The concept of technical and allocative efficiency

The concept of technical and allocative efficiency Technical Efficiency- Basic Concept The term Technical Efficiency was first used by M. J. Farrell in 1957 in his seminal paper and differentiated and disaggregated economic efficiency into two components i.e. technical efficiency and allocative efficiency. Coelli et al. (1999) define technical efficiency as the maximum achievable output from a given set of inputs and existing technology (Coelli, Rao, Battese, 1999). It has been also defined as the ratio of actual output and potential output of a farm unit i.e. In this sense TE refers to the manner in which the inputs or production resources are used. By this definition it is more closely associated with the techniques of framing or understanding of technology and deals with the behavior of how to produce an optimal level of production regardless of input-output price ratio. Hence, technical efficiency is also equivalent to Agronomic Efficiency. The concept of technical and allocative efficiency can be explained by the help of Figure 2.1 illustrated by Kalirajan and Shand (1999). Theoretically, we assume that all units of production (firm or land) operate at potential frontier production function i.e. the points along the curve FF. Any level of inefficiency with respect to this production function will be purely allocative. The reason may be that the producer has no income to buy inputs or is not willing to spend more for the marginal amount of inputs. Now suppose if the firm operates at point B by using I1 inputs and getting Y1 output. At this point the firm is both technically and allocatively efficient with a maximum profit of à Ã¢â€š ¬1. When the firm operates at Point-A with I2 level of inputs producing Y2 output points, earning à Ã¢â€š ¬2 amount of profit. At this point the firm is technically efficient as it is operating at FF but it is inefficient allocatively. It can improve its profit by à Ã¢â€š ¬2/à Ã¢â€š ¬1 amount. But on real grounds, the units of production operate at less than the level of its potential frontier. The reasons are differe nt technical, socio-economic, bio-physical, organizational and other unknown factors (Ahmed et al., 2002; Ajibefun, 2008; Ozkan et al. (2009)). Thus the firm operates at its actual production function AA below the potential frontier FF. Let us suppose it operates at point C with I2 amount of inputs and producing Y3 yield and earning à Ã¢â€š ¬3 profits. At this point the firm is neither technically nor allocatively efficient. It could maximize its profit to à Ã¢â€š ¬4 levels by operating at point D utilizing I3 inputs and producing Y4 outputs. But on real grounds, the units of production operate at less than the level of its potential frontier. The reasons are different technical, socio-economic, bio-physical, organizational and other unknown factors ( Ahmed et al., 2002; Ajibefun, 2008; Ozkan et al. 2009). Thus the firm operates at its actual production function AA below the potential frontier FF. Let us suppose it operates at point C with I2 amount of inputs and producing Y3 yield and earning à Ã¢â€š ¬3 profits. At this point the firm is neither technically nor allocatively efficient. It could maximize its profit to à Ã¢â€š ¬4 levels by operating at point D utilizing I3 inputs and producing Y4 outputs. Thus it is quite clear from Figure 2.1 that economic inefficiency is composed of two components of technical and allocative inefficiency. The total loss of the firm in profit terms operating at point C is à Ã¢â€š ¬1-à Ã¢â€š ¬3. Within this loss, à Ã¢â€š ¬3-à Ã¢â€š ¬2 and à Ã¢â€š ¬1-à Ã¢â€š ¬2 are the technical and allocative inefficiency losses respectively. The efficiency scenarios in these models explain three reasons of farmers attributes as discussed by Ellis (1988); Farmers desire to maximize profit with less input levels given by yield gap (Y0 Y3). Such behavior is referred as profit maximization behavior. Second reason may be the lack of correct allocation of inputs given by (Y3 Y2), and Farmers failure of operating in the most efficient production function (Y3 Y3). This gap represents technical inefficiency level, and Farmers behavior to reduce his risk instead of maximizing profit. . . . Technical Efficiency- History / Evolution Farrell (1957) is known as the pioneer of efficiency literature when the frontier production model developed by him, in one of his seminal papers, decomposed economic efficiency into two components; i.e. technical and allocative efficiency. He defined TE as the ability of a firm to produce maximum output given a set of inputs under existing technology. Stated differently, technical inefficiency is the failure of attaining the maximum possible level of production given existing resources and technology (Bravo-Ureta Pinheiro, 1993). The adoption of new technologies after green revolution for enhancing farm output has acknowledged special attention as a means to accelerate agriculture development after Schultzs hypothesis that conventional agriculture was fully efficient (Schultz, 1964). The growth performance is not only determined by such technological innovations but also by the efficient management and utilization of such technologies. The importance of efficiency measures as a me ans of nurturing productivity a considerable amount of literature is found focusing on agriculture (Bravo-Ureta Pinheiro, 1993). The efficiency analysis of units of agriculture inputs (land, labour, fertilizer etc.) has always been the focus of a number of studies since early 1960s. Most of the studies have supported Schultzs efficient but poor hypothesis. Theodore Shultz stated this hypothesis in 1964 that The traditional agriculture is fully efficient in the allocation of inputs under an existing technology. The combination of crops being grown, the depth and number of cultivation, time of planting, fertilizing, watering and harvesting, the combination of tools, draft animals and equipment are all made with a fine regard for marginal costs. (Schultz, 1964) Sahota (1968) based on his and many others have supported Schultzs hypothesis in their empirical works. Based on his study in Indian agriculture, Sahota (1968) concludes that the bulk of the evidences appear to support the hypothesis that the resources available to conventional Indian farmers have been, by and large, efficiently allocated (Sahota, 1968). A large number of frontier models were developed based on Farrells work which was than classified into parametric and non-parametric types. Aigner Chu (1968) were the initiators of deterministic parametric approach. They estimated a deterministic production frontier of a Cobb-Douglas type through linear and quadratic programming techniques. Timmer (1971) further developed this procedure by introducing a probabilistic production frontier model. He estimated a series of production frontiers by dropping extreme observations at each stage until the rate of change of parameter estimates stabilizes. These estimators had undefined statistical properties. Another class of frontier models was proposed by Afriat in 1972 known as statistical production frontiers. According to Afriats (1972) model, technical efficiency is a one-sided disturbance term with some explicit assumptions and frontier is estimated by method of maximum likelihood estimation (MLE). On the other hand if the disturbances are based on no a-priori assumptions, then corrected least squares (COLS) method is used to estimate the production frontier by just shifting the frontier upwards covering all negative disturbance terms. In 1977, Aigner et al. (Aigner, Lovell, Schmidt, 1977), and Meeusen and Broeck (1977) independently developed stochastic frontier production model in which the error term was decomposed into two components. A one-sided positive component reflecting inefficiency and a two-sided error component covering measurement errors and the random effects, which are not in control of the producer. Under this model the frontier could be could be estimated either by COLS or MLE. But in 1980, Greene found that the MLE are more efficient than COLS as the former method makes use of special statistical distributions for the disturbance terms e.g. exponential, half-normal or gamma distribution (Greene, 1980). Another mathematical programming method was developed by Charnes, Cooper and Rhodes (CCR) in 1978 which was a generalized form of Farrells (1957) method in terms of multi-input and multi-output vectors. Their method is well known as Data Envelopment Analysis or DEA. But their approach of measuring efficiency confounds the true technical efficiency score with uncontrollable noise (Charnes, Cooper, Rhodes, 1978). Further developments in DEA were incorporated by Varian in 1985. He brought improvements in DEA by treating the deviations as having stochastic characteristics and split them into two components of technical efficiency and random noise (Varian, 1985). The Free Disposal Hull (FDH) model, introduced by Deprins et al. (1984), was originally designed as an alternate to DEA models. In FDH approach only strong (free) disposability of inputs and outputs is assumed by relaxing the convexity assumptions of DEA models. FDH models were initially treated as DEA models under variable returns to scale (VRS). The FDH models are traditionally represented as mixed integer linear programming (MILP) problems. Further extensions in production frontier estimation are multi-equation models based on production, utility, cost or profit function specifications. Such extensions include the work of Kumbhakar (1987); Battese, Coelli and Colby (1989). In the decade of 1990s, the literature on TE expanded with the growing use of Z-variables in the application of Stochastic Frontier Approach (SFA). Previously, researchers used auxiliary or two-step regression on a set of socioeconomic, institutional and policy variables, so-called Z-variates to observe the effect of such variables on TE scores. A new method proposed by Wang and Schmidt allows a one-step procedure for calculation of TE and inspect effects of such Z-variables (Wang Schmidt, 2002). Kalirajan and Obwona (1994) suggested another approach for modeling production behavior and technical efficiency of any production unit, known as Stochastic Varying Coefficient Frontier Approach or SVFA. Under this method, like DEA, the potential output is estimated by allowing TE to vary by each individual input. Thus it makes comparison between firms performances easier in a sample of firms. It also facilitates to identify a benchmark of an excellent performing firm in terms of best practice in a sample (Kalirajan Shand, 1999). A recent approach, different from other sampling theory models, is Bayesian Approach (BA). The approach treats the uncertainty concerning which sampling method to use by mixing over a number of competing a-priori inefficiency distributions with a-posteriori model probabilities as weights. This approach overcomes the criticism of imposing a-priori distributions on disturbance term as in SFA. But in Bayesian Approach, like SFA, the potential output to estimate TE varies over all inputs taken together. It also differentiates random effects and fixed effects issue for panel data (Kalirajan Shand, 1999). Developmetns are being made on the methods to make them more, efficient, flexible, easily computable and more policy oriented. Especially Bayesian and FDH approaches need more modifications and specifications. Efficiency Studies in Developing Countries Agriculture and Associated Factors Here we cite some literature on efficiency estimates in agriculture sector of some developing countries with our main focus being on Pakistan. The findings regarding average efficiency scores and their relationship between different factors are summarized in the following paragraphs. Shapiro (1983) examined TE of Tanzanian cotton farmers using a Cobb-Douglas production frontier. His findings yielded an average TE of 66 percent leading rejection of Schultzs (1964) hypothesis. Balbase and Grabowski (1985) invested TE in Nepalese agriculture. His findings yielded 84 percent and 67 percent TE scores for rice and maize farms respectively. His analysis showed that nutrient levels, farmers education and income were significant factors influencing TE. Kalirajan and Shand (1985) examined TE of paddy farms in Indian state of Tamil Nadu. Their study proved non-formal education as significant positive factor in enhancing efficiency levels of farmers. Ali and Flinn (1989) have used a modified trans-log stochastic profit frontier to investigate profit efficiency of Basmati rice farms in Pakistan. They identify education, credit, late application of fertilizer and water shortage as key factors in profit losses. Ali and Chaudhary (1990) estimated efficiency for 220 farmers in Pakistani Punjab. According to his findings the average technical, allocative and economic efficiency were 84%, 61% and 51% respectively. Hussain (1991) analyzed efficiency in Punjab province of Pakistan. His results showed a TE score ranging from 80 percent for rice region and 87 percent for sugarcane region. Bravo-Ureta and Evenson (1994) analyzed efficiency for 101 cassava and 87 cotton farmers from Eastern Paraguay. His findings showed 58%, 70% and 41% technical, allocative and economic efficiency scores respectively for cotton farmers. Whereas the corresponding figure for cassava growers were 59%, 89% and 52% respectively. His results evidenced farmers age, education, farm size, extension contacts and credit availability as significant factors influencing efficiency level of farmers. Another study conducted by Ali, Parikh and Shah (1994) in NWF province of Pakistan by using both behavioral and stochastic cost frontier functions. Among socioeconomic variables, farmers age, farm size, land fragmentation and subsistency were showing significant influence on inefficiency levels. Ahmed et al. (2002) have analyzed TE of wheat growers in three provinces of Pakistan using a stochastic frontier production approach. The results yielded on average 32 percent losses due to technical inefficiency. The variables of age, education, extension services, farm to market distance, farm size, and credit availability had significant influence on efficiency levels of farmers in the provinces. He also found that wheat farmers in Punjab were technically more efficient (70%) than their counterparts in Sindh (66%) and NWFP (63%). Tenants were technically more efficient than the owners and owner-cum-tenants. Dhungana et al. (2004) have used Data Envelopment Analysis approach to examine efficiency of Nepalese rice Farmers. The results revealed that 76, 87 and 66 percent technical, allocative and economic efficiency levels were achieved by farmers. The factors contributing in inefficiency were excessive use of input resources, farmers level of risk attitude, managers age and gender, education and family labour endowment. Hassan and Ahmed (2005) examined TE of wheat growers in a mixed farming system of Punjab province in Pakistan using a C-D production function. The mean TE was recorded about 94 percent. The key influencing factors of efficiency were education, timely cultivation of crops, credit availability, sowing patterns and water availability. Bashir and Khan (2005) have conducted an efficiency analysis of 200 wheat farms in Northern region of Pakistan. They found high variation in yields of sample farms showing an average allocative efficiency of 72 percent in the study area. Farmers awareness, education level, farm size and level of fertilizer used were significant factors depriving farmers to achieve their optimum level of profits. Lambarraa et al. (2006) examined TE and productivity growth in the Spanish Olive sector. They found that farmers age, farm location; tenure regimes of land and organic nature of farming techniques affect significantly the level of efficiency. Mari and Lohano (2007) have analyzed TE of onion, tomato and chili farms in Sindh province of Pakistan. The mean TE was found to be 83 percent, 74 percent and 59 percent for chili, tomato and onion farms respectively. A detailed study on TE of Russian agriculture has been conducted by Brock et al. (2007). They found interesting results under three organizational farming regime; i.e. peasant farming, large corporate farming and household plots. The TE rankings were highest for household plots (81%) followed by corporate farms (74%) and peasant farms (70%). The peasant farms were least efficient. Analyzing efficiency of Nigerian food crops, Ajibefun (2008) has applied both SFA and DEA approach. He found only slight variation in average TE computed by both methods, i.e. 68 percent by SFA and 65 percent by DEA. Significant influencing factors were farmers age and education level. Kilic et al. (2009) have investigated TE of hazelnut production in Samson province of Turkey. Their study showed an average efficiency of 73.5 percent. Farmers education level and farm fragmentation were found as significant factor determining TE. A very recent work by Monchuk et al. (2010) on TE in Chinas agriculture reveals that heavy industrialization and large percentage of rural labour force in agriculture sector tend to reduce TE. He suggests that air and water pollution have negative effects on agriculture production; and growth of non-primary agriculture may lead to efficient use of labour resources. Factors Affecting Technical Efficiency There are various socioeconomic, infrastructural, institutional and policy factors that tend to influence technical efficiency of farmers, thereby depriving them from achieving a potential output from their available resources. Identification and probable solutions of such factors had been the focus of researchers and policy makers through decades. A summary table of the work of different researchers showing TE of different crops and significant factors affecting level of TE is given in Table 2.1 Yield Gap Yield gap is the difference between the yields of the experimental station by researchers and yield from farmers plot. According to Gomez (1977), yield gap appears in two ways (see Figure 2.2); The yield gap between maximum yield of research station and potential farm yield. This gap emerges into the system due to the environmental factors (climate, rainfall, humidity, sunlight etc) and non-transferable technology to farmers fields from the research station. Second type of yield gap is the difference between potential farm yields to that of the actual farm yield gained by the farmer. This difference arises from the different biological and socio-economic factors. This study of these gaps is particularly important in the context of research and arises some questions that whether the research methodologies, technologies, environment, equipments and capital costs utilized at research station are appropriate to farmers field conditions? Whether the recommended technology is complete? Whether this can address or takes into consideration the less favorable socioeconomic, bio-physical and environmental conditions of rain-fed and resource-poor marginalized farmers (Dahal, 1996)? The process of estimating technical efficiency gaps should be taken in a systematic and realistic way. It is necessary to consider the farmers specific farm trials rather than the trials conducted at the research stations. Role of Marketing in Rural Economy Farmers consider themselves as price takers and think that they have no control over prices and are bound to accept whatever the price is offered. They do not know how to capture new markets nor how market demand and buyers preferences are changing and which products are to grow to gain more profit from their produce. Farmers generally have knowledge and skills in agriculture production techniques but marketing needs new skills, techniques and sources of information. Farmers armed with newest business and marketing skills will have better profit margins (Dixie, 2005). Rural businesses include input suppliers, product buyers, transporters, storage companies, processing companies and wholesalers. These intermediaries are often believed to exploit farmers and making unfair profits. Although they try to maximize their profit yet it is to accept that without these intermediaries farmers would not be able to link with input and output markets and neither they would be able to sell their produce. Role of Marketing in Consumer welfare As farmers desire is to receive higher prices, consumers desire to pay lower prices. Farmers want to be paid as much share of consumer price as possible. These two conflicting goals balance when there is an efficient and low-cost marketing chain. Consumers preferences are constantly developing particularly in the case of horticulture crops. They need a marketing system that can respond to their changing demands and tastes. The marketing system should supply the volumes, variety and quality products that consumers demand. Fruits Marketing System in Pakistan (Aujla et al) Marketing includes a series of inter-connected activities involved in the flow of products and services from the point of production to the point of consumption at a profit. An efficient marketing system guarantees sustained agricultural growth as it affects both producers income and consumers welfare (Aujla, Abbas, Mahmood, Saadullah, 2007). The marketing of fruits in the Pakistan is supply based. Once a producer brings his produce to the market, the prices are decided by large traders at the spot such that he is bound to accept the prevailing prices. Most of the times the producers have to dispose off their commodities at throwaway prices (Hanif, Khan, Nauman, 2004). Several factors influence the efficiency of fruit marketing that include high perishability, seasonality, low quality, uneven prices and location of the products, the physical handling of produce and the institutional arrangements for facilitating these activities. The existing marketing system in Pakistan consists of assembly, wholesale and terminal markets, which are briefly discussed below: Assembly Markets Assembly markets are situated close to horticulture farm gate, generally situated in small towns or sub-districts, where farmers bring their major portion of marketable surplus for sale to the shopkeepers, traders and retailers present in these markets. Most of the transactions in assembly markets involve small quantities of produce. Traders in assembly markets are not approved by any government agency, although in some cases town committees charge an entry fee from traders. Usually, these traders maintain no systematic record of transactions. The price formation is simple and based on direct negotiation between the traders and the farmers. Because the quantities involve small bulks the farmers may not mind small price differentials. Wholesale Markets Wholesale markets are essential components of any marketing system, especially for horticulture crops because these markets provide farmers effective and profitable marketing outlets for their products. Adequately located, sized and managed wholesale markets serve as a basic instrument for promoting competition and help to improve consumers health and food quality control (FAO, 2001). Wholesale markets in Pakistan are usually located in a district town or a major sub-division town. These markets are the main assembly centers for the fruit and vegetable surplus of surrounding areas. These markets have better transportation, storage, communication and working conditions than those in the assembly markets. The example of wholesale market in Balochistan is that of Quetta, where the surplus fruit produce of nearby districts are supplied. Wholesale markets have permanent auction floors and offices built by traders (commission agent) who hold an official permit for their activities. Each trader has sufficient space in the market to store produce for a few days or for longer periods at a nominal charge. Traders keep records of their daily transactions and report them to the Market Committee. Market participants in wholesale markets including commission agents, wholesalers, retailers, shopkeepers and weighing men are also registered and licensed by Market Committees. Intro duction of these measures have resulted in some improvements in these markets. Commission agents in wholesale market, charged 8 to 10 percent commission on the sale revenue (Hussain Abid, 2005). The major players in the wholesale market are commission agents, wholesalers, retailers and shopkeepers. Terminal Markets Terminal markets are generally situated in large urban centers. Most of the marketable surplus of agricultural commodities is ultimately routed to these markets. The Karachi market is one of the best examples of this kind of market in Pakistan. Foreign trade is another reason for the flow of the marketable surplus to this market. Traders in terminal markets are usually wholesalers who supply agricultural products to firms, industries and exporters. The majority of traders are buying agents, who buy from other wholesale markets through their agents or directly when the produce is brought there from other regions. This market is well equipped with traders who are well established and mostly depending on supplies from growers and other wholesale markets. They have access to all modern facilities for approaching their agents in lower level markets. Many traders have their own trucking companies. Telephone and telegraph services are easily available for them. Fruit Marketing Channels in Pakistan Khushk and Smith 1996 Khushk and Smith (1996) have done a nice and detailed study of fruit marketing channels in Pakistan by concentrating particularly on mango production in Sindh province. According to them, agricultural marketing channels refer to the outlets or routes through which commodities pass to reach final consumers. As produce moves along the marketing chain, its price increases because of opportunity cost incurred by each intermediary (Dixie, 2005). The existing fruit marketing channels in Pakistan by à ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦. are presented in Figure . . . . . Figure 2.3 Marketing Channels for Fruits in Pakistan The marketing channels functionaries common in the country are; Producer The fruit growing farmers are dispersed geographically in the country. Majority of producer sell the harvesting rights of their orchards to contractors at the flowering or in hanging fruits stage because they do not want to be involved in marketing complications. Also the farmers do not do not want to take the risk of price and income variation due to perishability, quality damage, and price seasonality. In addition, Khushk and Smith (1996) found another important reason reported by farmers is the lack of knowledge of marketing. commission agents are biased towards farmers than contractors and do not want to transfer market price information to farmers or provide them other facilities, like informal credits, transportation or information access at the market-place. By this way commission agents control the supply, demand and prices of market (Khushk Smith, 1996; Ali, 2004; Aujla, Abbas, Mahmood, Saadullah, 2007). Contractor The contractor plays a main role in the marketing of fruits. He has close contacts with commission agents in the wholesale and terminal markets. While contracting an orchard, the contractor estimates its yield and considers the expected costs to be incurred for supervision, labour, transportation, and marketing. Khushk and Smith (1996) report that more than 95 percent of mango contractors in Sindh province of Pakistan obtained loans from commission agents to pay the initial installments to the mango farmers and to pay an advance for labour and packing material. Once a contractor receives loan from commission agent, he is obliged to supply the produce to that commission agent. Commission Agent Commission agents act as a link between contractors in the field and wholesalers or retailers at wholesale market. They usually have their own transport companies and have offices and staff at wholesale markets of big cities, equipped with all communication facilities. They maintain contacts with market committees, market associations, wholesalers and retailers and influence the prices in fruit markets of Pakistan (Ali, 2004). Wholesaler Wholesalers perform their business in wholesale or terminal markets of the country. They do business with large quantities of farm products and deal in several commodities like vegetables, fruits and other agricultural produce within interregional markets and also supply produce to processing industries, exporters, and retailers according to their demand. They maintain contacts with commission agents in wholesale markets and retailers in the local area. Wholesaler usually purchase fruit from the commission agents at open auction and sell in smaller quantities to the retailers and consumers. They mostly buy from the commission agents on a credit basis, and about one week after selling that quantity, they pay the commission agents. Some wholesalers also act as commission agents (Khushk Smith, 1996; Ali, 2004; Zulfiqar, Khan, Bashir, 2005). Retailer Market activities come to end with the retailers. They buy and sell small quantities according to the demand of consumers in the area. A small number of fruit retailers occupy small shops in the main fruit markets or in the town. Moreover, a number of retailers are found standing at focal places of a town, particularly railway stations, bus stands, vicinity of courts, schools, and hospitals. Among fruit retailers there is a high degree of competition. Retailers buy fruit from the wholesalers on a 24-48 hour credit basis (Khushk Smith, 1996; Ali, 2004; Zulfiqar, Khan, Bashir, 2005). Importance of Market functionaries / Intermediaries Although a heavy literature is found on exploitative behavior of market intermediaries towards agriculture producers, especially in developing countries such as Pandit et al. (2005) Aujla et al. (2007), Khushk and Smith (1996) and many others, yet their role cannot be ignored (Dixie, 2005). It is often mis-understood how important traders are in taking agriculture produce from farm to the market. Their importance becomes more critical in case of fruits which are highly perishable in nature and need quick supply. The more dynamic the fruit trading sector leads greater competition among traders and greater volumes of produce taken out of rural farm lands resulting, ultimately, high income returns to the farming community. Farmers Selling directly to consumers does mean higher profits but also greater risks. Market traders accept that risk such as non-payments, price decrease and marketing and handling losses (Khushk Smith, 1996). Therefore the intermediaries should be encouraged, not criticized (Dixie, 2005; Pokhrel, 2005). Marketing Margin Analysis Marketing margins or farm-to-retail price spread are some functions of differences between farm-gate prices and retail prices, intended to measure the opportunity cost of providing marketing services including buying, grading, packing, transporting, storage, and processing (Khushk Smith, 1996; Wohlgenant, 2001). The prices paid to the rural sellers at farm-gate are much lower. But as the product moves along the production-marketing chain, its price increases such that the retailers achieve the highest price (see Figure 2.3). The farm-to-retail price spread of fruits in Pakistan is con

Elder abuse Essay -- Health Care

Elder Abuse Elder abuse has been present in our society in the past times; however, it has been the hidden problem and under recognized by our community. It is really challenging for people to understand the severity of this problem unless one encountered it in one’s life. Society began to really acknowledge this issue because of the cases that have been reported. There are varieties of categories of elder abuse that are reportable to a healthcare provider; however, many cases are still left unreported and elder victims continue to suffer from mistreatment. The seniors that surround us have contributed to our community and to the great things that we now have. These people should be recognized and protected in all areas of life instead of being mistreated and left behind. Elder abuse is a social problem because it violates the ethical principles, standards of practice, and the legislature. In our society we have been taught from a young age to respect our elders and treat them with dignity and respect. Those who should be the most honored end up being one of the most vulnerable populations and a group of people that require special attention and care. These people require skilled nursing care and support from family and friends. Regardless of the abuse, it would lead to the needless suffering, pain, and violations of human rights. Elder abuse violates the principles of ethics; some of them are justice, autonomy, and nonmalificence. When dealing with older adults the caregivers are required to provide a fair treatment. The caregiver who stands in trust relationship to the resident cannot intentionally cause any harm or neglect. For the residents to be treated in a fair way, health providers must appropriately provide care to... ...aveman, B. (2006). Perceptions of elder abuse: voices of professionals and volunteers in Sweden -- an exploratory study. Scandinavian Journal Of Caring Sciences, 20(2), 151-159 American Nurses Association. (November 15, 2010). Code of Ethics for Nurses with Interpretive Statements. In Nursing World. Retrieved March 30, 2012, from http://www.nursingworld.org/MainMenuCategories/EthicsStandards/CodeofEthicsforNurses/Code-of-Ethics.pdf. CCERAP. (2011). About Elder Abuse. In Colorado Coalition for Elder Rights and Abuse Prevention. Retrieved March 27, 2012, from http://www.ccerap.org/index.php/about-elder-abuse. National Institute of Justice. (Novembeer 6, 2007). Elder Abuse. In National Institute of Justice. Retrieved April 1, 2012, from http://www.nij.gov/topics/crime/elder-abuse/welcome.htm.http://www.ncea.aoa.gov/main_site/pdf/publication/FinalStatistics050331.pdf

Leadership theory and competency framework Essay

Introduction Leadership is always been interesting topic to be discussed. Given the theories that continue to grow and evolve. There is none of the theories that really can define what is the real meaning of leadership but we agree that the leader must have knowledge, skills on how to analyse the information in order to make appropriate decision. An effective leader is one who is able to read the situation, correct the problem, responsible, willingness to develop the followers, have integrity and good ethics. Effective leadership expected to act within the ethical framework. The ethical framework itself is about what right or wrong and good and bad. The reason why ethical decision becomes so important in the leadership is because business involves in a lot of transactions with people both within and outside the organisation. The purpose of this report is to provide better understanding about effective leadership, decision making and ethical management and how they linked each other both in theori es and practices and how the leaders ensure that every decisions are made within the ethical framework. Ethics . According to Ciulla (1998) Ethics is study about human relationships it is about the role that we play in life on what we should do and what we should be like as human being. Ethics is about right or wrong and good or devil. Ethics is the foundation of leadership. There are four theories in ethics: 1. Virtue ethics. Focused on in individual processes whether their act is expressing good character (moral virtues) or not. 2. Deontological ethics. In deontological perspective, intentions are the morally relevant aspects of an act. As long as the leader acts according to his or her duty on moral principles then the leader acts ethically, regardless of the consequences. In simple words, deontological focus on what is right based on the facts. 3. Ethical growth and learning ethics. Ethical growth and learning ethics also called as the character ethics. According to Covey (1992) the character ethics based on living effectively including things like integrity, courage, fidelity and so on. He believes that human have to go through the necessary stages in their life for their personal growth. Senge (1990), see learning process in each individual are important for the organisation learning  development. 4. Teleological. This theory locates the ethics of the action in its results. Leadership Leadership is the one of the specific type of human relations. There are a lot of thoughts behind the theory of leadership, even those theories still growing from time to time and it stills remain without satisfactory conclusion on that. According to Bolden, The theories of leadership are ranging as follow (Bolden et all.,2003): 1. Great Man theories. These theories based on the idea that leaders are those who are incredible, born with leadership qualities and destined to become a leader. 2. Trait theories. The theories based on the qualities and traits that leaders have. Trait theories often 3. Behavioural theories. These theories are opposite from great man theories. The theories believe that good leaders are made, not born. 4. Situational theories. These theories view leadership as something that is specific into the situations. For example: there are some situations that require the type of autocratic leadership, in other situation participative approach might needed. 5. Contigency theories. These theories focus on particular variables related to the environment to suit the style of the leadership. According to this, successful leadership depends on numbers of variables including leadership style, follower’s quality and the conditions. 6. Participative theories. The theories suggest that ideal leadership style is one that taking input from others. These leaders are more engaging the group members in decision making process. According to Lewin (1939) there are three leadership style in participatory, autocratic, democratic and laissez faire. 7. Management theories or transactional theories These theories focus on the role of organisation and group performance. These theories use rewards and punishment system and most used by the business organisations. 8. Relationship Theories or transformational theories. These theories focus on the connection between the leaders and followers. In this theory, beside focus on the overall performance of the groups, the leader also focusing on each member’s potential. This theory also often has high ethical and moral standards. Decision Making According to business dictionary, Decision making is process of selecting a choice from the available options. In order to make good decision, someone must be able to predict the result of each option and based on that options, take the best for the particular situation. There are two dominant decision making process models: 1. Rational model Rational model is mechanistic. The foundation of this model is quantitative discipline. It involves a cognitive process where each step follows in a logical order in order to get the best result. Disadvantage of this method is slow process in decision making 2. Bounded rationality Bounded rationality foundation is qualitative approaches. Bounded rationality model recognize that the data that available may or may not be completely valid but decision maker stills allow to make decision based on available data. 1. Toyota Toyota started in 1993 as one of Toyoda automatic divisions. Toyoda Automatic was encouraged to develop Japanese automobile production by Japanese government for supply their domestic vehicles. In 1993, Toyota motor co. became independent and separated from Toyoda automatic. Toyota started to expand in 1960 to other countries began by establishing new research and development facility in Thailand and in 1963, the first Toyota built outside Japan located in Melbourne, Australia. During that decade, Toyota had  exported one million units which had their presence established worldwide. In 2010 Toyota facing the most critical crisis on their history as one of the biggest car manufacturers in the world. At least 8 million cars were recalled from the market regarding to floor mats and gas peddles that causing uncontrollable acceleration that reported become the cause of accidents and death. This incident costing the company of millions dollars in repair expenses lost in sales and destroy ed the company image for its reputation and of course undermining its credibility. The company also faced some of expensive lawsuits because it accused that Toyota leaders knew about the problems but they held back the information to held recall and in this case the Toyota leaders using ethical growth and learning approach. A lot of organisation experienced crisis incidents that need them to make audience public messages in explanation, apologies, and other efforts to fix their image. The unethical things that resulting in public accusation often can result in harm to shareholders and stakeholders of the organisation and will have negative impact in organisation’s sustainability. Toyota confront by some very clear situational limitation in trying to respond effectively in responding to the allegations and fixing its bad image. The allegations including the causes of the problem is not all clear yet ranging from engineering issue to human’s error. In reality, some reports suggest that the company do to repair the product are not solving the problems. The toyota also accused on having slow decision making process because they didnt respond to that that problem quickly and decisively. Ideally, the organisation expected to have quickly responsive actions to make positive image in the society because it is indicate that the organisation primary interest is to solving the problems rather that avoid legal problems. Such organisations are likely to be seen as ethical, responsible and decisive. However, the most difficult part that the company confront regarding their CEO. Akio Toyoda, the grandson of the founder. He facing the culture conflict associated with his multinational company’s nature. In general, Japanese corporate cultures encouraging harmony and try to avoid addressing the problems in public and prefer to manage behind the scenes and the process of their decision making is using consensus model. Consensus model is time consuming process and it will slow organisation in  their respond to the crisis. For some countries this can be seen that company is not decisive. Also in the Japanese organisation culture, they more focus on their leader’s opinion than public’s opinion. 2. Trafigura Trafigura is a private company established in 1993 by six partners, Claude Dauphin, Eric de Turckheim, Graham Sharp, Antonio Cometti, Daniel Posen and Mark Crandall. They are focusing on three regional markets, South America for oil and mineral industry, Eastern Europe for metals industry and Africa for oil industry. Currently, the group has 81 offices in 56 countries. The story of ethical issues that faced by Trafigura begun in early 2006 when Trafigura’s oil trader decided to buy Coker naphtha, a refinery by product from Mexico. They did this to make a quick profit. In between March and June 2006, three loads of 28.000 tonned was received in Texas and transferred to chartered cargo ship, Probo Koala. Dangerous chemicals were used to clean the Coker naphtha and then Trafigura realised that they facing the problem on how to dispose the toxic material safely. In July 2006, Probo Koala arrived in Amsterdam where one of the branch corporate offices is located. The Amsterdam Port Service, a Dutch waste management company agreed to treat and dispose the waste but in the higher price than it was agreed because APS discovered that the slop was much more polluted and requiring special treatment. As the consequences of that problem, the Probo Koala back to the sea and in August 2006, it arrived in Ivory Coast to deliver the waste to local company called Compagnie Tommy. Tommy then was illegally dumped the waste without treating it across Abidjan. The weeks after, thousands were sick and at least 10 death reported. Trafigura reached out of court agreement with Ivorian government by paying $ 198 million for cleaning up and helping the victims. Here we can see that the company using teleological approach in handling the problem. However, they denied that what they did is wrong and refused to accept any legal liabilities for that incident. The way Trafigura handled the crisis criticized by corporate responsibility observer. They said it was clearly messed up because when facing the problem, company ideally needs to find the facts quickly,  disclose them quickly and involve those who can reduce the problem and work with affected community in order to clean up the damage. In contrast, Trafigura, held everything privately and in the company like this they don’t have the same transparency and ethical requirements that a publicly company has. By looking for those examples, we realised that the need for ethics in leadership become obvious. Ethics influenced the leader in their leadership and decision making. Understandings of ethics begin with the analysis of values, both individual and organisational. Effective leaders must aware of their values, and system of ethics and ethical decision making. Good character and integrity are what we want to see from the leader. Somehow there is always the connection between a value system and the ability of the leader to use these values in their decision making. According to the Josephone Institute’s (1999), there are six pillars of character that might easily be applied to business setting. They are: Trustworthiness – honesty, integrity, reliability, loyalty, keeping promises and not deceiving others. Respect – using the golden rule or treating others as you wish be treated, in addition to being courteous, listening to others, and accepting individual differences Responsibility – accountability, self-control, the pursuit of excellence and considering consequences of our actions prior to making them Fairness – playing the rule, not taking advantage of others, making informed judgments without favoritism or prejudice, and not blaming others Caring – Kindness, compassion, and altruism, acting to minimize hardship and to help others whenever possible Citizenship – working to make one’s community better, protecting the environment, making our democratic institution work, and operating withi n the law How the leaders ensure that all decisions are made ethically? The foundation of ethical decision making involves choice and balance. As we discuss before ethics is the study of human relationship about right and wrong. To ensure that all decisions made ethically, leaders have to do ethic checks. There are varies on ethic checks but to make it simple, we can define ethic checks into three parts. The most common questions when we questioning about ethics are whether it is legal?, whether it is fair?, and if we do this, how it  will affect ourselves as human being s a member’s of society. The first part of ethic check is bout legality. Legal here means not only within legal system but also whether it is legal within the organisation policies. After we get the answer for the first part the next question will it be fair? One of the traits that effective leadership must have is putting the organisation’s interest above their personal interest. Hence to ensure the decision has made ethically here the leader should check whether the decision will be fair for all stakeholders. Lastly, after those two questions answered, the leaders must ask themselves how they want to be view by the society because whatever it is, regardless the power that the leaders have, they are still a member’s of society. Conclusion Ethics is the heart of leadership. In understanding the leadership it is important for us to understand about the ethics. Ethics is the study of human relationship. It is about what we should do and what we should be like in the society. The ethics can be different from one and another because ethics influenced by other factors such as family influence, religious belief, culture, experience and personal reflection. Leadership on the other hand is the particular type of human relationship that involving power. The effective leader has to have good ethics as one of their traits because in effective leadership, leader should put the group interest above his or her personal interest. Nowadays, many organisations in the world have been damage by their unethical decision making and most cases because they put self- interest above group or society interest which destroys the society trust to the organisations. Regarding to that we can see that ethics and leadership should go hand in hand and the effective leadership should have good ethics that stick to the moral values on the society and oppose all the unethical conduct. Like other things in the world nothing is perfect, but it is very good for the leader to ensure that the decisions are made ethically through questioning their decision whether it is legal or fair for them and for the community and the leader also consider their decision as their personal reflection. References Bolden, R., Gosling, J., Marturani, A. and Dennison, P. (2003). A review of leadership theory and competency framework. Centre for Leadership studies, UK : University of Exeter Linstead, S., Fulop, L., Lilley, S. (2009). Management & Organization A critical text. New York, NY: Palgrave Ciulla, J.B. (ED). (1998). Ethics, the heart of leadership. Westport, CT:Praeger. Driscoll, D. M. & Hoffman, W.M. (2000). Ethics matters: How to implement values-driven management. Waltham, MA Hitt, W.D. (1990). Ethics and Leadership. Columbus, OH: batelle Johnson, C.E. (2001). Meeting the ethical challenges of leaderhip. Thousand Oaks, CA: Sage Publishers. The six pillars of Character. (2009). Retrieved from http://charatercounts.org/six pillars.html Leadership Theories and styles. (2009). Retrieved from http://www.etsu.edu/ahsc/documents/Leadership_Theories.pdf History of Toyota. (n.d). Retrieved from http://en.wikipedia.org/wiki/History_of_Toyota Seeger, M. (2010) Image restoration and Toyota recall. In communication currents. Retrieved from https://www.natcom.org/CommCurrentsArticle.aspx?id=967 Trafigura corporate history. (n.d). Retrieved from http://en.wikipedia.org/wiki/Trafigura Chhabara, R. (2009) Trafigura –Toxic ethics. In communication reporting. Retrieved from http://www.ethicalcorp.com/communications-reporting/trafigura-%E2%80%93-toxic- ethics 10 of most unethical business practices in business (n.d). Retrieved from http://www.businesspundit.com/10-most-unethical-business-practices/

The Rise Of Einsteinian Special Relativity Essay - 1908 Words

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