Employee involvement and market orientation in a transition economy: importance, problems and a solution.

The former state controlled economies in Central and Eastern Europe continue the transition from state control of business enterprises to private ownership of those enterprises through privatization programs and a regulatory environment that facilitates business development. Unfortunately, privatization and a supportive regulatory environment are not enough to ensure the transition to a free market economy. Continued progress in transition economies depends on a number of factors at the individual firm level, such as the business' ability to adapt to changing market conditions, the ability to successfully implement innovation, the ability to develop highly skilled management teams, the ability to involve employees in the business venture, and the ability to develop a market oriented culture that focuses on customer and competitor related activities. Although these factors have all been identified as critical factors for the success of businesses and continued growth of transition economies, a number of barriers exist that are slowing the business development process (e.g., Aoki and Kim, 1995; Crockford, 1994; Ennew et al., 1993; McDonald, 1993; Miller, 1994; Shipley and Fonfara, 1993). One of the most critical elements appears to be the lack of involvement of managers and employees throughout the organization in market oriented activities of the firm.

This article explores the importance of employee involvement and employee empowerment for becoming market oriented in a transition economy by (1) identifying the importance of employee involvement in the implementation of a market orientation, (2) examining the difficulty of developing employee involvement and empowerment in businesses in Eastern European countries, (3) presenting the results from a series of interviews with CEOs from companies in Eastern Europe with respect to employee involvement and market orientation, and (4) describing the use of goal setting theory as a management tool for incorporating employee involvement and empowerment into the market oriented activities of firms in an Eastern European country.

The Importance of Employee Involvement to a Firm's Market Orientation

The development of a strong market orientation in firms in the U.S. and similar cultures has been identified as an important factor to the success of a business because a strong market orientation in a company will increase its ability to adapt to changing market conditions, will increase its ability to be innovative and will generally increase the performance of the company (e.g., Atuahene-Gima, 1996; Day, 1994; Jaworski and Kohli, 1993; Kohli and Jaworski, 1990; Narver and Slater, 1990; Ruekert, 1992; Slater and Narver, 1994).

The above cited market orientation literature suggests a strong market orientation consists of five main components.

* The systematic and continuous generation of market intelligence, including detailed information about customers, competitors, and the general market environment.

* The dissemination of market intelligence throughout the organization.

* Cross-functional coordination and the inclusion of all employees in focusing their activities toward satisfying customer needs at all levels of the organization.

* A rapid response to changing customer needs or market conditions.

* A dynamic strategic planning process incorporating a long-term perspective.

These components, when implemented together, produce market oriented companies with increased sales, increased profits and higher growth rates when compared to their less market oriented counterparts (e.g., Atuahene-Gima, 1996; Narver and Slater, 1990; Slater and Narver, 1994).

Employee involvement in marketing activities is pervasive in the market orientation concept and is critical to the successful implementation of a market oriented organizational culture. To effectively engage in market oriented activities requires the involvement and participation of employees at all levels in all functional areas. This is not a "marketing problem," but a problem of implementing a culture throughout the organization. Involving all employees in the marketing program means that employees throughout the organization know the company' s customers, customers' needs, problems customers may have, how customers use the product and so on. Employees also know the company's competitors, competitors' strategies, competitors' differential advantages and so on. In addition, in market oriented companies, employees are expected to act on their knowledge of customers and competitors and are given individual responsibility for doing so within their area of responsibility (cf., Kohli and Jaworski, 1990).

Effectively involving employees in the market performance of the firm requires a culture that encourages employee involvement and empowerment, communication from the top down about the importance of employees' involvement, a willingness to share market-related information throughout the organization, and informal or formal cross-functional teams (Day, 1994; Day and Wensley, 1988; Kohli and Jaworski, 1990; Slater and Narver, 1995). Implementing a marketing plan throughout an organization is easier, more efficient and more effective when everyone understands the purpose or goal of the plan because employees can coordinate their activities with other functional units and can more easily adapt the plan to fit with changing market conditions (e.g., Day and Wensley, 1988; Kohli and Jaworski, 1990; Ruekert and Walker, 1987). The results of this involvement process include speeding up the cycle time for new product planning, making sure all functional areas are focusing on customer satisfaction, and reducing problems in implementation such as production difficulties, billing processes, and customer service (Bondra and Davis, 1996; Griffin and Hauser, 1996; Ittner and Larcker, 1997; Kohli and Jaworski, 1990).

Employee Involvement in Eastern Europe

Most of the research and conceptual writing suggesting the critical role of employee involvement in the marketing process has been done with U.S. firms. The limited array of research on this issue outside the U.S. has found mixed results with respect to the impact of employee involvement on market orientation and firm performance (e.g., Atuahene- Gima, 1996; Greenley, 1995a, 1995b; Ittner and Larcker, 1997; Liu, 1995). For example, Atuahene-Gima (1996) researched companies in Australia and found that cross-functional teamwork was strongly related to the firm's market orientation, and that the cross-functional coordination of activities produced a more efficient innovation process in companies, but was not related to the financial impact of the innovation. Greenley (1995a & 1995b) and Liu (1995) concluded from their research of companies in Great Britain that market orientation was related to the performance of companies, but that the form and structure of market orientation was significantly different from what has been reported in U.S. companies. Deshpande et al. (1993) found that companies in Japan experienced greater business performance when they had a greater customer orientation and when their corporate culture focused on market competitiveness and innovation. Ittner and Larcker (1997), in a study including Canada, Germany, Japan and the U.S., found that cross-functional involvement of employees was a critical factor for the successful impact of speeding up the new product development cycle time across all four countries. Given the mixed results of these few studies, the cross-cultural generalizability of findings from the U.S. regarding the nature and structure of employee involvement in a firm's market orientation can be questioned.

Very little systematic research has been conducted on employee involvement in the marketing process in Eastern Europe. The privatization literature conceptually supports the idea that employee involvement may be a stumbling block for successful performance of newly privatized firms (e.g., Cowan, 1990; Crockford, 1994; Miller, 1994). Anecdotal evidence suggests that employee involvement and empowerment is a crucial variable in Eastern Europe for companies to develop a strong and effective market orientation. For example, McDonald (1993) relates an example of a Polish company that was headed for disaster after gaining private ownership until the top management was able to motivate employees throughout the organization to become involved in the marketing process. McDonald (1993) and others (e.g., Shipley and Fonfara, 1993) suggest that cultural differences between most Eastern European countries and the U.S. create barriers to the effective implementation of employee involvement and, hence, a firm's market orientation. If managers are to effectively implement employee involvement it will have to be within the cultural dimensions. They will need tools to help them do this, but first we must identify whether and to what extent employee involvement occurs. Given the anecdotal nature of the evidence to date, exploring the extent to which companies in Eastern Europe have actually developed market oriented activities and the extent to which employees are involved in this process is important.

An Exploratory Study of Employee Involvement in Companies in Eastern Europe

The following objectives were the basis for conducting an exploratory study of companies in a transition economy in Eastern Europe. Our goal was to explore the following.

* The extent to which market oriented activities were being implemented throughout the organization.

* The extent to which all employees were involved in market oriented activities.

* Senior management's desire for employee involvement in market oriented activities.

* Whether the lack of employee involvement acts as a barrier to firms attempting to develop a market orientation.

Method

Given the exploratory nature of the study, in-depth interviews on a sample of companies was chosen for the research method. Although this method limits the results to primarily qualitative analysis, it was deemed superior to a more quantitative method because of the lack of information available to develop specific response categories for a structured survey. The top executives from thirty companies across three countries were each interviewed for approximately two hours regarding their company's market oriented activities and the level of employee involvement in those activities. Rather than examining firms in only one country, three separate countries were selected in order to ensure more generalizable findings. The three countries that were chosen for this study were Croatia, Slovenia, and Italy. Croatia was chosen as the primary country of interest for several reasons. First, having declared independence from the former Yugoslavia in 1991 and after the fall of communism in Eastern Europe, Croatia is in its seventh year of transition to a free market economy. Although great strides have been made in the economic transition, and many companies are developing their marketing activities, Croatia's economy is still struggling in its transitional phase (Aoki and Kim, 1995; Gracanin, 1994; Martin and Grbac, in press; Silber and Robinson, 1996). Additionally, Croatia's location on the Adriatic Sea makes it a strategic point of entry to the rest of Southern, Central and Eastern Europe. Finally, from an historical perspective, Croatia has traditionally been tied culturally and economically to Western Europe rather than to the East and is more accommodative of the cultural values of the west. As such, the development of a market orientation in companies in Croatia was of interest. Companies were sampled from three regions of Croatia (Istria, Rijeka, Zagreb) in an effort to obtain a representative mixture of companies from the country.

Slovenia was chosen as a comparison country because it is in a similar state of economic transition, and it is similar in culture and history to Croatia. Slovenian cities that companies were sampled from included Ljubljana, Postojna and Kosevja in Central and Southern Slovenia. Italy was chosen as a third comparison country because of its cultural and economic influence in Croatia and Slovenia and because of its dynamic, heavily industrialized free-market economy. Being geographically close to Croatia and Slovenia, yet having a clearly different economic structure, the Fruilli region of Northeastern Italy was chosen as a region against which to compare and contrast our findings from the transition economies of Croatia and Slovenia. Fifteen companies in Croatia, seven companies in Slovenia, and eight companies in Italy were examined.

Companies were selected for interviewing based on three criteria. We were interested in manufacturing firms, firms with less than 500 employees, and those firms that were successful businesses in that region for each of the countries. Manufacturing firms were selected because this sector of Croatia's economy is a critical link in the transition process but appears to be a weakness in transition progress and, therefore, merits special attention. Firms with less than 500 employees were selected because the very large companies in Croatia were still heavily controlled by the state at the time of interviewing. Interviewing successful businesses in each region was done because these firms would be most likely to have begun developing and implementing a market orientation. In some instances, however, successful firms meant only that those companies were still solvent. Thus, the "success" criterion provided a wide range of success from barely successful to highly successful, so that the sample of firms was not biased toward the highly successful firms.

Interviews with the CEO/President of each company lasted approximately two hours and took place in the manager's office. An interpreter was used when necessary. A list of interview questions was developed that queried the manager about the company's performance over the past three years (growth in sales, profits, employees, and product lines), the extent to which the company engaged in each of the market-oriented activities identified previously including several questions about employee involvement, the manager's attitude about organizational learning, environmental concerns and activities, and the company's strategic orientation.

Results

Responses to questions from the interviews were analyzed independently by two of the authors. The content analysis focused on three elements: the level of market orientation, the level of employee involvement throughout the organization, and the performance of the company. Each of the three elements was evaluated for each company based on management responses to interview questions. The two independent analyses were then compared for each company which resulted in agreement for 93.3% (28) of the companies, suggesting strong consistency in analyses across companies. The inconsistency in analysis for two of the companies (one in Italy and one in Croatia) was due to answers concerning those two companies' innovativeness.

Market Orientation. We assessed the market orientation of the firm based on four of the five components identified earlier. We measured employee involvement separately in order to determine whether firms without employee involvement could maintain an otherwise strong market orientation. The four elements that assessed market orientation were: 1) the type, extent, and frequency of customer, competitor, and general market information collected by the firm, 2) the extent to which the CEO/President attempted to share the market information throughout the organization, 3) the rapidity with which the company was able to respond to changing market conditions, and 4) the extent to which the company's strategic planning process was dynamic and long term.

We assigned the 30 companies to one of four levels of market orientation.

1. No market orientation.

2. Limited market orientation in which the company collected some market-related information but was not able to act on the information.

3. Moderate market orientation in which the company collected more extensive information, attempted to share the information with employees, and engaged in dynamic strategic planning.

4. Strong market orientation in which the company collected extensive customer, competitor and general market information; attempted to share the information throughout the organization; responded rapidly to changing market conditions and customer needs; and had a dynamic strategic planning process within a longterm perspective.

Employee Involvement. We examined our assessments of the level of employee involvement in the marketing orientation activities for each of the companies and classified the 30 companies into three categories.

1. Companies with no employee involvement in marketing information and activities. Managers in these companies were either not interested in having employees involved in any part of the marketing process, or had not been successful in motivating any employees to become involved in the process.

2. Companies with limited employee involvement in marketing information and activities. The limited involvement of employees was due to managers' inability to motivate employees (typically lower-level managers) to become marginally involved in cross-functional teams or because management was uncertain about how involved they wanted employees to become.

3. Companies with moderate to high employee involvement in marketing information and activities. These companies exhibited the use of cross- functional teams, and/or an informal system of empowerment for employees at all levels to make changes to better satisfy, customer needs and encouraged managers and employees to use the shared market related information.

Business Performance. The success of the businesses was assessed by the manager's self-reported trend in sales and profits for the past three years. Although this method of measuring success can be criticized along a number of dimensions, the self-report approach as an indicator of the business' performance was considered acceptable for the purpose of this study. We considered firms with over 10% annual increases in sales and real growth in

profits to be highly successful. Firms with flat or increasing sales but little growth in profits were considered to be moderately successful. Firms with declining sales were considered to be not successful.

Table 1 displays the companies, the number of employees, the level of employee involvement, the level of market orientation and the level of success. The overall correlation between market orientation and employee involvement was extremely strong (r = .92; p [less than] .001). Examining the results from Table 1, across the three countries, those companies with a strong market orientation all had moderate to high levels of employee involvement. In Croatia, the three companies with a strong market orientation also had a moderate to high level of employee involvement. In Slovenia, the two companies with a strong market orientation also had a moderate to high level of employee involvement. In Italy, the four companies with a strong market orientation all had a moderate to high level of employee involvement.

Across all three countries, firms with no employee involvement had very limited, if any, market orientation. In Croatia, the seven companies that had no employee involvement had no or very, limited market orientation. In Slovenia, the three companies that had no employee involvement had no market orientation. In Italy, the three companies that had no employee involvement had no or very' limited market orientation. These findings suggest a strong relationship between involving employees in the marketing program and the ability of the firm to successfully implement a marketing orientation.

Supporting the previous literature on the relationship between market orientation and success of the firm, there was a fairly strong correlation between the level of market orientation of firms in our sample and their level of success (r = .50; p [less than] .005). Generally speaking, for all three countries, firms with strong market orientation appeared to be experiencing higher levels of success than firms without market orientation. Although market orientation and success were not perfectly correlated, this relationship suggests that market orientation is an important set of activities for companies in transition economies to develop.

The strong relationships found in this study between employee involvement and market orientation and between market orientation and performance across two countries with transition economies provides strong evidence for supporting the anecdotally based contention of McDonald (1995) and others (e.g., Shipley and Fonfara, 199s) concerning the importance of developing employee involvement in Eastern European firms. The relationships found in this study mimic the relationships found in studies of U.S. firms and firms from other western developed countries. Given this study's evidence of the importance of employee involvement for implementing market-oriented activities and, hence, its importance to the financial performance of the firm in a transition economy, the next step in the analysis was to explore the barriers to effectively involving employees in the marketing activities of these companies.

During the interviews with companies in Croatia and Slovenia that indicated moderate, limited or no employee involvement, we found two types of managers with respect to employee involvement. The first (and by far the most frequent) type of manager did want lower-level managers and employees involved in marketing activities. They indicated that although they tried to involve lower-level managers and employees in market-oriented activities by giving them market-related information and asking for their input, those employees were not interested in becoming involved in the process. These managers indicated that one of the most difficult tasks they had was to figure out how to motivate employees to become more involved in the process of satisfying customer needs.

The second type of manager did not want employee involvement of any kind. They indicated that they had no desire to involve employees in the marketing process, including employees with significant amounts of customer contact. These managers indicated that they were the authority in the company and there was no reason for lower-level managers or employees to be involved.

On the other hand, there was only one type of manager in Italy in companies with limited or no involvement. These managers indicated that they had simply not thought about involving employees in the marketing process and could see no reason for their involvement.

Several very interesting relationships emerged from the data which point to the contrast between the more Westernized Italian firms and those of Croatia and Slovenia. In all three countries the pattern of relationships between employee involvement, market orientation and success is similar. When employee involvement is low, market orientation is low and firm success is low. But there is a difference between the Italian companies and most of those in Croatia and Slovenia in terms of why employee involvement is low. In Italy, involvement is low by choice. These managers were fully aware of how to include workers in the process; they had simply chosen not to do so. This is a very different scenario from what was encountered in most of the low-involvement Croatian and Slovenian firms. In Croatia and Slovenia the majority of managers did want the employees to become involved, but the employees were reluctant to step into the process. Most managers in Croatia and Slovenia who had low employee involvement were aware of the need to include their workers in the process and were perplexed over how to accomplish this. The problem evidenced here is one of breaking down social and economic stereotypes that have been in place for many years. The employees need to internalize a different structure in which their own involvement is not only valued, but where it is critical to the successful functioning of the firm.

For those managers seeking to involve employees in marketing and to motivate them to autonomously make decisions that can more effectively satisfy customer needs, the question as to how to accomplish employee empowerment remains unanswered. To address this issue, we will consider some of the cultural barriers that may be preventing employees from accepting a more empowered role. To do this we will identify what employee empowerment and involvement means and then, based on the work of Hofstede (1980a), we will identify possible cultural barriers to involving employees in the marketing program. Finally, we will discuss Goal Setting Theory (Locke and Latham, 1990) as a managerial tool that can guide managers as they attempt to overcome these barriers.

Cultural Barriers to Employee Involvement and Empowerment

Involvement and Empowerment

Employee involvement in market-oriented activities includes providing employees with the necessary market information and empowering them to autonomously take action to devise the means to better satisfy customer needs. Darraugh (1991) defines empowerment as getting workers to do what needs to be done rather than doing what they are told. This process often involves delegation of individual responsibility, autonomous decision making and developing workers with positive feelings of self-efficacy. Conger and Kanungo (1988) suggest that empowerment is not only delegating or sharing of power with workers, but that empowerment can be a relational construct that includes resource sharing. This envisions empowerment as a process by which a leader shares his/her power with subordinates by sharing control over organizational resources. Conger and Kanungo would group techniques such as Management by Objectives, Quality Circles and Goal Setting together as a category of tools that facilitate the sharing of resources. Conger and Kanungo also describe empowerment as a motivational construct where workers are motivated through enhancing their own self-efficacy. That is, employees are motivated to accomplish tasks and goals because they are given the authority to do so. Thomas and Velthouse (1990) have further expanded upon the work of Conger and Kanungo. They see empowerment as a type of motivation which emphasizes the "pull of the task rather than the push of management" (1990:667).

Three Cultural Dimensions

Three dimensions of culture that can be expected to vary across societies and will affect the process of involving and empowering employees are individualism/collectivism, power distance, and uncertainty avoidance (Hofstede, 1980a). Hofstede (1980b) studied managers from 40 different countries. Each of the 40 cultures was measured on the dimensions of individualism/collectivism, power distance and uncertainty avoidance. Because Bosnia-Herzegovina, Croatia, Slovenia, and the Federated Yugoslavia were all part of the former Yugoslavia prior to 1991, we will use Hofstede's ratings for the former Yugoslavia on these factors when we discuss Croatia and Slovenia.

Collectivism is characterized by a tight social framework where individuals are interdependent with subordination of individual goals to group goals. Individualism implies a social framework where individuals are independent and people take care of themselves and subordinate group goals to individual goals. based on Hofstede's research (1980b), the countries of Croatia and Slovenia rated strongly toward the collectivist end of a continuum of collectivism/individualism while the United States was rated more toward the individual end of the continuum. For example, the presence of very strong, informal social networks in which people experience a sense of connectedness and may sacrifice their own achievements to help others in their social network tends to be characteristic of the collectivism dimension in Croatia and Slovenia. Attempts to involve employees in market-related activities by focusing on individual responsibilities and autonomy (the cornerstone of empowerment in Western developed countries) are likely to be met with significant resistance from employees in Eastern European transition economies.

Power distance reflects how much a society accepts an unequal distribution of power within organizations. An organization in a culture with high power distance would see the people at the top as very different from the rest of the employees and in a dominant position over other employees. This dominance is expected and accepted. Most Eastern European cultures are higher on this dimension than Western cultures. based on Hofstede' s (1980b) rating of the former Yugoslavia, Croatia and Slovenia rate quite high on this dimension. Even though the country has experienced tremendous changes during the last seven years, our interview data suggest this basic cultural dimension has remained consistent over time. The people at the top of an organization are seen and accepted as powerful and dominant. This factor might work against employee involvement because in order to increase employee involvement, employees need to have increasing autonomy and decision-making authority. These are often hard obstacles to overcome because not only must management appear to give up some of its power, but the employees must be willing to accept that power.

Uncertainty avoidance is how much a society feels threatened by uncertainty. Uncertainty avoidance is the extent to which people in a society avoid ambiguous situations through greater career stability, more formal organizational rules, and more elaborate forms of communication. The former Yugoslavia (including Croatia and Slovenia) rated fairly high on uncertainty avoidance (Hofstede, 1980b). A culture with a high level of uncertainty avoidance is more likely to use an elaborate communication style that does not leave much room for ambiguity, whereas a culture with low levels of uncertainty avoidance will more often use a succinct style of communication (Erez and Earley, 1993). In these cultures communication is used to establish rules. By establishing rules much uncertainty will be avoided. Lifetime employment is also more common in high uncertainty avoidance countries as a way to reduce uncertainty. Transition economies are fraught with uncertainties, and in cultures of high uncertainty avoidance any attempt to empower employees that results in an increase in uncertainty is likely to be rejected.

Goal Setting as a Management Tool for Developing Employee Involvement and Empowerment

Based on the above definition of empowerment, an ideal situation would be one where managers have control over setting the work standards and have the resources to enable workers to accomplish the set standards. In addition, the workers should feel challenged by the standards, yet be confident enough in their own ability to accomplish the task. Goal setting theory, can support this situation by providing a motivational environment conducive for empowerment. Goal setting is one potential technique for increasing employee involvement in order to further develop the market orientation of firms in transition economies such as Croatia and Slovenia.

Goal setting is a motivational technique that has been found through years of research to increase employee productivity. A core premise of goal setting theory is that as regulators of human action, goals have two major functions. Goals help the individual select behaviors in which to engage, and goals guide the amount of effort that an individual puts into a behavior (Locke and Latham, 1990). However, before goals will motivate a person, the individual must be aware of the goal and the individual must accept the goal. Because goals are used to direct one's action and energize behavior, receiving goals is generally desirable to most individuals.

Goal setting theory suggests that, as long as the goal is accepted, there is a linear relationship between the level of goal difficulty and performance. Several meta-analyses of goal setting research (e.g., Tubbs, 1986; Wood et al., 1987) find support for this relationship. Goal setting research also suggests that the more specific the goal is, the higher the person's performance (Locke and Latham, 1990). Research on goal setting generally finds that consistent, specific feedback regarding goal achievement will also improve performance (Locke and Latham, 1990). Thus, specific and difficult goals make behavior directed toward accomplishing the goals more meaningful to the worker. Because of its direct effect on employee behavior, goal setting theory should provide a useful tool for motivating employee involvement in market oriented activities.

In U.S. companies, goal setting is used on a routine basis in a wide variety of contexts. With respect to employee involvement in market oriented activities, a company might establish specific internal process goals (e.g., number of errors in billings, number of production flaws, customer wait time, new product/improved product ideas, service provision levels) as well as specific external market-related goals (e.g., number of customer complaints, customer satisfaction levels, number of repeat buyers, cross-sell penetration ratios) for each business unit and each employee of the business unit. Goals would be challenging but achievable. Goals would typically be stated in individual employee terms, as well as department or business unit terms. Market related information about customers and competitors would be provided on an ongoing basis to provide managers and employees with an understanding of what needs must be satisfied and why. Employees would be given the authority (typically within a certain latitude) to make changes in the way they are currently engaging in their activities in order to better accomplish their individual goals. On a regular and consistent basis, employees would be given specific feedback regarding goal achievement, and employees would adjust their behavior accordingly.

Most of the research on goal setting has been conducted in the U.S. and most of the research has involved studying relatively simple jobs (Pritchard et al., 1988). Very little research has applied goal setting in Eastern European cultures or within an employee involvement and empowerment context. Erez and Earley suggest "very little research has been done on the impact of the environment and the way it interacts with different managerial practices to affect workers' behavior" (1993: 8), and that motivational techniques which are incongruent with cultural values will most likely be rejected.

Each of the three cultural dimensions discussed previously could have an impact on the development of an employee empowerment program in a transition economy within a goal setting program. Recognizing the cultural variations between these countries and our own, and then making adjustments in the goal setting process for each of those three dimensions, is critical to the success of goal setting in achieving employee involvement in market oriented activities. Managers in developing economies such as Croatia must learn to adjust the goal setting process to fit with the cultural dimensions that influence the acceptability of involvement to employees, We will systematically discuss each of the three dimensions regarding how a goal setting program would need to be adjusted in order to be effective in the Eastern European transition economies of Slovenia and Croatia.

Individualism/Collectivism

The general cultures of Slovenia and Croatia appear to be more collectivist than that of the United States. As such, some goal setting principles would need to be adjusted to reflect this difference. For example, goal setting is generally employed so that individual goal attainment will yield individual rewards. In a collective society where group goals would be more meaningful than individual goals, a group reward system may result in greater success. Matsui et al. (1987) found greater effectiveness for group goals in Japan, which is also considered to be a collectivist culture. Earley (1989) suggests that in the United States, group goals result in social loafing because group members do not share individual feelings of responsibility for outcomes. However, in Japan (and presumably in other collectivist cultures), individuals do feel responsibility for attaining group objectives.

The collectivist nature of the organization will be to work toward a shared objective. To develop a strong market orientation, that objective needs to be customer satisfaction. If the goal of employee involvement is to encourage the workers to take an active role in the treatment of customers, then the goal must be internalized by the employees. For this goal to be accepted by employees, it must be stated as a group oriented goal. The workers need to recognize that while they are working individually to know and serve customers, the entire organization is striving as a team to accomplish this goal. The final objective would be for the team to commit to a goal of pulling the customer into the team in order to make the customer feel like s/he is also part of the team.

Power Distance

Eastern European countries such as Croatia and Slovenia rate higher on the power distance dimension than the United States, which should have an impact on the employee involvement process in two ways. First, managers may be reluctant to involve employees in market oriented activities because they may perceive this as "giving up" their own power and authority. In a high power distance culture, this perception of empowerment may cause the concept to be rejected. Second, employees may not accept a more empowered role because they expect the manager to be the person "in control."

A goal setting framework can be used to circumvent this power distance barrier. As a starting point, managers have to change the way they think about power and control. Managers from our sample who did not want employees to be involved in the marketing program indicated they felt the employees needed to be told what to do and how to do it. Approaching their position of authority strictly from this perspective limits their ability to achieve a fully market oriented company. The manager must realize that in order for empowerment and involvement to occur, the subordinates' jobs will have to change and so must the manager's job. The managers have to be trained to manage the new jobs of subordinates. Managers must realize that while their base of power doesn't change, the managers must exercise their power differently. Under this system the manager maintains his/her power through establishing goals, training employees in the development and use of strategies for the attainment of challenging goals, providing feedback about goal achievement and allocating resources based on goal achievement. Through this system of activities, the manager continues to control employee actions.

Workers in high power distance cultures will prefer a situation of high differentiation between who does and who does not hold power. To accept goals under this system employees need to understand that the goal setting process is an exercise of the manager's power and so the manager is still the authority figure.

Uncertainty Avoidance

Croatia and Slovenia and other similar Eastern European transition economies are more intolerant of uncertainty than the U.S. and many Western European countries and, therefore, may have a harder time instituting employee empowerment if it increases employee and manager uncertainty. There are a number of ways to avoid increasing the uncertainty associated with involving employees in market oriented activities. First, involving employees in the marketing decision-making process will create increased knowledge for employees. As they begin to understand the decisions that are being made, uncertainty about their own role will decrease. When management becomes comfortable with employees' ability to effectively achieve empowered goals, management uncertainty should dissipate.

More concretely, three techniques of the goal setting process should reduce uncertainty. First, goals should be very specific. When goals are very specific, uncertainty produced by vague goals is avoided. Second, providing extensive training for employees so that they can develop strategies for achieving their empowered goals will reduce uncertainty. Third, providing feedback on a regular basis will reduce uncertainty.

An apparent question from this discussion is how some enterprises in Croatia and Slovenia seem to have developed high market oriented approaches if employee involvement and empowerment were constrained by the cultural barriers of transitional economies. This issue is best addressed by recognizing that within all cultures, including our own, there will be vast variation among companies on each of these dimensions. While the Eastern European transitional countries are, on average, high on collectivism and power distance and intolerant of uncertainty, companies do differ on these dimensions. It is our estimation, based on the company interviews, that these differences may be instrumental in the varying levels of employee involvement evidenced in our data. For example, the skin care company and the recycled metals company in Croatia were both high on employee involvement, and appeared to be much lower on power distance and in tolerating uncertainty than the metal work or paper companies (both very low on employee involvement).

The metal recycling company makes an interesting example. The President of the company discussed these very issues as the barriers he faced when he first began programs in employee involvement. His initial plan was to let the workers establish their own work schedule. He told them very precisely what needed to be accomplished and gave them strict guidelines. Although he did not use our terminology, he had in effect set a specific goal for the workers. The response from the work force was anger and hostility. He felt strongly about his program and persisted. Once the workers became comfortable with the idea they were quite enthusiastic. He found absenteeism dropped to almost zero and productivity was described as "going through the ceiling." The power which was once his by virtue of his position had been replaced with a different kind of power in which the employees respected the President for his actions rather than his tide.

One additional example from Slovenia would be the bread company which has high employee involvement and appeared to be low on both power distance and collectivism in contrast to the metal products company which has low employee involvement and appeared high on power distance and collectivism. The bread company manager found that establishing specific goals and providing specific customer information to employees reduced uncertainty enough to raise employees' comfort level with being involved and empowered in the marketing process. We caution that these are post hoc observations, but they do create insights into how managers in the successful firms are recognizing and overcoming the cultural barriers which presently exist.

Conclusions and Limitations

Goal setting is an effective management tool for incorporating employee involvement in market oriented activities. In transition economies that vary dramatically along cultural dimensions, adjusting the goal setting process to reflect cultural variations may provide a key tool for managers in those cultures to implement employee involvement and empowerment to achieve a full market orientation. Recommended adjustments include: 1) altering the content of the goals to reflect the group rather than the individual and to reflect a social network and relationship building orientation to the customer, 2) changing the focus of management authority to a goal setting orientation by providing challenging goals for employees, and providing employees with the strategies for goal achievement and feedback about goal achievement, and 3) sharing decision- making rules and the goal setting process with employees, making the goals very specific and providing clear, frequent, and consistent feedback regarding goal achievement to reduce uncertainty about management expectations.

Market orientation is critical for the long-term success of any business including those in transition economies. Employee involvement is a critical factor for the effective implementation of a market orientation in the U.S. Although our study was exploratory in nature and used a relatively small sample, we found strong evidence that employee involvement is a critical factor in market orientation development in the transition economies of Croatia and Slovenia. We also found a relatively strong relationship between market orientation and the business' self-reported performance. based on these results and the literature from empowerment and cultural differences in management practices, we identified three cultural dimensions for which empowerment and involvement would differ across cultures. We used goal setting theory as a means of adjusting management practice to fit with the cultures of Croatia and Slovenia and other countries of Eastern Europe that are similar on those three cultural dimensions.

This study is not without its limitations. The sample size is small and, therefore, caution is advised when interpreting the results. In spite of the small sample size, the in-depth interview was chosen over a large-scale survey. A large-scale survey is typically used to collect data when the specific response categories of respondents is known in advance. Due to the dearth of existing research from these countries, this was not the case. As such, our intent was to probe in depth and ensure clarification of our questions. The information available from this series of interviews should act as a springboard to future research. It is hoped that these findings will inspire studies that investigate the development of employee involvement for strengthening market orientation in a larger sample of companies across additional Eastern European countries that will better enable us to understand these issues from a global perspective.