Turning points are significant changes in the trajectory of life or an experience or realization that causes someone to reinterpret the past, similar to a midlife crisis (Clausen 1998, Rosenberg et al. 1999). Wethington et al. (2004) examined in what areas of life turning points occurred and whether they clustered in midlife. The most common turning points involved the work domain, usually a change in job or career. They were most likely to occur at midlife for men but earlier for women (Clausen 1990, Moen & Wethington 1999). Wethington et al (2004) claimed that entering the thirties may be more disruptive than turning 40. This seems to be consistent with the idea that a “quarter-life crisis,” can occur for those in their mid-twenties and early thirties as they struggle to find satisfaction in work and meaningful relationships (Robbins & Wilner 2001). Furthermore, the conceptual frameworks of midlife are based on Jung’s theory (Lachman & James, 1997). According to Jung (1971), the individuation process is a major goal of midlife. Individuation is the balancing of all aspects of the inner self. Jung (1971) stated that midlife must be approached with a different set of goals than earlier adulthood and the failure to deal with the psychological and physical changes in middle age could lead to difficulties and then to a midlife crisis.

Furthermore, it has been claimed that from a lifespan perspective, the dynamic nature of changes in the middle years can be represented as both gains and losses (Baltes 1987, Eichorn et al. 1981). The midlife experience is determined both biological factors, such as menopause for women or chronic illnesses for both males and females and it is also determined by cultural influences. Although midlife does not exist as a concept in all cultures (Shweder 1998). When life events such as divorce or chronic illnesses are experienced, the middle life adults are faced with finding ways to cope or compensate for the losses. The middle-aged adult may be frequently forced to balance the negative and positive aspects of relationships and other aspects of life. Although this may lead to increased stress, it may also serve as a training ground for emotion regulation in later life (Magai & Halpern 2001). This can be seen as a turning point in middle life and not a midlife crisis.

Furthermore, Neugarten & Datan (1974) found evidence that supports the notion that midlife is the prime of life. They found that midlife was a time of peak functioning in psychosocial competence. Other evidence suggesting that midlife is the prime of life come from key longitudinal studies on cognitive functioning, which have found that cognitive functioning are maintained or even improved in midlife (Eichorn et al. 1981, Hultsch et al. 1998, Schaie 1996). These include the pragmatic aspects of functioning, such as tacit knowledge (Baltes et al. 1999, Sternberg et al. 2001), that depend on experience. Although some aspects of cognitive functioning may show declines, the middle-aged adult typically has the resources and experiences to compensate for them (Miller & Lachman 2000). Furthermore, personality is prominent in deciding whether midlife is the prime of life. It has been found that the self plays a vital role in midlife as it serves as a resource for negotiating the physical changes and social stresses that may arise. According to Lachman & Firth (2004) no one is immune to the complexities of midlife, yet those who feel a sense of mastery and control are better able to meet the challenges head on and find effective strategies for reducing or dealing with stress.

Moreover, social relationships have been found to influence whether midlife is the prime of life or a time of crisis. Markus et al. (2004) states that positive relations with others, such as parents, spouse and offspring is the one major component of well-being at midlife. Social relations bring a major source of satisfaction and contribute to wellbeing and health in midlife, but also can be a source of stress (Rook 2003, Walen & Lachman 2000). Furthermore, the role of work is seen to be central during the middle years (Sterns & Huyck, 2001). An individual is seen to be defined by their work so a large part of their identity lies in their career. It has been found that cognitive capacity and intellectual flexibility can be affected by an individual’s work (Kohn & Schooler, 1978). The progression of career trajectories during midlife is diverse (Barnett 1997). Therefore, many individuals may have stable careers, whilst others may not and there is a higher chance of midlife adults may find it very difficult to find a job due to many factors such as skill and pay demands. Furthermore, health and physical changes can also influence whether midlife is a crisis or the prime of life. One of the major issues in midlife is that of reproduction, especially menopause for women. The median age of the last menstrual period is typically 50–52 years, although there is wide variation in the menopause experience (Avis 1999, Rossi 2004). Avis (1999) found that there is no evidence for a universal experience of distress associated with menopause. Research shows that the transition in to menopause is somewhat exaggerated as according to Avis (1999) it is possible that the association noted between depression and menopause is based on clinic/patient populations who self-select into treatment.

The claims about whether midlife is the prime of life or a time of crisis are quite unclear. The majority of people tend to free associate the word ‘crisis’ to the word ‘midlife’. This reflects a widespread cultural stereotype about the midlife period but not an accurate portrayal, as only a small percentage seems to experience a midlife crisis (Wethington et al. 2004). However, middle age is also associated with positive descriptors such as competent, responsible, knowledgeable, and powerful (Lachman et al. 1994). Therefore, although midlife is referred to as a crisis, it is also described as an age period with desirable characteristics. There is some empirical support for both of these views, as those in midlife may experience turbulence as well as success (Eichornet al. 1981). Midlife seems to be unique to every individual during the transition from adulthood to midlife.

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Free Essays

Analysis of Harold Hotelling’s Theory


Economists have long been concerned with the extraction of natural resources. This paper presents an evaluation or analysis of Harold Hotelling’s theory that asserts that the most socially and economically profitable extraction track of a non-renewable resource is one along which the price of the resource, determined by the marginal net revenue from the sale of the resource, increases at the rate of interest

The paper presents a model of the Hotelling rule and examines its applicability to real life phenomena. The paper finds that while the Hotelling theory had contributed to the economics of nonrenewable resources and the rise of the conservationism movement, the assumptions laid out by the theory are not applicable to the real world. In conclusion, the paper suggests the need to relax the assumptions in order to explain the real-world phenomena.


The efficient use of scarce natural resources, both renewable and non-renewable sources, has long been a concern of natural resource economics (Shogren 2000). For example, Adam Smith explored on the natural progress of opulence and suggested that for a country to achieve an optimum economic progress, it had to allocate capital to land, fisheries and mines (Barnett & Morse 1963).

In a similar vein, Ricardo explored on the significance of land quality on economic rent. Robert Malthus raised concern about the dangers of population growth, asserting that the increasing population was likely to preclude the endless progress towards a utopian society (Barnett & Morse 1963). Similarly, Jevons raised concern about the consequences of coal depletion on population growth (Shogren 2000). A feature shared by all these economists is their treatment of natural resources as a free factor of production. That is, they all treat natural resources as provided freely by nature.

But towards the beginning of the 21st century, a shift in mindset occurred as economists began treating natural resources as something more distinct than just a free factor of production (Shogren 2000). Theorists such as Hotelling and Gray particularly pointed out to the additional intertemporal cost of extracting natural resources (Shogren 2000). In this regard, this paper presents an evaluation or analysis of Harold Hotelling’s theory that asserts that the most socially and economically profitable extraction track of a non-renewable resource is one along which the price of the resource, determined by the marginal net revenue from the sale of the resource, increases at the rate of interest (Harold 1931).

Harold Hotelling’s theory

In 1931, Hotelling used differential calculus to derive the optimal extraction of a fixed resource over time (Bradley 2007). He began by recognizing the inadequacy of the standard economic analysis in the industry in which production was bound to decline (Bradley 2007). Hotelling then asserted that if the total resource base and capital investments were fixed and efficient extraction methods used, then the marginal net revenue of extraction of non-renewable resource would rise at the rate of interest over time (Hotelling 1931). This premium price was referred to as the ‘resource rent’ or rather the ‘hotelling rent’.

In other words, under a perfectively competitive market, the market price of a non-renewable resource minus the marginal costs must grow in tandem with the interest rate. As such, the price of the natural resource should increase with time, provided that the marginal costs are kept constant (Chakravorty et al. 2009)

Harold Hotelling’s theory postulated that the most socially and economically profitable extraction track of a non-renewable resource was one in which the price of the resource, determined by the marginal net revenue from the sale of the resource, increased at the rate of interest (Harold 1931). The theory thus proposed the time track of natural resource extraction that most increases the value of the resource reserve.

But at the time, his analysis was way ahead of time as mathematics had not yet been incorporated into economics. As a result, his seminal analysis was originally rejected for this reason. However, Hotelling’s rule later came to be known as the pillar of the theory of nonrenewable resource economics through its rich insight on the long-run behaviour of resource price and scarcity of extraction and its contribution to the rise of conservatism movement (Gaitan et al. 2007).

Modeling of the Hotelling rule

To illustrate the Hotelling rule, let us consider as basic model where in So denotes an economy’s total stock of resource and Rt denotes the total extraction at time t (Gaitan et al. 2007). The utility of consumption would be denoted by U(Rt). The objective is to maximize the marginal net revenue of extraction of the non-renewable resource. Assuming that the extraction is carried out with constant unit costs,

Then the optimal path of extraction of the natural resource would be found by the following equation

………………………………………………………………….. (i)

But the maximization must meet the condition

……………………………………………………………………………………. (ii)

Assuming that private and social discount rates are the same and that there are no externalities (Gaitan et al. 2007), then the solution to equation (i) and (ii) can be found using optimal control theory as shown below:

……………………………………………………. (iii)

But conditions require the optimal extraction path to fulfill the following relation (Gaitan et al. 2007),

……………………………………………………….. (iv)

The opportunity cost or rather the shadow price at time t, Yt, is in the present case constant. We thus have

Equation (iv) can thus be rewritten as follows:

…………………………………………………………………………….. (v)

And given that in a market economy, then it can be seen that equation (iv) reflects the Hotelling rule that the marginal price of the natural resource increases with increase in the rate of discount.

Hotteling’s predictions of a decline in non-renewable resources with time such as oil, minerals and forests led to demands for regulation of exploitation of such exhaustible assets (Rothband 2000). The selfish exploitation of natural resources at a rapid rate gave rise to the conservation movement (Rothband 2000). This theory has formed the basis of the conservationist movement and has been influential to the point that prohibitions against oil and mineral mining and deforestation in certain government lands have been justified on this ground (Hotelling 2007).

Criticism of Hotelling’s theory

An important point to emphasize in the Hotelling model is that the market price of non-renewable resources must increase with time, provided that costs remain time-invariant (Chakravorty et al. 2009). However, in reality such an increase in the price of non-renewable sources may not persist as many short-run factors such as regulation and speculation in commodity markets may come into play resulting in alternative phases of upward and downward price movements (Chakravorty et al. 2009).

For example, if the Kyoto Treaty was to impose a target of 450 PPM of carbon, energy prices would be expected to rise but fall soon after the constraint becomes binding (Chakravorty et al. 2009). But when there is a fall below the 450 ppm level, the prices are bound to rise again (Chakravorty et al. 2009). Such a cyclical behaviour in the prices of non-renewable resources is not covered under the Hotelling model.

As a result of such kind of price variations, Harold’s Hotelling theory has come under criticism. Economists have argued that Hotelling’s theoretical prediction of a rise in scarcity and relative prices of nonrenewable resources over time is not borne out of facts (Watkins 1992). For example, Krautkraemer (1998) argues that for the most part, Hotelling’s theoretical predictions have been inconsistent with empirical studies of non renewable resource prices and in situ values.

Over the past 100 years or so, there hasn’t been a persistent increase in the prices of nonrenewable resources (Krautkraemer 1998). Also, economic indicators do not provide evidence of an increase in scarcity of these resources (Krautkraemer 1998). Although the popuplar view among the general public is that exhaustion of non-renewable resources is progressing at a faster rate, this view is highly debatable. In fact, economic indicators have shown that there has been growth in nonrenewable resource supply as new deposits continue to be discovered and the extraction technology continues to progress (Krautkraemer 1998). This has been argued to mitigate the scarcity effect (Krautkraemer 1998).

But the above criticism may not necessarily hold as just like other economic analysis on this subject, Krautkramer’s analysis has been conducted at the global level (Wright & Czelusta 2002).Although it may seem appropriate to test Hotelling predictions at the global level, such analysis leaves open the possibility that the depletion may have been staved off at the global level, through the discovery new and underexplored territories (Wright & Czelusta 2002).

Nonetheless, the popular view that the world is likely run out of natural resources in the near future may not necessarily be true. If resources are considered to be scarce, then there is a higher likelihood of its real price rising (Braddley 2007). In the event of an increase in real price, producers are likely to be induced by the high prices to explore for more reserves resulting in an increase in resource stock (Braddley 2007). The lifetime measures of most resources can thus be assumed to remain constant over time

Another error that Hotelling made was linking his highly conditional analysis to the real world (Braddley 2007). Hotelling faulted laissez-faire for deviating from his derived optimality in extraction of non-renewable resources, stating that the extractive industries had discrepancies which resulted in wasteful forms of exploitation (Braddley 2007). He also argues that such wasteful forms of exploitation would have been regulated in the interest of the general public (Braddley 2007).

Whilst Hotelling was quick to recognize market failure, he failed to account for what is currently known as government failure (Braddley 2007). As can be seen with the long history of petroleum regulation in the US, government intervention has generally been lacking in information and has been highly problematic in practice (Adelman 1993). Only an omniscient planner would know the specifics of demand, supply, price, cost, interest rates, and entreprenurial alertness needed to arrive at an optimal extraction solution (Braddley 2007).

Role of logistics

Harold’s hotelling theory can be applied to the logistic industry. According to the hotelling theory, the most profitable extraction is one in which the price of the resource, determined by the marginal net revenue from sale of the resource, increases at the rate of interest. In this respect, to reduce on the marginal cost of extraction, it would require that an industry be located close to the extraction point. This would not only decrease the transport costs, but will also increase efficiency in the supply chain and logistics.

Logistics thus has an important role to play in determining the optimal extraction solution. The lower the transport costs, the more likely are the returns to scale. Whilst the transport costs are account for a small percentage of the total costs, the optimal extraction solution must also take into account the total logistics costs. Logistics have an impact on a firm’s optimal location behaviour and thus must be taken into account of when determining the optimal extraction solution of a natural resource.


In Summary, the Hotelling theory has contributed to the economics of nonrenewable resources. It has formed the conceptual and theoretical framework used by economists to model the supply and the prices of nonrenewable resources. More so, it has contributed to the conservationist movement. However, the Hotelling theory, though elegant, seem somewhat misplaced. The model points out to a rise in trajectory of net prices of non-renewable resources along with the rate of interest yet there is a lack of empirical evidence to back this pricing behaviour.

Moreover, the assumption of an increase in scarcity of non renewable resources is highly debatable. These assumptions seem not applicable to the real world. Perhaps, to explain the real-world phenomena, it would be helpful to relax these assumptions. For example, in order to explain the price of oil, it would be necessary to discard all assumptions of inevitable increase in price and the assumption of a fixed stock.


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Free Essays

The Theory of Institutionalisation and State Building


When looking at achieving political and economic stability through state building, it can be seen that this underlying concept of building the state and the institutions within it is the central theoretical issue for determining how Libya can gain success by largely focusing on institutional reform and stability. This element of the literature review will look specifically at utilising state institutions, i.e. state building, as a means of gaining economic success, for countries going through a period of reform, as is the case with Libya. This section of the literature review will firstly look at the link
between the theories of building institutions and achieving peacekeeping and political stability, before going on to discuss the more general theories on state building.

The Need for Institutional Development in Libya

Following the death of Gaddafi, the previous Libyan leader, the region entered into a potentially dynamic yet volatile period of reform where the general feeling both within the country and within neighbouring countries was that of elation and hope for the future. Nevertheless, the death of Gaddafi also created potential political unrest and the need to consider how the country should now be developed and how the institutions within the country could establish the foundations for the future. Prior to the death of its leader, there were concerns that Libya was going to find itself in an autocratic state, with a large amount of civil unrest (Call, and Cousens, 2008). Libya, however, is currently in the potentially interesting position where, in order to develop efficient stability, the country now needs to make use of the natural resources that it has and to create the appropriate level of stability for the future. More specifically, there is a challenge facing the country as to how it makes the most of the resources available to it, primarily from the oil sector, and how this can then be utilised in order to influence infrastructure and services within the region.

It is argued that the key challenges to achieving this is that the region currently has substantially underdeveloped political institutions, with a large degree of rationalisation across the country being dominated by oil companies. The oil industry is hugely influential in Libya, with estimations that 80% of government revenues come from the oil industry and oil accounts for 25% of its gross domestic product. With this in mind, it can be argued that, in Libya, the key challenge facing the government is to develop institutions in such a way that the government can make the most of its earnings from the oil industry, in a way that will create critical and economic stability, in the long run. This will entail not just supporting the oil industry, but also supporting the surrounding industries and public services, e.g. health and education (Crafts, 2000).

The underlying issue which is seen to be relevant here is that having an accountable government when they rely heavily on oil revenue is unlikely to happen. In Libya, for example, 80% of government revenue comes from the oil industry (Crafts, 2000), which immediately brings into question the ability of the government institutions to be swayed by public opinion. Moreover, where such heavy reliance is placed on economic industries, for example, in the oil industry, the institution is now arguably losing importance. Also, issues, e.g. climate and the collection of taxes have become heavily swayed by the demands of the oil industry, rather than the validity of the governmental institutions. Furthermore, it is noted that the current Libyan leaders are placing a heavy emphasis on ensuring freedom and democracy which is likely to be inherently linked to the strength of the institution. Yet, there is no guarantee that, without strong institutional reforms, this would not be the case in the future with different leaders.

Whenever a country has an important natural resource, it also has the potential to provide substantial revenue, and there are potential concerns over political unrest with the risk of coups, as experienced in Libya, in 1969. Interestingly, whilst the current euphoria surrounding the changing government has driven a push towards achieving democracy, it is clear that the position is potentially fragile. This means that establishing robust institutions within the state is seen as a crucial step to take, at this stage, in order to ensure that, even if there is a change of government in the future, democracy remains minimal. An example of how this has worked in other jurisdictions can be seen by looking at Norway. In the 1960s, Norway discovered that it had a substantial natural resource and worked hard to ensure that it did not suffer the same problems that other countries had, upon a similar discovery. Norway recognised that it needed to create an interaction between natural resource profits and political power, so that it would not suffer the same level of political unrest which had been experienced by other jurisdictions. In Norway, restrictions were placed on access to the oilfields and this immediately had the by-product of reducing the impact of currency appreciation (North, 1990). A certain amount of profit was setaside, from the outset, in order to ensure that funds were built up to improve infrastructure and to create new oil facilities (Delacroix, 1980). Crucially, Norway created a national resource fund which is also considered to be a government pension. The government can only access the interest of the funds, so that the government has a limited access to the natural resources. This required the government to continue to seek the individuals’ approval, rather than simply relying on the support of the oil industry to maintain power. Political institutions were established, in such a way that politicians were required to continue to consider the public at large. In this context, Norway did not suffer the same level of disruption as is felt in Libya. This also had the effect of continuing to encourage diversified industries and allowing other companies to be buoyant within the region and make the government itself a less attractive proposition for any takeover attempt. By having this national fund in place, Norway was able to ensure that it invested in infrastructure and prevented commercial entities from simply taking the profits for their own benefits. But, by allowing the government full access to the interest, it still has a degree of freedom, on the understanding that there is a specific requirement to maintain economic stability and this prevents the type of boom and bust attitude that could be very damaging (Daunton, 1998).

In order for this institution itself to be effective, there needs to be a degree of independence from government. Arguably, if it is possible for government institutions to gain access to the fund at any point, this would not then assist in providing the necessary economic stabilisation. Taking this into account, it would be argued that any national resource fund established in Libya would need to become its own independent and transparent entity, something which would require a reasonable degree of state building to offer the framework for this type of independent institution.

By pursuing the creation of institutions of this nature, it will naturally limit political economic power which can be difficult to achieve, as well as being difficult to maintain. More specifically, this type of institution would require the government to accept a reduction in its immediate economic return, in exchange for guaranteeing long-term stability, something which it may not benefit from, if it is long-term. The economyin Libya has experienced shrinkage, in recent times. This means that the temptation is to turn towards its natural resources to rebuild the economy quickly, thus creating institutions that would limit short term gain is likely to prove challenging, regardless of the merits of this type of approach for the long-term stability of the country.

Given the potential difficulty in encouraging these types of institutions to be formed, the research now focuses on where the initiative is likely to emerge from and whether the international community itself has any form of power to encourage this type of state building within Libya. There is some suggestion that direct control, for example, by the US Treasury which still controls $700 million worth of frozen assets from the prior political regime and the fact that Libya is still dependent on foreign aid, to a large extent. As such, the international community will have at least some say in the institutions that are likely to emerge (Cook, 1970).

Regardless of the way in which this is achieved and the level of pressure that the international community may place on the country, there is clear strength in the argument that institutions formed at this stage could be fundamental to establishing long-term stability throughout the country and to ensuring that future governments cannot reverse the good work undertaken.

Building Institutions – Importance with Peace Building

A highly informative definition of state building has just been put forward by Call and Cousens (2008). This definition states that it is the “actions undertaken by international or national actors to establish, reform, or strengthen the institutions of the state which may or may not contribute to peace building” (p.4). This link between building institutions within the state and achieving political and economic gains is potentially very interesting, in that it contributes to the research and is worthy of discussion in this regard, given the volatile position that Libya is currently in. As noted in the 2008 research by Call and Cousens, the theoretical shift has moved away from looking at social and economic relationships between the parties of the conflict and looking more towards ensuring that the state and its institutions are functioning in such a way that this building of institutions is a natural by-product. This was supported by Paris and Sisk (2009), where they noted that the building of institutions within the state should be viewed as a vital part of this building process and the way in which the institutions are developed and state relationships achieved.

State building through the use of institutions has been the focus of discussion in many research papers, with differing suggestions as to why this building is likely to be so high on the political agenda. Kahler (2009) argues that creating institutions within a state is likely to assist when it comes to dealing with humanitarianism and the increasing pressure being placed on states from across the world to behave in a certain manner. Secondly, research by Collier (2007) has indicated that state building is fundamental to long-term political and economic stability and that, in reality, creating political stability should happen at the outset of the recovery process, following the conflict, with a view to preventing future conflict. This is highly relevant to the case in Libya, where there is a degree of euphoria being experienced, at the end of the conflict. Yet, this is arguably the key point at which the agenda should be set, in order to prevent future instances and it is here that the foundations of these institutions should be laid out, without waiting for conflict to emerge. Finally, other researchers including Fukuyama, in 2004, have suggested that developing these types of institutions is a necessity, given the changing ways in which security threats are emerging, on an international basis, especially in the wake of the September 11 crisis. For this reason, it has been suggested that building state institutions is crucial to the agenda of the international community. It could also be argued that, as universal convergence increases, so does the need to have stability within individual states and, as such, institutional state building becomes a matter for the international community, as much as it does for the individual locations.

The Theory of Institutionalisation and State Building

It has already been mentioned that institutions can be formative in establishing a degree of governance and democracy within a country such as Libya. This raises the question as to whether there is any theoretical link between the concepts of establishing stability, both economically and politically, with the notion of using an institution as a means of achieving this end. As argued by Chandler, (2010), there is a new ‘institution first’ approach being taken in a modern economy which has led to an increase in the development of institutional economics as a set of theories in their own right. Although this is a relatively new area of research, many of the foundational theories can be seen to have existed back in the 1920s, where old-style institutional economics suggested that individuals will not always be able to act as rationally as predicted, due to the constraints placed on them when an institution arises. Whilst these theories did not look specifically at how institutions could establish economic stability in the wake of a crisis, they did look at the way in which the institution impacted upon decision-making, with a high degree of influence being placed on subjectivity within institutions.

According to North (1990), who was instrumental in developing this new area of institutional economics, there is a direct link between theories of institutions and economic capabilities. By taking on board this new approach, the traditional notion that the market is the perfect way in which resourcesshould be allocated is flawed. Instead, the markets should ideally be viewed as a means of training and encouraging certain social behaviours. Harris et al., (1995) contended that the market has, incomplete and asymmetric information which creates a reasonable degree of uncertainty when it comes to allocating resources. This establishes a transaction cost for every decision that is made; so, effective institutions can look towards reducing this cost by drawing upon the neoclassical economics theory that individuals will typically pursue the goal that is rational. Consequently, by maximising its own position, an institution can place constraints on the variety of options available to the individual, so that they are still behaving in a rational manner, but within the constraints of the institution.

The definition of an institution as put forward by North (1995) as “the humanly devised constraints that structure human interaction” p.23, introduced the idea that the institution can act as a means of reducing uncertainty, thus reducing potential transaction costs while making the overall market more efficient. Despite this, it was also argued by North that institutional change rarely happens immediately and, in fact, is more likely to be part of several smaller interactions and incremental changes. Crucially, it is the performance, as well as the indirect and direct consequences of the institution and their mechanism that would ultimately dictate how effective it is, when it comes to building a stake in creating an efficient market.

By looking at the above, it can be argued that there is a strong relational link between the notion that under-development of the market and the economy can be blamed on some form of institutional blockage. This suggestion that it is the institutional framework within a country that is most likely to lead to economic success was established by Bates, in 1995, who stated: “[a]n older generation, who had emphasised the importance of market failure in development economics, finds in the new institutionalism new justification for their interventionist beliefs. And a new generation, seeking a middle ground between the champions of the market and the defenders of the state, finds in the new institutionalism a justification for basing development efforts on community action and civic engagement.” P.27

It can be seen from looking at the theories of the state and the institutions within, that the current thinking is moving more towards the notion that the stateis changing in its role so that the relationship between the state and the markets are inter-linked, rather than being distinct. Modern theories indicate that it is accepted that the state is not opposing the way in which free markets work, but rather an important force that will enable the market to then create rules within which it operates. Essentially, not only does this suggest that the institutions of the state are in fact rule makers by which the markets will then operate, but it is also often the case that the boundaries break down between the state and the economics around them which can create blurred lines. The need to deal with these situations and recognise that they are interlinked, is the subject of considerable literature, in recent years, not least that of Pugh (2011). Recognising where there are economic failures within the state institution can often be a consequence of informal reactions against particular controls that may have emanated from the state institution, in the first place. It was noted in the research by Pugh that as state institutions become stronger, this can sometimes create greater corruption and those looking to behave in that way need to become more sophisticated and deliver new ways of behaving in a corrupt manner, which in itself manifests difficulties that the state then struggles to address.

Institutional Development = Good Governance?

Another area of the literature which is extremely important in the context of how institutional development commences in jurisdictions, such as Libya, in developing new systems is whether institutional development will automatically lead to good governance, where there is slightly more complexity within the arrangement. This is worthy of further discussion, most notably in terms of mapping out how institutional development could be used as a means of achieving strong governance.

International financial institutions, in particular, have focused heavily on the need to get the structure and governance of institutions correct as a means of ensuring stability and growth in the future. Furthermore, there is a body of research which is focusing specifically on the governance of institutions in the United States. This research argues that every country should work to set standards for their institutions, as this seems to be best practice, with these standards often being linked to those used by US organisations (Aron, 2000). Despite the fact that concepts of good governance have yet to be harmonised, on a global level, typical recommendations include such factors as ensuring a strong approach to bureaucracy of the judiciary, as well as the protection of personal rights, so that individuals are encouraged to develop new products and services. Transparency is also perceived to be vitally important within the public social welfare and labour institutions, to ensure that workers standards or other social elements are managed within states (Aron, 2000).

It is argued by individuals, such as Kapur & Webber (2000), that the international financial institutions are fundamental to the development of institutions and their use in order to improve economic sustainability, especially in developing regions like Libya. Although it was recognised in this research that international financial institutions offer a vitally important set of rules and government suggestions, it was also found that institutions in the developed countries, when placed as a requirement on the developing regions, can be too demanding and difficult to actually use on a practical level. The human resources and financing of these types of institutions cannot be beyond the developing country during the initial stage of development. Merely having institutional best practices in place is simply not practical. Indeed, it may even be the case that trying to establish financial institutions of this nature would go against social development within the region and could be so far against the norms and cultures of the countries concerned that they themselves would end up being a formative part of any conflict in the future. Whilst it is intended here that this argument is both relevant and has merit attached to it, it is still necessary to develop ideas as to which institutions should be established in which local region as well as it being necessary to look at institutional reform, in order to support a country that is likely to involve relatively rapidly. Consider, for example, the current situation in Libya where the region is recovering from economic collapse, the institutions will need to develop at a relatively rapid pace if the country is likely to undergo relatively sharp curves of recovery in a way that the more developed countries are likely to see steady improvement rather than rapid changes. All of this indicates that the use of institutions cannot be uniform across the globe (Kauffman et al., 1999).

As a result of this train of thought, it is unsurprising that a body of research has emerged suggesting that developing countries should simply wait for the institutions to evolve spontaneously. This is in order to ensure that the institutions being developed are in keeping with local conditions and demands and allowing spontaneous evolution is likely to be the best way of achieving this. In reality, there are often time limitations which require a slightly quicker response; so, simply allowing spontaneous evolution is not an appropriate method of institutional development, particularly in countries like Libya where there is a need for immediate reform and to provide foundations for long-term development.

Methods of Institutional Development

In order to understand the way in which institutional development can potentially impact on the opportunities for economic reform and the ways in which institutional development can be managed in a variety of different jurisdictions, both developed and developing. Interestingly, the issue of democracy and development of institutional reform has created discourse in a variety of jurisdictions, including those that are now perceived to be developed. Take, for example, the situation in France where voting was initially introduced for men only over the age of 30 who pay at least a minimum amount in taxes, meaning that voting was restricted to an extremely small portion of the 32 million population being able to vote and it took a prolonged period of time for this fundamental element of the political institutions to be dealt with in such a way that true democracy was perceived to be achieved. Similar examples can be seen elsewhere, with Germany also taking nearly a century between all men being allowed to vote and all men and women being able to vote (Uphan, 2000). Consequently, although it can be seen that political institutions have developed in many of these countries, this has not happened in a short period of time. This needs to be borne in mind when tackling issues within the developing regions and when looking at institutional reform which needs to be done over a much longer time horizon than may be seen as desirable when looking at countries such as Libya and the need to establish strong institutions, relatively rapidly, to navigate a post-conflict period.

A similar situation can be seen when looking at issues relating to bureaucracy and the judiciary. The judiciary, in particular, has been the subject of much debate in terms of how an institution should provide good governance. Having the judiciary as an independent institution is often seen as vitally important for the social and economic development of the country. Yet, it is cited by Upham (2000) that there are instances, for example, in Germany and Japan, whereby an entirely politically independent judiciary can create its own difficulties. This means that there needs to be an element of political control over it, in order to operate effectively.

It was suggested by Upham that the effectiveness of the judiciary as an institution depends not only on its independence from the political arena, but also on a much broader variety of factors, including the level of professionalism shown by members of the judiciary. Although the research by Brogan (1985) focused on the judiciary as an institution and how it should establish itself for true effectiveness, many of these factors are seen to be relevant to the general issue of institutional development. This indicates that, when looking at institutional development as a whole, several factors need to be drawn upon and not simply whether or not it is politically independent and able to take a stable, robust stance, but whether it has the internal professional mechanism available to undertake these activities, in the first place (Brogan, 1985).

Financial Institutions

Taking on board this background understanding, the next stage of the analysis is to consider the role of the financial institution. It is intended here that, in Libya, financial institutions are likely to be a fundamental part of economic development and will receive a large amount of political attention. For this reason, financial institutions and the nature of their impact warrant their own discussion. When looking at the more developed countries and how they currently utilise financial institutions, it can be seen that the banks themselves became fashionable lending institutions relatively late on, typically in the 20th century (Lamoreaux, 1994). In the early years, banks, dating back to the 18th century were typically run as self-help associations, when merchants were able to offer credit to each other rather than being a banking system itself. Recognised institutions took a relatively long period of time to develop with the UK only achieving financial integration in the 1920s, suggesting that financial institutions are somewhat behind many of the economic developments elsewhere, for instance in the judiciary and democratic state institutions (Lamoreaux, 1994).

As well as being relatively slow to develop, banking institutions have also experienced difficulties when it comes to gaining robust banking regulations and this has been a perceived weakness within these financial institutions for many countries, not least the UK and the US in the wake of the recent financial crisis. The role of the central bank has become fundamental to the development of financial institutions and offers a strong potential route for countries like Libya when looking to create a central institution that can then support the development of the surrounding institutions (Lamoreaux, 1994).

The Central Bank of England was established back in 1694 and became an institution viewed as the lender of last resort, during the 18th century. Therefore, although this institution has a long history, it only became a central institution capable of having a dramatic economic impact on the country in its entirety in relatively recent years (Lamoreaux, 1994). Arguably, the Central Bank institution took on a powerful position when it had the monopoly over note issuing although this was several decades, if not centuries, after the banks establishment in the first place in most countries; for example, in the UK, the Central Bank was established in 1694, but only gained the monopoly of issuing notes in 1844 (Crafts, 2000).

This suggests that the institution itself is not a critical factor, but rather the powers and opportunities that are given to the institution. Arguably, it is the structure of regulation which actually has the definitive argument as to whether or not the institution is an important development factor. Therefore, it can be stated that it is the legislation surrounding institutions which ultimately determines the effectiveness when it comes to achieving economic stability (Carnes, 2000). As well as the Central Bank, public financial institutions have also emerged, over the years, which play an important role when dealing with recovery and development within a particular country such as Libya.

The developed countries during their history have also had periods of hardship, e.g. through lack of monetary capability; for example, they had a limited power to tax individuals, thus making it difficult for the government to be effective when it comes to making monetary decisions (Larsson, 1993).

Social Welfare Institutions

Where social welfare and economic developments are concerned, there is clearly a potential argument for a link between social welfare institutions and the likely increase basic stability in the country as a whole, especially where individuals find themselves in the position of being unable to look after their own basic needs. Although their remains a substantial debate about the role of social welfare institutions which go far beyond the discussion in this paper, the basic notion that social welfare institutions will create a level of stability to prevent any group of individuals failing to have their basic needs met and thus create a situation whereby they may turn to criminal behaviour. The link between having a balanced social institutions and a well-balanced nation has far-reaching consequences, particularly when these are linked to political and economic reform, for example where the institution is refusing to let political democracy take place and restricting voting rights, based on financial assets (Pierson, 1998).

Recognising the role that social welfare institutions play has been central to many research projects, most notably the research undertaken by Pierson. The research by Pierson suggests that by establishing regulations in terms of how the social welfare institutions operate will have a direct impact on other institutions and, crucially on the financial stability of the region. As noted by Marx, (1976), the regulation of working practices, e.g. placing a maximum working hours for adults and children, can have a dramatic impact on the operation of the economy, as a whole. Merely being aware of the link between financial institutions and other institutions, as well as general nexus of institutions, in terms of how the markets within the state then operate is as important as looking at the minutiae of the management of financial institutions, alone.


By looking at the various avenues of research which deal specifically with institutional needs or, indeed, with more general issues of economic development and stability, one factor which has become very apparent is that regulatory standards on a global level will simply not be effective for achieving strong economic development. Furthermore, researchers have also indicated that the theories of institutional operations indicate that it is the combined efforts of all of the institutions which are likely to have the biggest impact on the overall economic and social stability of a region or country. When looking at issues faced by Libya, as well as the way in which other jurisdictions have dealt with issues, the importance of the institution has becomes even more obvious. What remains unclear is just how institutional development should be managed, because simply to allow institutions to develop organically is unlikely to present a suitable solution, in a country like Libya which has undergone a dramatic period of difficulty, in recent years.

The key learning from this element of the literature review is that different institutions have different roles to play and it is their combined effect that needs to be explored in more detail when looking to develop regulatory policies, as this will ultimately allow the underlying aims of the region to be achieved. Regulation and management of these institutions is almost as crucial as the institution itself, and it is this combination of factors which needs to be borne in mind when looking at how institutional development is likely to influence the Libyan state.


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Free Essays

Critically Evaluate and Discuss the Contribution of Clusters Theory in International Business Management


International trade is not a novel phenomenon. For centuries, traders and merchants have wandered across national and regional boundaries to conduct international trade. However, it has never been conducted with such an enormity or with such an impact on national economies, firms and individuals, like it has been done in the past few years (Czinkota et. al. 2005). The widespread trend of globalization is establishing a new world order, in which localized firms, industries and economies are being swept away by the fast moving international corporations. Despite the widespread trend of globalization, some researchers content that local economies and industries will be able to retain their importance and remain competitive through the formation of industrial clusters. The formation of clusters will enable local industries to attain specialization in specific business areas, and subsequently gain competitive advantage. The focus of this essay is to critically evaluate the contribution of cluster theory in international business management.

Globalization and the International Business Management

The innate characteristic of globalization i.e. the insignificance of geographical boundaries and national borders for conducting trade, has enabled companies to source their capital, goods, information, and technology from around the world, often with the ease of a mouse click (Porter, 1998) . Laudon (2010) describes a Hewlett-Packard (HP) Laptop’s path to market. The laptop computer comprises of components and involves services that are sourced from across the globe. For example its idea and initial design came from United States. Its graphic’s processor is designed in Canada and made in Taiwan. Its LCD display and several integrated chips come from Taiwan and South Korea. Its hard disc drive is manufactured in Japan. China, Japan, Singapore and South Korea and the US all supply several other parts of the machine until it is finally assembled in China (see fig.1) (Laudon, 2010 p. 555). This example illustrates that the open global markets and faster means of transportation and communication have moderated the role of local competition. As Michael Porter contends that globalization has annulled all those sources of competitive advantages that can be efficiently sourced by networked corporation through international trade. With the ever expanding network of a global supply chain, the conventional wisdom about the way in which nations and local industries compete needs to be revamped (Porter, 1998).

Fig.1: An HP Laptop’s Path to Market

(Source: Laudon, 2010 p.555)

Porter’s argues that competition in the modern business world is much more dynamic. He proposes that despite the growing insignificance of geographical distance, location is still valued when it comes to specialized industrial clusters. For instance, the likelihood of finding a top notch mutual fund service in Boston is much higher compared to any other place in the world. Similar is the case in finding a high-performance auto company in South Germany or a fashion shoes company in Italy. All these businesses are industrial clusters operating within a region. Today’s global economy is comprised of ‘clusters’, which are critical masses of businesses whose activities complement each other. The agglomeration of these businesses collectively gains an unusual competitive advantage in particular business fields (Porter, 1998). The Institute for Strategy and Competitiveness defines clusters as “geographic concentrations of interconnected companies, specialized suppliers, service providers, and associated institutions in a particular field that are present in a nation or region” (ISC, 2012). For example, the presence of full range of highly sophisticated financial services within the city of New York is an industrial cluster.

Macroeconomic Stabilization and Cluster

It is widely acknowledged that clusters enhance employment level much quickly than the same industry in the economy having limited presence within a cluster. According to Delgado, Porter and Stern (2011), a cluster enables greater agglomeration of an economy by attracting a large number of skilled employees, specialized suppliers and buyers, connected industries and strong local competition. Through the establishment of clusters, an economy is able to attract the best talent of a particular field in terms of entrepreneurs and individuals with ideas (Porter, 1998). Propinquity of associated industrial activity also reduces transaction costs. Moreover, clusters enhance accumulation of information through research and development in specialized fields and enhance knowledge transfers while speeding up the flow of information. Clusters also influence the facilitation of specialized training and infrastructure development through the provision of educational programs and quality of certification organizations (Delgado et. al, 2011).

These factors combine together to reinforce complementarities across related industries. Complementarities refer to a host of connections amongst members within a cluster. Through the formation of these connections, the “cluster members result in a whole greater than the sum of its parts.”(Porter, 1998) For instance, in a typical tourism cluster, it is the sum of the appeal of a primary attraction and the efficiencies of related businesses such as hotels, transportation, restaurants and shopping areas that result in a superior tourist’s experience. All these businesses complement each other and are mutually dependant, i.e. good performance of a business within a cluster boosts the success of others.

Importance of Cluster for Competition

According to Porter (1998), competition within the modern business world depends upon productivity. The sheer size of an individual firm and its access to goods no longer serves as a sustainable competitive advantage as it is nullified by the advent of globalization. Clusters have a significant impact upon competition as they increase the productivity of industries through the provision of complementarities. They also drive the trend and rapidity of innovation which is important for future productivity. Clusters also stimulate the formation of new complementary businesses which broadens and strengthens the cluster itself.

In order to gain a more pragmatic view to the cluster theory, we now consider the previous example of the HP’s Laptop computer. As it portrays the prevailing phenomenon of globalization and international trade, it also signifies the importance of industrial clusters. HP sourced various components of its Laptops from different location across the globe. Its choice for sourcing its components from those locations was determined by the high efficiency and productivity of those economies in producing particular goods. Thus it was the presence of industrial clusters in Japan, China, Taiwan, Singapore, and South Korea, that attracted specialized global buyers i.e. HP towards them. It signifies the role of productive industrial clusters in international trade, and how they sustain local competitiveness.


Businesses within a cluster share common technologies, knowledge, inputs, and cluster-specific institutions, thus they benefit from complementarities. The presence of a cluster enhances national, industrial and firm level growth by increasing the efficiency of an industry, driving productivity, and creating employment opportunities. It also drives expansion, attracts talent, and fosters innovation (Porter, 1990; 2003). It is through the formation of such industrial clusters that an economy uses its available resources at the most optimal level rendering the optimal development of the national economy.


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Porter. E.M (1998) “Cluster and the New Economics of Competition”. Harvard Business Review November-December 1998 pp 77-90

Porter, M.E., (2003), “The Economic Performance of Regions,” Regional Studies, 37, pp. 549-578.

Free Essays

‘Rupert Murdoch’s looming hunger for power is a threat to democracy’ (porter). Chilling insight or conspiracy theory?’


It will forever be seen as the moment when the sun set on the Murdoch empire and when democracy in Britain, at the eleventh hour, avoided committing suicide and stood proudly again. The sight of the House of Commons unanimously rejecting Rupert Murdoch and News International, in whose thrall they had been since the days of Thatcher (Campbell, 2008, p.410) was both commendable and contemptible. That it took so long and journalism which plumbed new depths of depravity for it to resurface is a stain on the British democratic body but, whatever is said, allowing News International to ultimately take over BskyB would have put Murdoch in an unassailable position in the UK and for that Parliament is to be commended. His demise has been swift and it was democracy which acted to sever his arteries of power and deny him a prize which many thought should have been denied him by a more robust application of European competition laws (Feintuck & Varney, 2006, p.95). Indeed the coalition government was, outrageously, ready to waive through the bid without referral to the competition commission and the bid would have followed the example of the Times and the Sunday Times which were acquired by Murdoch in 1981 without being similarly referred to the Monopolies and Mergers Commission as it was then known (Greenslade, 2003, p.377). The bid has now been dropped altogether. As a FT editorial observed the threat to media plurality was, and remains, real and ultimately it was the people who rejected the idea:

“Merging the two [broadcast and print] would create a behemoth with the potential to dominate the media scene, locking out challengers and stifling the diversity of debate.” (FT Editorial March 3rd 2011)

Aristotle once observed: “In a democracy the poor will have more power than the rich, because there are more of them, and the will of the majority is supreme.” (Aristotle, 1996, p.154). The House of Commons reaction to the phone hacking scandal was perceived to be democracy at its finest, a reaffirmation of the will of the majority which had become, as Porter (2010) would argue, under threat from a media baron who has had the police, government and parliament at his mercy in Britain ever since he first came to the UK (Curran & Seaton: 1997, p.366). Subsequent events to Porter’s observation, made before the phone hacking scandal reached its nadir when the phone of tragic murder victim Milly Dowler was hacked to delete voicemail messages which gave false hope to a grieving family and brought the fury of a nation, and crucially of a resurrected Parliament, to bear on News International, would at first glance seem to validate his claims, in 2010 (Porter, 2010), that Murdoch’s empire is a threat to British democracy. Democracy in the UK has not been rediscovered overnight and it is arguable that this episode is but a sign of a deeper malaise. Porter’s analysis was clearly a chilling insight but his article is built upon foundations which are shaky and which verge on the conspiratorial. The separation of powers doctrine, first proposed by Montesqieu (Richter, 1977, p.91), enables democracy and to the executive, legislature and judiciary we can add the fourth estate, as Thomas Carlyle observed, the press, which acts as a watchdog upon the others (Robertson & Nicol, 2003, p.3). This essay will, structured along the lines of the separation of powers, argue that Poter’s assertions that Murdoch’s empire “makes and breaks governments” is misjudged and that the current reaction to the phone hacking scandal demonstrates that he is, in fact, ultimately accountable to Parliament: the threat to democracy has diminished but only temporarily. In part 1 then this essay will look at the “fourth estate” and its relationship with democracy before chapter 2 reflects on the executive, legislature and judiciary branches and the threat of Murdoch. As an editorial in the Guardian observed, there has been a lot of soul searching in the last few months and the scandal at the News of the World has rocked every democratic institution weaned on Murdoch’s power:

“No well-functioning democracy should allow one man to frame its window on the world. But then the institutions of British democracy have hardly been functioning well of late in relation to Mr Murdoch. The fourth estate of the free press, in which we are of course one interested party, is one of those institutions. It should check and balance political power from the outside, while itself being held in check by the ordinary processes of the criminal law.” (Guardian editorial, June 2011)

Part 1: The fourth estate and Rupert Murdoch

The notion of the “fourth estate” has been around for about 200 years and rests upon the idea that a government unchecked by a vigilant media is liable to exceed its bounds (Curran & Seaton, 1997, p.49). This role, taken on by the media, in effect legitimises democracy, at least in classical liberal theory, with the press able to enlighten the electorate to make an informed decision during an election, protect and promote human rights and social tolerance and, of most importance, to ensure that governments are brought to account and abuses of power made transparent (Pilger, 2004, p.xv). In reality however this romanticised notion of a newspaper is a myth which the News of the World shattered conclusively with the original defence of the wrongdoing being attributable to a “rogue reporter” exposed as the last refuge of a newspaper which had grown accustomed to paying private detectives to obtain private medical records and bribing police. Thus the press can just as readily play a less noble role as the following observation by Sheila Coronel demonstrates:

“The media, however, can play antidemocratic roles as well. They can sow fear, division and violence. Instead of promoting democracy, they can contribute to democratic decay.” (Coronel, 2003, p.3)

There has been a need for self-regulation to right the imbalance caused by unnecessarily intrusive reporting. The liberal theory of press freedom appeals to a self-righting process first advocated by John Milton in the Aeropagitica who argued for freedom of expression in a marketplace of ideas where bad ideas would wither and good ideas would ultimately prosper (Siebert, 1956, p.44). Evolving away from an authoritarian past where the Crown controlled the press England moved towards libertarianism in the 18th century (ibid) and ultimately in 1953 established a body which was ran by the industry to regulate the press (Royal Commission on the Press, 1974, p.1). It was Sir David Calcutt’s Royal Commission into the press that ultimately rejected the predecessor, the Press Council, by proposing the Press Complaint Commission’s formation (Mcnair, 1997, p.186, Curran & Seaton, 1997, p.368, Allen, 1999, p.181). One of the effects of the phone hacking scandal involving the News of the World has been a call to abolish the Press Complaints Commission and introduce privacy laws: a move which will could endanger freedom of expression and logically democracy itself (Meyer, 2006) although the PCC is not without weakness it is the least worst option (Coad, 2009). More directly Murdoch’s newspapers have been reflections of the proprietor’s political instincts in being Conservative, supportive of the private sector, anti-immigration and ‘fun’: bastions of sleaze, sensationalism and corruption which have driven standards ever downward and even debased the once-mighty Times, the traditional newspaper of record, which Max Hastings decries as a travesty (Hastings, 2002, foreword xvi). Celebrity gossip and sensational stories are the staple diet of Murdoch tabloids and, with the proprietor treating his newspapers like, as Hastings memorably puts it, “private rifle ranges” (Hastings, 2002, foreword xvi) to endorse his political viewpoint, coupled with the kind of persistent editorial interference which prompted Harold Evans to resign as editor of the Times in 1982 (ibid, xvi), it is no stretch to say that the watchdog role of the press is lost on his newspapers who have too often supped with the devils at Westminster and used stories as political weapons rather than beacons of the truth (Greenslade, 2002, p.212). His huge share of the newspaper and broadcasting market also undermines media plurality and he was edging ever closer to a monopoly which would have included 100% of BskyB until the hacking scandal forced him to back down. As things stand his share of just below 40% of the UK newspaper market (Guardian editorial, June 30th 2011) is not befitting of a modern democracy and his thirst for power is clearly a threat as more diversity leads to enlightened debate. For how can a public fed on stories of celebrity gossip, biased political stories and dubiously obtained information which is itself criminal and sometimes xenophobic ever make the informed decisions which nurture a democracyWith the fall of the News of the World and the neutering of the once-mighty oracle The Times Murdoch has succeeded in sabotaging the fourth estate from within.

Part 2: Executive, legislature and judiciary

Murdoch’s empire has reached into the very heart of Westminster and for successive governments he was the key to victory, encapsulated by the pithy headline following Major’s victory over Neil Kinnock: “It was the Sun wot won it” (Young, 1997). Much is made of Margaret Thatcher allowing Rupert Murdoch to purchase the Times and the Sunday Times without referral to the MMC by bending the rules in his favour (Campbell, 2008, p.409), Tony Blair’s trip to Australia to play court to him in exchange for what was perceived to be decisive support in the 1997 election (Young, 1997) and now David Cameron’s hiring of the former NoW editor Andy Coulsen as press officer has again raised the spectre of Rupert Murdoch being too close to the ruling party (Jenkins, 2011). Details are now slipping out of endless meetings between the chancellor and Murdoch prior to the BskyB bid, extravagant cocktail parties for the great and the good and bizarre stories of backdoor visits and cups of tea (ibid). The colour of the political chameleon is, as David Cameron pointed out in the Commons recently, irrelevant as “the clock stopped on his watch” and indeed all parties have been in bed with, or frightened of, Murdoch which is an affront to democracy and a poisoning of the well of debate (ibid). Poter misjudges the power of Rupert Murdoch, however, by saying that he “makes and breaks governments” (Poter, 2010). Although many in the House of Commons were afraid of him it cannot be said that the support of the Murdoch newspapers decides elections and at best his support would garner a few extra votes. Stephen Glover, writing in the Independent, observes in relation to the 2010 election that Cameron’s advisors greatly exaggerated the power of the Murdoch press (Glover, 25th July 2011)

Proprietors are often given to exaggerating the impact of their newspapers: Max Hastings recalls Conrad Black having similar notions but ultimately the ability of newspapers and the media to shape the political world is limited (Hastings, 2002, p.303). Poter’s misjudgement was the establishment’s misjudgement, however, and for that reason his observations gain strength. He also asserts that Parliament has been unable to stand up to him. This observation was true at least until the phone hacking scandal inquiry and the miraculous sight of MPs and government ministers abandoning the Murdoch empire (House of Commons Home Affairs Committee, 2011). Although it is tempting to say that democracy has returned, this is perhaps just a glimpse of what should be and the stories of police officers being bribed on an industrial scale is reprehensible. A wider malaise is at work here and one which, but for the News of the World overstepping the mark, would have been well on the way to democratic suicide. As the Guardian points out the path to 2011 has been a tortuous one:

“After years of denials, supine Press Complaints Commission oversight and an odd reticence on the part of the police, the truth has very slowly asserted its power in the phone-hacking scandal.” (Guardian editorial, 30th June 2011)


Of the institutions of democracy it is only the judiciary who appear to have emerged unscathed. The systemic bribing of police undermines this claim to some extent however and the battles between Parliament and the Supreme Court over prisoner’s voting rights demonstrate the tensions. What is clear is that the prophecy that every democracy commits suicide eventually appears to be coming to fruition and although Poter’s article is a chilling insight it is an insight into a problem with far greater roots than Rupert Murdoch’s admittedly consuming lust for power. News International has now been permanently handicapped by a temporary reassertion of parliamentary democracy in action but the threat to democracy in putting forth a right-wing agenda which destabilises debate, covering news stories which trivialise and sensationalise news, compromising editorial independence, obtaining information by criminal means and by being perceived to be able to influence the outcome of elections is very real. The watchdog role of the press as the fourth estate, already diminished by the demise of the Times and investigative journalism, would cease to exist if Murdoch’s power went unchecked and this would be the greatest threat to democracy of all, a threat which has not disappeared following the phone hacking scandal.



Coad, Jonathan (2009) ‘The PCC: Weak, Secretive and Biased’ in British Journalism Review vol.20 issue 13 pp 13-20 on p.14

Coronel, Sheila S. (2003) The Role of Media in Deepening Democracy. Philippine Centre for Investigative Journalism available online at:

Meyer, Christopher (2006) ‘We Know Better Than the Courts’ in British Journalism Review vol 17 issue 3 pp 27-32


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Mcnair, Brian (1994) News and Journalism in the UK Routledge: London and New York (4th edition)

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Porter, Henry (2010) ‘Rupert Murdoch’s hunger for power is a looming threat to democracy’ Guardian online retrieved on 1st July 2011 and available from:

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Free Essays

The Upstream-Downstream Hypothesis And Corporate International Diversification Theory


The study of multinationals has received much attention in literature. Certainly, it has become a subject of controversy among the scholars. On the one hand, some researchers including Reeb & Mansi (2001), Chkir & Cosset (1999) and Chen et al. (1997) point out to the diversification benefits to multinationals due to risk reduction inherent in operations within imperfectly correlated markets. While on the other hand, the more recent research by Reeb, Kwok & Baek (1998) and Bartove, Bodnar & Kaul (1996) notes a positive relationship between internationalization and high debtholder monitoring costs.Against this backdrop, this analysis suggest an alternative upstream-downstream hypothesis whereby the overall effect of internationalization on the risk and leverage of multinationals is dependent on the market conditions of the host and target country. The paper examines the theory that multinationals should have lower risk and higher leverage than non-multinationals and explains the difference between this theory and the upstream-downstream hypothesis. Also included in this analysis, is an explanation for the documented puzzle that multinationals tend to have lower levels of long-term debt but more use of short-term debt than non-multinational firms.


The study of multinationals has received much attention in literature. Over the last few decades, it has become a subject of controversy among the scholars. It has generated more heat than light with some suggesting diversification benefits to multinationals, while others point out to the positive relation between a firm risk and internationalization. Against this backdrop, we suggest an alternative upstream-downstream hypothesis whereby the overall effect of internationalization on the risk and leverage of multinationals is dependent on the market conditions of the host and target country.

Previous researchers including Reeb, Mansi & Alee (2001), Chkir & Cosset (2001) and Chen et al. (1997) found a positive relationship between internationalization and debt ratio due to risk reduction inherent in operations within imperfectly correlated markets. On the contrary, Burgman (1996) and Lee & kwok (1988) demonstrated a negative relationship between internationalization and debt ratio that results from increased risks due to agency costs, and political and exchange rate risks.

Similarly, while the findings obtained from Initial research by Hughes, Logue & Sweeny (1975) are consistent with the diversification benefits, the more recent research by Reeb, Kwok & Baek (1998) and Bartove, Bodnar & Kaul (1996) found a positive association between the risk of a firm and internationalization. Additionally, while focusing on leverage, Burgman (1996) noted that internalization may result in higher debtholder monitoring costs and thus significantly reducing the levels of leverage. Consistent with greater agency costs, Lee & Kwok (1988) and Chen et al. (1997) found that the domestic corporations would in general tend to have significantly higher debt ratios relative to the MNCs. Clearly, from what can be discerned, the study of internationalization of firms has become a controversial issue among scholars.

This analysis is thus an attempt to shed light on the above by exploring on both international diversification benefits and the upstream downstream hypothesis. We begin out analysis by examining the upstream and downstream hypothesis


Kwok & Reeb (2000) argue that there is an increase in risk and a reduction in debt usage when firms from stable economies make investments internationally (downstream). Conversely, the risk is reduced and debt usage increased when firms from weaker economies make investments internationally (upstream). It therefore follows that the overall effect of internationalization on firm’s leverage and risk is dependent on the characteristics of the home and target economy.

The firms’ behaviour towards international activity or rather the overall effect of internalization on firms leverage and risk is dependent upon whether the firm is moving upstream or downstream (Kwok & Reeb 2000). For example, for multinationals based in the United States (which is among the most stable economies in the world), their overseas expansion tend to exacerbate risk. This increase in risk may not be totally offset by the risk reduction due to international diversification and thus resulting in a downward adjustment of the firms’ leverage.

On the converse, for firms in the emerging economies, investment internationally in the developed economies leads to a reduction in corporate risk and subsequently an upward adjustment of leverage.


The upstream downstream argument can be extended to the systematic risk area. Multinationals, by definition, have their operations diversified into various countries. The systematic risk of an ith operation can therefore be defined as ?i (Reeb, Mansi & Allee 2001).

?i = (?im ?i)/ ?m

Where ?im represents the correlation between the market return and firm’s return

?i represents the firm’s return standard deviation

?m refers to the market return’s standard deviation

An ith operation is thus influenced by the nature of the business operation and the economic system of the country where the operation takes place (Reeb, D.M., S.A. Mansi and J.M. Allee, 2001). Take for example a project that is located in a more volatile emerging economy. This project would tend to have a higher value of total risk, ?i. Unless there is an offset of the high standard deviation by a lower correlation coefficient ?im, the systematic risk ?i would be higher.

On the converse a project that is located in a more stable economy tend to have a lower value of its total risk, ?i. Similarly, unless there is a substantially higher value of correlation efficient ?im, the systematic risk ?i tend to be lower.

For any multinational, its overall systematic risk is simply the weighted average of the betas (?i) of all its business operations within the various countries (Reeb, Mansi & Allee, 2001).

?mnc = ? Wi ?i

Where Wi represents a fraction of the total capital invested by the MNC in the ith country’s operation.

Therefore, for a firm that is headquartered in a more stable economy, expansion of its operations into a less stable market would increase the overall beta (?mnc) of the firm, due to potentially greater environmental risk for the new operation (Reeb, Mansi & Allee, 2001). Conversely, when a firm that is headquartered in an emerging economy expands its direct investments into a developed economy, its overall beta may decrease.

The ability to arbitrage markets may as well differ due to the economic differences of the home and target economies (Reeb & Kwok 2000). Take for example, the shift of income. The ability to have the income shifted among different tax regimes depends on the degree of sophistication of the host and target government (Reeb & Kwok 2000). Firms that are based in economies which are more developed and with greater resources, tend to have fewer opportunities for shifting their income (Reeb & Kwok 2000).

In contrast, firms that are based in the volatile emerging economies tend to have different opportunities to arbitrage labour and capital markets (Reeb & Kwok 2000). That is, firms that are moving upstream have more opportunities to hire employees with different sets of skills and experience than those that are moving downstream. This implies that firms’ behaviour towards international activity varies with the characteristics of the home and target market. Therefore, the overall effect of internationalization on the firms risk and leverage depends on whether the firm is moving upstream or downstream.


Aligning with the above, the association between internationalization and firm risk suggests a leverage effect as well. Traditional capital structure theory posits that as firm risk increases the debt utilization decreases (Reeb & Kwok 2000). Hence, for firms that are based in the more volatile emerging economies, their overseas expansion may lead to more debt utilization, as they may gain access to debt that was not previously available. The converse is also true.

This view of the leverage aspect of upstream-downstream hypothesis suggests a negative association between leverage and internationalization for firms based in the more developed economies and vice versa (Reeb & Kwok 2000). That is, firms that are moving upstream tend to have a positive relationship between the firms leverage and internationalization while those moving downstream tend to have a negative association. This implies that the overall effect of internationalization on the leverage of multinationals is equally dependent on the home and target market conditions.

This next section will explore on the corporate diversification theory and the effect of agency costs and internal capital markets on the firms’ leverage. In particular, the agency conflicts and efficiency of internal capital markets will be used in providing an explanation as to why multinationals tend to have lower levels of long-term debt but more use of short-term debt than non-multinational firms.


The corporate international diversification theory posits that multinationals should have lower risk and higher financial leverage than the domestic corporations (Doukas & Pantzalis 2001). One of the main reason as to why corporations would not take 100% debt in their capital structure is because of the risk of insolvency (Doukas & Pantzalis 2001). Given that this risk is not linear but increases with higher debt levels, firms can thus limit their leverage in order to avoid incurring bankruptcy costs.

There are a variety of business risks as well as opportunities that stem from corporate international diversification. Business risk which is typically measured by the volatility of the operating net income refers the cost of financial distress or rather bankruptcy cost (Doukas & Pantzalis 2001). Both the domestic and multinational firms are also faced with exchange rate risk. That is, the risk that fluctuations in currencies will affect the demand and supply, price and cost characteristics of the corporation.

There is also the risk of higher agency costs which faces multinational firms. MNCs face higher agency costs due to auditing costs, monitoring costs, different accounting systems, different legal systems, sovereignty uncertainties, language differences, labour market and capital imperfections as well as the different asset structures (Doukas & Pantzalis 2001). Agency costs are known to have a significant impact on the optimal debt level as will be discussed below (Doukas & Pantzalis 2001).

Political risks arise from political events that may have adverse effects on the economic wellbeing of the firm. For example, potential conflicts may arise between the goals of the government and those of the foreign firms. This is especially the case with foreign direct investment, given their effect on the host economy.

Among the benefits put forth by scholars is the view that through international diversification, firms are able to increase on their debt capacity and reduce their bankruptcy costs (Doukas & Pantzalis 2001). It has been argued that risks are reduced by portfolio effects due to the imperfect correlation of foreign cash flows. In this regard, Fatemi (1984) and Agmon & Lessard (1977) point out that diversification benefits reduce the bankruptcy costs and increase the debt usage by multinationals.


The documented puzzle that multinationals tend to have lower levels of long-term debt but more use of short-term debt than non-multinational firms warrants an explanation. There are many reasons as to why one would expect multinationals to have different leverage ratios relative to the domestic corporations. First, given the international nature of their operations, MNCs are expected to have access to more capital sources unlike the domestic firms (Doukas & Pantzalis 2001). Therefore, they can raise more capital via foreign debt financing and at more favourable terms than the domestic corporations (Doukas & Pantzalis 2001).

Consider, for example, the case of multinationals that have subsidiaries in countries with different tax rates. These multinationals can benefit a lot by borrowing through foreign affiliates exposed to high tax rates, hence increasing their tax shields (Butler 1999). It therefore follows that due to access to external sources of financing, these multinationals should in general have higher debt ratios than the domestic firms (Butler 1999).

Another reason as to why Multinationals should exhibit higher debt ratios than non-multinational firms is that the foreign debt can be used as a hedging instrument against the risk of foreign exchange (Butler 1999). Given that multinationals have higher levels of foreign exchange exposure in comparison to the domestic firms, they are thus expected to make greater use of debt financing than the local firms (Butler 1999). Additionally, since multinationals are subject to political and exchange rate risk exposures, it is expected that these multinationals should have higher overall debt ratios relative to the local firms (Butler 1999).

Thirdly, due to industrial and geographical diversification of operations of MNCs, they are expected to have lower business and financial risk than the domestic firms (Doukas & Pantzalis 2001). This has the impact of reducing the cost of debt and therefore increasing leverage. This implies that the leverage of multinationals should have a positive relation with foreign involvement while financial distress should have a negative and greater bearing on DMCs’ leverage (Doukas & Pantzalis 2001).

However, while hedging, financial distress, liquidity and operating considerations imply that multinationals are more likely to have greater leverage than the domestic corporations, findings from empirical studies show that these multinationals have instead lower long-term leverage relative to the domestic firms (Doukas & Pantzalis 2001).

Three possible explanations can be given for this finding. These include: (Doukas & Pantzalis 2001)

Efficiencies of internal capital markets
Agency costs of debt
Legal and institutional differences across counties where multinationals operate.


Since MNCs have numerous divisions operating across countries, they tend to create extensive internal capital markets which may provide cheaper financing relative to the external markets (Doukas & Pantzalis 2001). Hence, where the internal capital market is efficient, MNCs tend to rely more on internal financing than the external one. As a result, they tend to have lower leverage than the domestic firms. Consequently, a non-positive relation between the firms leverage and its foreign operations can emerge when internal capital markets bypass external capital market informational asymmetries (Doukas & Pantzalis 2001).

In a recent study, Matsusaka & Nanda (1997) and Scharfstein & Stein (1997) examined the improved capital allocation in internal capital markets and the associated agency costs for firms that had diversified their operations. They found that diversified firms could use internal capital markets in funding profitable projects, which would not be financed in external capital markets due to agency costs and information asymmetries.

This implies that the external debt financing need for multinationals can be attenuated and that the low levels of leverage for Multinationals should reflect the strengths of internal capital markets (Doukas & Pantzalis 2001). This view certainly indicates a negative relation between industrial diversification and the leverage of multinationals. That is, MNCs debt ratios should exhibit a negative and more pronounced association with industrial diversification than the domestic firms.


The agency cost of debt effect on leverage of multinationals arises from their industrial diversification. Since their operations are geographically dispersed, the cost of gathering and processing information is generally more costly for MNCs than the domestic firms (Doukas & Pantzalis 2001). Therefore, multinationals are expected to have more inherent agency problems between the debtholders and shareholders due to their diverse geographic structure.

It therefore follows that bondholders will require higher interest payment on loans to firms that have greater monitoring costs and are more susceptible to asymmetric information problems (Doukas & Pantzalis 2001). This implies that firms which have diversified their operations are more likely to have their debt ratios lower than domestic firms. Further, firms with greater foreign involvement are expected to have a negative and more pronounced relation between the firms leverage and agency costs of debt, than the domestic firms (Doukas & Pantzalis 2001).

Several authors have suggested that, unlike the domestic firms, multinationals are likely to support more debt in their capital structures. Burgman (1999), however, contests this claim and in fact argues that multinationals have, in the actual sense, less debt in their capital structure. He addresses whether factors such as the political and exchange rate risk and the agency costs can explain this phenomenon. The findings of his study show that multinationals tend to have higher agency costs and that diversifying their operations does not lower their earnings volatility.


Clearly, there are inherent business risks as well opportunities that stem from corporate diversification. While we do not ignore the cross-border benefits of corporate diversification, we suggest that the overall effect of internationalization on the firms risk and leverage can be predicted by an upstream-downstream hypothesis.


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Bartov, E., G. Bodnar, and A. Kaul, 1996.“Exchange rate variability and the riskiness of US multinational firms: Evidence from the breakdown of Bretton Woods”. Journal of Financial Economics, 42: 105-132.

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Butler, K.C., 1999, Multinational Finance, 2nd edition, Cincinnati, OH: South-Western College Publishing

Chen, C.J. P., C.S. Cheng, H. J. Agnes, and K. Jawon, 1997. “An investigation of the relationship between international activities and capital structure” Journal of International Business Studies, p. 563-577.

Chkir, I.E. and J.C. Cosset, 2001. “Diversification strategy and capital structure of multinational corporations”. Journal of Multinational Financial Management 11, 17–37.

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Fatemi, A. 1984. “Shareholders Benefits from Corporate International Diversification”, Journal of Finance Vol. 39 No.5.

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Kwok, C. Y. Chuck and D. Reeb, 2000.” Internationalization and Firm Risk: An Upstream-Downstream Hypothesis”, Journal of International Business Studies, 31, 4; 611-629.

Lee, K., and C.Y. Kwok, 1988. “Multinational corporations vs. domestic corporations: International environmental factors and determinants of capital structure”. Journal of International Business Studies, vol 19, pp. 195-217.

Matsusaka. J, and V. Nanda, 1997, Internal capital markets and corporate refocusing, Working Paper, University of Southern California.

Reeb, D.M. and C. Kwok and H. Y. Baek, 1998. “Systematic Risk of the Multinational Corporation”, Journal of International Business Studies, Second Quarter.

Reeb, D.M., S.A. Mansi and J.M. Allee, 2001. “Firm internationalization and the cost of debt financing: evidence from non-provisional publicly traded debt”. Journal of Financial and Quantitative Analysis 36, 395–414.Chkir & Cosset (1999)

Scharfstein, D.S, 1997, The dark side of internal capital market II, Working Paper, MIT press.

Free Essays

Outline and Explain Beck’s Theory of the ‘Risk Society’ and Consider to What Extent it Provides an Adequate View of Contemporary Society


The essay looks at Beck’s theory of the ‘risk society’, the idea that modern society is distinctly different from previous ages in the nature of risk, and attitudes to it. The theory also involves the idea that scepticism towards scientific reasoning and knowledge is increasing. Beck identified new types of risk associated with the modern age. These new risks have widespread potential repercussions, not restricted to one geographical location, to one particular time scale or to one social group. These new risks also require new strategies for management (Coaffee 2009). This essay will first briefly outline Beck’s theory, then takes a critical and analytic perspective on his idea.

1. Introduction

The following looks at Beck’s theory of the ‘risk society’, the idea that modern society is distinctly different from previous ages in the nature of risk, and attitudes to it. The theory also involves the idea that scepticism towards scientific reasoning and knowledge is increasing. Beck identified new types of risk associated with the modern age. These new risks have widespread potential repercussions, not restricted to one geographical location, to one particular time scale or to one social group. These new risks also require new strategies for management (Coaffee 2009). This essay will first briefly outline Beck’s theory, then will take a critical and analytic perspective on his idea.

2. Beck’s Theory of the ‘Risk Society’

Beck proposed his idea of the ‘Risk Society’ in his 1992 publication ‘Risk Society: Towards a New Modernity’ (Beck 1992). His ideas emerged from the developing discipline of risk management, rooted in sociology.

There are several strands to Beck’s idea as follows:

A transition from one type of modernity to a new type
The part played by the media in the construction of risk
The nature of reflexivity
The financial impact of new risk patterns

Coaffee (2009).

There is also a critique of science (Lyall et al 2009). This breakdown will be used to shape the following section.

For Beck, we are experiencing a new wave of modernity. In contrast with the simple modernity of the industrial age, contemporary modernity is reflexive, and is characterised by new risks with a “potentially global impact” (Ericson and Doyle 2003, p. 74).Modern society is increasingly critical of the underpinnings of industrial society (Beck 1995)

In terms of the role played by the media in creating risk, Beck suggests that “the mass media and the scientific and legal professions in charge of defining risks become key social and political positions” (Beck 1992, p. 22). The media also provide the site within which risk is contextualised and debated, with a new potential for conflict between those who create risk definitions and those who are affected by them (Coaffee 2003).

Another key concept for the notion of the risk society is ‘reflexivity’, or the ability of humans to reflect upon the past, and use this knowledge to influence what they do in the future. Widely taken up by the social sciences in general, for Beck, people in contemporary society have come to terms with the increasing amount of risk they face through reflexivity, balancing the opinions of experts with cultural considerations (Coaffee 2003)

Beck suggests that there is a financial impact of this change in the nature of risk. Traditionally, it has been acceptable to use insurance to secure against risks. However, in the risk society, insuring against all types of risk is not possible (Coaffee 2009). As danger grows, so protection diminishes.

As the new risk society emerges, the role and ability of science is played down. On the one hand, the scientific approach to managing risk, for Beck, inadequate, as it is most useful in addressing natural risks, rather than risks created by decisions. On the other hand, Beck suggests that the supposedly neutral stance of the scientist should be questioned. Rather than objective observers, scientists have played a part in creating the new, risk-laden contemporary world. This role is often hidden by the institutions which have grown up around the scientific world (Lyall et al 2009). Scientists are also seen as in the service of corporate and financial interests. At the same time, people increasingly have to trust the opinions of scientific experts and the complex systems they devise to analyse risk. However, expert opinion is often marked by disagreement regarding the extent and best management of the risk, underlining Beck’s point that scientific consensus is open to question (Coaffee 2003).

3. To What extent does Beck’s Theory Provide an Adequate View of Contemporary Society

Beck seems to provide a comprehensive model of changing attitudes to risk, risk management, and society in general.Although his theory has its roots in concepts of risk management, it seems to offer a useful way of understanding modern society in general. Seen thus, it suggests that society as a whole is dominated by risks which both threaten physical life and livelihood, and also occupy the collective psyche.The existence of specifically modern threats such as global warming, increased mobility of disease and nuclear radiation seem to back up Beck’s claims (Rosa 2006). Beck himself suggests that his model offers a certain degree of positivism and hope, whereby reflexivity can help overcome the problems associated with globalisation and increased risk. He also seems to suggest it offers a way whereby the ideals of the Enlightenment can be kept alive, albeit in a way infused with a post-modern irony and self-criticism (Beck 1998).

However, there are a number of criticisms which can be made of the notion of the ‘Risk Society’: some have condemned it as overly deterministic, with little scope for bringing about change (Hughes and Edwards 2002). Bluhdorn sees Beck as proposing a historical determinism which is Marxist in feel, as industrialisation and its associated form of modernity gives way to the risk society (Bluhdorn 2000). Others have dismissed it as a passing fad rather than an academic approach with lasting influence (Dingwall 1999)

Some question whether Beck’s model is adequate to capture the nature of risk.Beck’s approach has been called “utilitarian and objectivist” (Alexander 1996, p. 135); that is, it relies upon a definition of risk that draws upon what works, and which assumes the objective reality of the concept. He fails to take into account the multiplicity of ways in which individuals understand the notion of risk, and apply it. Perhaps a more appropriate model would have a more complex understanding of the role played by social structure and perceptions of risk (Elliott 2003). Relatedly, Beck has also been criticised for ignoring any psycho-analytic interpretation of human action and motivation (Hollway and Jefferson 1997), and for failing to understand that human subjectivity is embodied (Petersen 1996). In other words, “Beck’s theory cannot grasp the hermeneutical, aesthetic, psychological and culturally bound forms of subjectivity and intersubjectivity in and through which risk is constructed and perceived” (Elliott 2003, p. 26).

Others have questioned the extent to which Beck generalises in a way which is not supported by the facts.Beck sees the spread of contagious diseases as one of a wholely new set of risks for modern society. However Turner (1994) points out that the globalisation of disease is not a new phenomenon, but one which has been in existence since trade and world travel started. Others point out that the only change is in the type of disease which spreads rapidly and offers risk: at one point it was the plague, at others syphilis, while today offers BSE and bird flu (Ihlen 2009). Turner (1994) also suggests that Beck is mistaken in his description of the ways in which standardisation and regulation have changed. Although global risks introduce a new level of uncertainty, evidence suggests that there is still an over-riding attempt to standardise worldwide (Martin and Johnson 2001)

Another criticism asks whether the mechanisms for greater public ‘voice’ and participation in decisions that Beck seems to envisage in his model actually exist. Fairhead and Leech, for example, argue that he makes “assumptions about the capacity for new forms and institutions of public engagement to emerge and have influence” (Fairhead and Leech , p.225)

A particularly damning critique is that Beck’s account is garbled and contradictory, particularly in reference to the ecological and environmental parts of his discussions. In ‘Risk Society’, for example, tries to argue both that the planet is increasingly at risk of harm from objective factors, and also that these factors are socially constructed and therefore not part of the objective world (Lidskog 1993). There is also some tension in his work between analysing the situation and advocating activism as a solution, with descriptive and prescriptive approaches often running side by side. Beck also confuses the concepts ‘risk’ and ‘hazard’, in some places suggesting that they are separate ideas, and at others assuming they are equal terms (Hannigan 1995, p. 24). A similar criticism is that the notion of the risk society is too vague to be of use: for example, his discussion of the role played by the media is not based on factual research or published data (Mooney and Evans 2007)

Finally, criticisms have been made of the idealistic and utopian slant of Beck’s ideas. It is a large scale attempt to understand the nature of the world as a whole, and to suggest what the world should be like. Deuchars suggests that there is an element of cultural imperialism in Beck’s suggestions, with a hidden assumption that the enlightened residents of the developed world (who have already been through the process of industrialisation) need to set an example to other countries using reflexivity to address problems of risk (Deuchars 2004). Others suggest that the aim to explain so much undermines the success of his smaller-scale analyses (Mythen and Walklate 2006)

4. Conclusion

Certainly, Beck’s theory is a persuasive and powerful one. It has had repercussions not just for the understanding of risk and risk management but in diverse other fields particularly studies of ecology, the environment and sociology. It is complex, and includes different ideas including an analysis of how the perception of risk is distinct to the modern era, the role played by the media, and the nature of reflexivity in determining how we manage risk. While the theory has benefits, there are also a number of problems which mean it should be approached with caution. Particularly, it seems to involve a somewhat naive and objectivist concept of reality which ignores the role played by subjective experience, it is rather fatalistic and deterministic about historical change, and its underpinnings in thorough research are questionable.

5. References

Beck, U (1992) Risk Society: Towards a New Modernity. London: Sage.

Beck, U (1995) Ecological politics in an age of risk. Oxon: Wiley-Blackwell.

Beck, U. (1998) ‘Politics of risk society’ in Franklin, J. (ed.) The Politics of Risk Society , Cambridge, Polity Press.

Bluhdorn, I (2000) Post-ecologist politics: social theory and the abdication of the ecologist paradigm. London: Routledge.

Coaffee, J (2003) Terrorism, risk, and the city: the making of a contemporary urban landscape. UK: Ashgate Publishing, Ltd.

Coaffee, J (2009) Terrorism, risk and the global city: towards urban resilience. UK: Ashgate Publishing.

Deuchars, R (2004) The international political economy of risk: rationalism, calculation, and power. UK: Ashgate Publishing, Ltd.

Dingwall, R (1999) ‘”Risk Society”: The Cult of Theory and the Millennium?’. Social Policy & Administration. Vol 33:4, 474–491,

Elliott, A (2003) Critical visions: new directions in social theory. Maryland: Rowman and Littlefield.

Ericson, R V and Doyle, A (2003) Risk and morality. Toronto: University of Toronto Press.

Fairhead, J and Leach, M (2003) Science, society and power: environmental knowledge and policy in West Africa and the Caribbean. Cambridge: Cambridge University Press

Hannigan, J (1995)?Environmental Sociology. London: Routledge.

Hollway, W and Jefferson, T (1997) ‘The Risk Society in an Age of Anxiety: Situating Fear of Crime’, The British Journal of Sociology, Vol 48:2, 255-266.

Hughes, G and Edwards, A (2002) Crime control and community: the new politics of public safety. US: Taylor & Francis.

Ihlen, O (2009) Public relations and social theory: key figures and concepts. Abingdon: Taylor and Francis.

Lyall, C, Smith, J and Papaioannou, T (2009) The limits to governance: the challenge of policy-making for the new life sciences. UK: Ashgate Publishing.

Martin, R and Johnson, L (2001) Law and the public dimension of health. UK: Routledge.

Mooney, A and Evans, B (2007) Globalization: the key concepts. Abingdon: Taylor & Francis.

Mythen, G and Walklate, S (2006) Beyond the risk society: critical reflections on risk and human security

Petersen, Alan. 1996. ‘Risk and the regulated self: the discourse of health promotion as politics of uncertainty’. Australian and New Zealand Journal of Sociology, 32:1, 44-57

Rosa, E A (2006) ‘Risk Society’ [online] (cited 5th January 2012) available from

Turner, B (1994) Orientalism, Postmodernism and Globalism. London:Routledge.

Free Essays

Why is green theory becoming popular in international politics at the current time?


Following the impact of the global financial crisis, which nearly shattered the world economy, the ideas of transparency, sustainability, resiliency and accountability have increasingly been associated with the restructuring of the international financial system (Runnalls, 2011; Newell, 2008). Along with this, the issue of climate change has also attracted significant attention over the past decade, transforming from a problem of the margins of policy making to one that has been placed at the core of global politics. The increasing awareness of the damaging impact which pollution has on climate change and biodiversity (Cumming, 2007; Brown et al, 2007) has arguably led to a consideration of a greener approach towards economic development and the use of natural resources. The continuing decline of oil supplies has raised concerns about the future of an economy that is entirely dependent on oil and academics have called for an increased appreciation of the problems with associated with such a strategy of economic development (Cato, 2009). Because of this, the ideas of a new, greener politics and the theory behind it have become a prominent part of the discourse of international politics. In addition, green economists have been concerned about the ways in which the current economic system has led to the widening of inequalities between rich and poor on a global scale, and the inevitable tension and conflict this inequality creates (ibid.). The alternative solution, underpinned by green thinking, has led to calls for the rejection of changes in the current forms of governance and has led to a suggestion that political communities below the nation-state should be decentralised.. This involves decentralization not only on the levels of political organization, but encompasses economic and social organization as well. Green proponents also argue for abandoning traditional sovereign systems and practices in favour of more mixed locations of authority. Such an argument significantly departs from the ideas upon which the movement of environmentalism is built, as the latter is said to be in agreement with the framework of established forms of world political governance. According to green theorists, the main origin of the environmental crisis is precisely within this same form of governance, therefore there is a need to move beyond it (Dobson, 1990). As Eckersley (2004) notes, the greens suggest the establishment of new, ‘green state’ the regulatory ideal and democratic procedures of which are to be informed by ecological democracy rather than the principles of liberal democracy. Such a state could be understood as post-liberal, insofar as it emerges from an ecological critique of the current state of affairs, rather than from and outright rejection of liberal democracy (ibid.). To date, the green theory has gained wide prominence and this essay would like to provide a reflective inquiry on some of the reasons for its popularity, as well some of the problems associated with it. In line with this, the following section of the essay will provide an outline of the principles which are associated with the green theory and the movement inspired by it, as well consider its position of one the global issues of the 21th century, namely climate change.

The principles of green theory and a green economy

The green theory and the type of politics associated with it have several specific characteristics, among which are the ecocentric ethics, limits to growth and the decentralization of power (Patterson, 2005). To begin with, ecocentrism should be interpreted as the rejection of an anthropocentric world-view which places independent value only on humans in favour of one which places independent value also on ecosystems and all living beings (Eckersley, 1992). According to ecocentrism, the world is ontologically composed of inter-relations rather than individual entities (ibid.: 49). All beings are fundamentally ‘embedded in ecological relationships’ (ibid.: 53). Consequently, there are no convincing criteria which can be used to make a hard and fast distinction between humans and non-humans (ibid.: 49-51). Ethically therefore, since there is no convincing reason to make rigid distinctions between humans and the rest of nature, a broad emancipatory project ought to be extended to non-human nature. All entities are endowed with a relative autonomy, within the ecological relationships in which they are embedded, and therefore humans are not free to dominate the rest of nature.

The second principle of the green theory, of decentralization, suggests the need to shift authority from international institutions to local organizations (Rosenau, 1992; Hempel, 1996). Rosenau (1992) makes this claim concerning patterns of authority in global politics in general, but also specifically in relation to global environmental politics. For Hempel (1996), such forms of global environmental governance are emerging because the spatial scale of the state is inadequate for dealing with the scales of environmental change. The state is simultaneously too small and too big to deal effectively with such change, and thus practices of governance move towards regional and global levels and at the same time towards local levels, in response.

The third principle of the green theory is that of the need to limits the proportions of growth in order to create a sustainable society and ensure security (Dobson, 2011). The economic growth of wealthier states is not necessarily related to the security which its citizens feel (ILO, 2004). For this reason, green theorists have suggested the shifting of focus from economic growth towards sufficiency and income security (Barry, 2007). In addition, as the recent financial crisis has shown, the emphasis on growth and expansion of the economy of neo-liberal states has created more problems that it has actually resolved, signifying the failure of contemporary approaches to economic development.

Also, contemporary proponents of the green theory have suggested the increasing urgency of changing the current framework for climate justice towards one of capabilities (Schlosberg, 2012). The previous approaches of historical responsibility, carbon egalitarianism, and rights have all failed to take into account the wide variations of the needs and problems which the different countries and communities are exposed to on a daily basis. To a significant extent this has also been related to the misguided focus on prevention, rather than adaptation (Scholsberg, 2013a). Climate change has been an ongoing process and has been significantly affected by human activity (Steffen, Crutzen and McNeill, 2007), not to deny it, but as a result of the undermining of adaptation policies, international efforts have also failed to introduce effective preventive strategies as well (Scholsberg, 2013a). In fact, by focusing solely on prevention and mitigation, international conventions such as the UN Framework Convention on Climate Change have failed to acknowledge the fact that climate change has undermined the provision of basic human rights needs in the developing world (ibid.). Moreover, academics have argued for a case where climate change itself can be perceived as a violation of the human rights to life, health and substance (Caney, 2010). The move towards adaptation policies for climate change is well-suited for such as task (Vanderheiden, 2008; Holland, 2012: Scholsberg, 2013a). Therefore, climate justice which is equipped with the principles of basic human and their provision is able not only to take into account the unequal distribution of environmental risks across the globe, but could potentially create a sustainable environment where these could be adhered to and implemented. Because of its grassroots focus (Wall, 2010), the green theory and the economics which is built up on its main principles can easily recognise the wide range of needs which can vary in different societies and communities worldwide. As an advocate of local participation and voice, the green theory is more than capable of devising distinctive policies within a diverse set of contexts by taking into account subjective and specific regional needs, as well as successfully addressing them by designing adaptive strategies (Scholsberg, 2012).This shift towards policies based on adaptation is also linked to the adoption of a capabilities approach towards climate change, which, in line with the former is able to take into account the particular needs of communities, as well as capable of directing adaptation policy towards the preservation and reconstruction of the specific capabilities under threat from climate change, and of measuring the success of implemented adaptation policies.

To summarise this section, the green theory and some of its main proponents appear to have established a solid framework with the utilisation of which a number of global problems such as inequality and climate change can be addressed. The movement is innovative in its propositions and its focus on tackling injustice, the focus on community development as a cornerstone for the promotion of sustainability, as well as basic human rights have all contributed towards the growing popularity of its principles. However, as the next section of this essay will show, the green theory has also been subject to significant criticism.

Problems associated with the Green Theory and Green Politics

Since the 1980s, many of the post-industrial consumer societies have been exposed to cultural shifts of governance which have led to a reconsideration of environmental concerns as a way towards the creation of more sustainable states and economies (Bluhdorn, 2013). This is the core hypothesis of the theory of post-ecologist politics (Bluhdorn, 1997, 2000) which comprises, of the theory of the post-ecologist turn (Bluhdorn, 2002), and secondly, the theory of the politics of unsustainability (Bluhdorn, 2007, 2011). At core of this theory is impossibility for liberal democratic states to create sustainable policies based around environmentalism. Due is due to the principles of individualism and personal freedom, which underpin liberal democratic forms of governance, as well as the emphasis on consumption practices which are at the core of late modern neo-liberal states. What this has led to is the acknowledgement of the ‘failure of liberal democracy’ to introduce solutions for ecological and environmental issues (Shearman and Smith, 2008). In line with this, Bluhdorn (2007, 2011) has suggested that the contemporary approaches towards devising environmental politics should be considered as attempts to sustain unsustainability, as there is an increasing awareness about the crisis of sustainability, yet the practices of the consumerist society are not scrutinized, despite the fact it was these practices which have had a negative impact of the environment and climate change. This amounts to a ‘post-ecologist paradox’ (ibid.), according to which the environmental problems are increasingly depoliticised, even though their existence is not denied. Within academia, this has called for the adoption of new forms of governance, as authoritarianism appears to be the remedy for the ‘post-ecologist paradox’ (Sherman and Smith, 2008). In a similar note, Giddens (2009: 7-8) suggests that the commitment to participatory democracy is counterproductive, and instead, an approach of centralised planning should be adopted.

Such appeals seem to be in direct conflict of some of the principles which underpin the green theory. To begin with, it discards the possibility for any grass-roots activism, which to a significant extent is associated with the operation of the green movement (Wall, 2010). The focus on centralised planning also argues for the implementation of policies which may not necessarily take into account the different needs which communities have, thereby also undermining the human factor in the decision-making process. Although the critique of democratic states focuses primarily on the patterns of consumption, it fails to take into account the large number of cases where democratic states, which have adopted the principles of green economics, have succeed (Cato, 2009). Also, in many of these countries it was the same principles of participatory democracy which contributed for the promotion of green thinking and the rise of the green parties on the political landscape (Carter, 2013).Therefore, it would be an understatement to suggest that the problem of approaching and addressing environmental issues is not related to participatory democracy itself, rather than it is the neo-liberal approach towards economic development which a country adopts that constitutes the problem. And the green theory appears to be capable of resolving it, hence the increasing popularity and influence of its ideas on the international level. Having provided an outline of some of the criticisms associated with the green theory and its suggestion for the establishment of green states based on democratic principles, the concluding section of this essay will relate the principles of the green theory to the United Nations Conference on Sustainable Development in Rio, 2012 and its objectives.


The United Nations Conference on Sustainable Development in Rio, 2012 (UNCSD, 2012) outlined the main principles upon which more sustainable states should be based. Among these were the eradication of poverty, the promotion of sustainable patterns of consumption, the protection and effective management of natural resources. Moreover, this sustainable development should be achieved via the promotion of sustained, inclusive and equitable economic growth, creating greater opportunities for all, reducing inequalities, raising basic standards of living, fostering equitable social development and inclusion, and promoting integrated and sustainable management of natural resources and ecosystems that support, inter alia, economic, social and human development while facilitating ecosystem conservation, regeneration and restoration and resilience in the face of new and emerging challenges. Although such an approach towards sustainability has been criticised for being over-inclusive and lacking in depth at the same time, it placed sustainability on the priority list for international development and by and large placed the agenda for the development of the green economy on national and domestic level, thereby allowing the incorporation of strategies based on capabilities approaches, which, as it was argued earlier is at the core of the green theory. Therefore, the lack of a defined and universal strategy for the promotion of sustainable states on the international level should not necessarily be considered as a failure, as in fact it will countries from the developing world to devise policies which will be based on the subjective needs each one of them has, as well as address the specific problems which have a negative impact of their citizens and communities (Council on Foreign Relations, 2012). Such an approach clearly incorporates many of the principles which underpin the foundations of the green theory for a more sustainable development and allows its incorporation. This could be the opportunity for many green theorists, economists and activists to devise a balanced, comprehensive and ecologically founded strategy of sustainability, as the academic debates around green theory and international development should not be separated from the context in which they occur, but rather contribute to the discourses around environmental justice and the promotion of sustainability (Scholsberg, 2013b). In conclusion, over the past decade, the green theory and its proponents have become an inseparable part of political debates on international debates. It has gained significant popularity since the world financial crisis and its alternative framework towards sustainability and the acknowledgement of climate change as a violation of basic human rights have all raised its profiled and contributed to its widespread recognition. Yet, there are many challenges which the movement has to tackle and only its critical engagement in international development can prove that the green theory is the alternative form of governance which the international community needs and deserves.


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