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How do people get energized by cross-cultural interactions: a

moderated mediation model

Master Thesis Human Resource Management

University of Groningen , Faculty of Economics and Business

February 4, 2018 Margarida Gil Lopes Beja

S3137961 Ijsselstraat 69A 9725 GD, Groningen Tel. +351 914891905 Email: m.g.l.beja@student.rug.nl

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2 ABSTRACT

This study aims to test the influence of cultural distance on relational energy. Although several researchers have studied the impact of energy on organizational outcomes there is still a gap on research regarding the antecedents of energizing relationships. Due to cultural differences, individuals may feel more uncertain about how others will behave and how they should response. It is hypothesised that cultural distance will increase perceived uncertainty which in turn will decrease relational energy. Moreover, empathy will play an important role in cross-cultural environments. It will affect the reactions of individuals towards the experiences of others, reducing perceived uncertainty. Therefore, it is expected that empathy will moderate the indirect relationship between cultural distance and relational energy by weakening the positive relationship between cultural distance and perceived uncertainty. Evidence has shown that these hypotheses are not statistically supported. However, it is noticeable that high cultural distant dyads had a tendency to have a negative indirect effect on relational energy when mediated by uncertainty and moderated by empathy; contrary to the positive effect of low/medium cultural distant dyads.

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3 INTRODUCTION

Over the past decade especial attention has been given to energy at work mostly due to its positive organizational outcomes, such as team performance, job satisfaction, motivation, innovation (Cross, Baker & Parker, 2003) and job engagement (Owens, et. al., 2016). According to Quinn & Dutton (2005) energy can be described as the feeling of being capable and motivated to act toward a certain position; it is related to positive emotions and dispositions; and, it entails motivational effects – the positive feelings captured by an energizing relation can lead individuals to increase effort when performing certain activities because they perceive that they have the energy to do so. The presence of energy in organizational contexts is vital; its unavailability can generate burnout, stress and/or disengagement (Owens, et. al., 2016). Moreover, energy is also associated with higher thriving and learning; individuals that engage in energizing networks will rely and seek more for information from the energizers increasing not only knowledge within the employees but also leading to more innovation in organizations (Cross, Baker & Parker, 2003).

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high importance in cross-cultural environments, especially due to lower levels of social integration and interpersonal attraction related to less similarity between co-workers, at least in initial stages (Thomas, 1999; Milliken & Martins, 1996). As of yet it remains unknown whether cultural distance influences relational energy within employees. Therefore the following research question has been elaborated: How does cultural

distance influences relational energy?

As result from cultural differences in the organizational environment people engage in the process of self- categorization. The self-categorization theory argues that people categorize their selves and others into in-groups and out-groups; in this way, individuals stop being perceived as their unique self but as part of the relevant prototype (Hogg & Terry, 2000). As Hornsey & Hogg (2000) stated, “people strive to avoid uncertainty about who they are, how they should behave, and how other people will behave” (p.144). It is expected that diverse environments will contribute to greater feelings of uncertainty; uncertainty about others behaviours and how to respond. Therefore, perceived uncertainty will mediate the relationship between cultural distance and relational energy. In addition, empathy will play a moderator role in the relationship between cultural distance and uncertainty. Empathy will reflect how people are aware of others experiences and points of view and will enhance compassion to others feelings (Davis, 1983); therefore decreasing uncertainty in a cross-cultural context, at least in the initial state.

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interactions with other employees. Managers will able to understand better the differences of energy level on cultural diverse teams enabling them to take action and change behaviour to increase energy. Despite the benefits on the individual and dyadic level, increasing energy will lead to positive outcomes on organizational functioning.

THEORETICAL BACKGROUND

Relational Energy

Relational energy in the organizational context refers to the degree to which interpersonal relations create or not the feeling of energy within co-workers (Cameron, Dutton & Quinn, 2003). According to Quinn and Dutton (2005), energy can be described as the “ type of positive affective arousal, which people can experience as emotion - short responses to specific events - or mood - longer-lasting affective states that need not be responses to specific events” (p. 36).

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reflects the direction, intensity and persistence of those same decisions (Quinn, Spreitzer & Lam, 2012).

The concept of energy entails three different domains: affective or emotional arousal – feelings of enthusiasm or excitement; cognitive – the intention to direct attention and investigate answers for work related problems; and behavioural – the physical resources applied to benefit the organization (Cole, Bruch & Vogel, 2011).

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7 Cultural distance

Cultural distance can be defined as the extent to which individuals differ from each other in norms, beliefs, perspectives, attitudes, behaviour and values (Early & Mosakowski, 2000; Thomas, 1999; Drogendijk & Slangen, 2006). Several researchers have developed measures to cluster countries by assessing different behaviours and attitudes of employees based on their similarities (Ronen & Shenkar, 2013). For instance, Hofstede (1984) measured cultural distance through four dimensions: power distance - the extent to which social inequality is accepted and treated as normal, although inequality is present in all societies some are more tolerant to it than others; individualism – contrary to collectivism, it represents the level to which individuals look firstly for their own interest and their direct family; masculinity – opposes to femininity, it refers to the extent to which cultures define clear different roles between gender; and, uncertainty avoidance – the extent to which individuals try to avoid situations that are unclear or unstable; for example, countries such as USA, Netherlands or Sweden have scored much higher on individualism when compared to Greece, Mexico or Portugal.

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(Thomas, 1999). In order to engage in the process of categorization, people use prototypes as a representation of the characteristics of a certain group such as beliefs, behaviours or attitudes that distinguish this same group from others (Hogg & Terry, 2000). As a result from self-categorization, individuals stop being seen for their unique self but as an extension of the related prototype (depersonalization process) leading to stereotyping, ethnocentrism and normative behaviour (Hogg & Terry, 2000). This implies that people may hold more positive attitudes toward their own group when compared to other groups (Knippenberg, De Dreu & Homan, 2004). Moreover, according to Turner, Brown and Tajfel (1974), interpersonal communication and interaction are higher within the same social group. Dissimilarity intensifies the distance between individuals leading to lower levels of attraction and liking; affecting work impressions and attitudes due to less attraction and communication (Tsui & O´Reilly, 1989). As a matter of fact, dissimilarity between co-workers has been associated with lower level of cohesiveness affecting, in turn, social integration negatively (Harrison, Price & Bell, 1998). Nevertheless, time as been referenced as a moderator for this relationship, because over time individuals are able to get more information about their co-workers enabling them to be more cohesive and reduce stereotypes (Harrison, Price & Bell, 1998).

Perceived uncertainty

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Uncertainty can be characterized as the perceived lack of information to predict something truthfully or to differentiate significant data from not so significant data (Milliken, 1997); it is the “state that exists when an individual defines himself as engaging in direct behaviour based upon less than complete knowledge” (Downey & Slocum, 1975, p. 571). Perceived uncertainty is associated with three factors: information scarcity; time gap between action and feedback; and, common uncertainty related to casual relationships (Ducan, 1972). Furthermore, according to Milliken (1997), uncertainty can be distinguished in three different dimensions: state uncertainty – related to the environment and how different factors of the environment act; effect uncertainty – it refers to the incapability of predicting future outcomes; and response uncertainty – the feeling of not being sure on how to respond and the significance of those responses to the situation. As a matter of fact, Downey & Slocum (1975) stated that perceived uncertainty is also related to individual behavioural response uncertainty which reflects the individual´s dilemma in what kind of behaviour to engage in accordance with different environments.

In cultural diverse environments people will perceive higher levels of uncertainty, mostly related to their counterparts resulting in less attention and action capacity, meaning that people will be more resistant to relational energy with their co-workers.

For the reasons mentioned above, the following hypothesis has been elaborated:

H1: Perceived uncertainty will mediate the indirect negative relationship between cultural distance and relational energy.

Empathy as a moderator

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Empathy can be defined as the tendency to care about others feelings, to feel compassion and to be aware of different points of view (Chopik, et.al., 2016); it reflects “ the reactions of one individual to the observed experiences of another” (Davis, 1983, p.113). More empathic people have shown to have higher levels of life satisfaction, emotional intelligence and self- esteem (Chopik, et.al, 2016).

Davis (1983) developed the measurement of individual empathy in four different dimensions: perspective taking (PT) – the extent to which people take into account others point of view; empathic concern (EC) – the degree of compassion and concern about others; fantasy (FS) – the extent to which people try to put themselves imaginarily into feelings or actions of fictional characters; and, personal distress (PD) – the tendency of feelings such as anxiety or discomfort. The results of perspective taking have shown to be related to the individual ability to predict behaviours and responses of others, and higher self-esteem; thus, reducing response uncertainty and facilitating interpersonal relationships. Moreover, higher levels of personal distress were related to feeling of uncertainty or vulnerability leading to lower levels of social functioning.

According to Gudykunst (2005) the higher the level of empathy the lower the level of uncertainty and anxiety is experienced. Besides, being empathic to other´s cultural differences and being able to take into perspective other´s experiences and points of view will reduce perceived uncertainty because people will feel more in control and they will be more able to anticipate other´s behaviours and reactions resulting in better interpersonal relations. Thus, the following hypotheses are presented:

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Hypothesis 3: Empathy moderates the indirect effect of cultural distance on relational energy through perceived uncertainty, such that, empathy will weaken the positive relationship between cultural distance and perceived uncertainty, affecting consequently energizing ties.

Figure 1: Conceptual model

METHOD

Sample

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TABLE 1 Sample descriptives

Students Nationality Frequency Response rate

Dutch (a) 117 68,8%

European (b) 34 20%

Asian (c) 19 11,2%

Total 170 100%

Note. (a) including Aruba and Bonaire

(b): Albania, Armenia, Bulgaria, France, Germany, Greece, Italy, Moldova, Poland, Portugal, Romania, Spain and Turkey (c): Japan, Vietnam, Korea, Indonesia, India, China, Mongolia, Taiwan and Thailand

Procedure

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soon as the group finished the task they had to answer the third and final part of the online survey regarding relational energy and perceived uncertainty, this took around 5 minutes.

Manipulation

Cultural distance was manipulated taking into account the cluster formation from Ronen & Shenkar (2013). According to the same authors, clusters can conduct cross-cultural sampling by grouping different countries that are relatively homogeneous. These same clusters of countries were designed based on similarity and dissimilarity of work-related attitudes.

Teams were assigned according to the country of origin of the participants; in this way it was possible to manipulate the level of cultural distance between the participants. Group 1was formed only by Dutch students, zero cultural distance; Group 2 was formed by Dutch and Other Europeans students, medium cultural distance; and, Group 3 was formed by Dutch and Asian students, high cultural distance.

Measures

Relational energy was assessed through a 5-item scale developed by Owens, et. al. (2016)

plus an item to measure the total score of energy. The items were scored using a 7-point Likert scale. Example item: “after an exchange with this person I feel more stamina to do my work”. 1(α=.85)

Uncertainty was measured through a 10-item scale of attributional confidence developed

by Gudykunst & Nishida (1986). This scale represents the degree to which each participant was able to predict others behaviours or feelings. The items were scored with a scale of 0 to 100. Example item: “How confident are you in your ability to predict how your partner will behave in the next activity?”. Moreover, uncertainty was assessed twice during the experiment. Firstly after the ice-breaking activity, initial state, and secondly

1The first item of this measure was excluded from the following analysis because most of the participants did not understand the

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after the survival task, by the end of the experiment. The reason why uncertainty was evaluated twice is to compare how the participants felt through time and to use the results from t0 as a control variable. (Uncertainty t0: α=.88; Uncertainty t1: α=.90)

Empathy was assessed by the IRI (Interpersonal Reactivity Index) developed by Davis

(1994). It consists on a 28-item survey scored in a 5-point Likert scale from 1, does not

describe at all, to 5, describes me very well. Example item: “I sometimes try to

understand my friends better by imagining how things look from their perspective”. (Empathy: α=.82; Fantasy: α=.78 ; Empathic Concern: α=.73 ; Perspective Thinking: α=.71; Personal Distress: α=.77)

Control Variables

Big 5

Personality traits can influence uncertainty in cross-cultural environments and relational energy. For instance, extroverts are able to transfer positive energy to others in certain situations (Cullen-Lester, et.al., 2016); or people with higher levels on Openness to experience will more willing to tolerate and explore unfamiliar situations (Homan, et.al., 2008). This variable was measured by the 50-item scale IPIP (International Personality Item Pool) from Goldberg (1999) with a 5-point Likert scale. (Extraversion: α=.87; Agreeableness: α=.74 ; Consciousness: α=.76 ; Emotional Stability: α=.86; Openness to Experience: α=.77)

Diversity Beliefs

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15 RESULTS

Descriptive Statistics

Table 2 provides some descriptive statistics, including means, standard deviations and correlations of the different variables.

Table 2

Means, Standard Deviations and Correlation

Note. N=170; All variables ranges between 0 and 5, except for relational energy (1-7), uncertainty (0-100) and age; *p<.05; **p<.01 (two-tailed significance)

Hypothesis testing

Hypothesis 1: mediation analysis

The first hypothesis predicted that there was an indirect relationship between cultural distance and relational energy when mediated by perceived uncertainty. To test mediation a series of regression analysis were conducted. For the analysis, the independent variable

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was transformed into two dummy variables – dummy 1 takes the value 1 for group 2 (Dutch x other Europeans) and the value 0 for all other groups; and dummy 2 takes the value 1 for group 3 (Dutch x Asians) and the value 0 for all other groups. According to Baron & Kenny (1986), a series of regressions were conducted to test mediation (see Appendix). According to the same authors, the direct effect of cultural distance on relational energy should be significant. Although there was no significant relation between these two variables ( D1: B=.23; SE= .15; p=.12; D2: B= -.03; SE= .17; p=.86), what is proposed by the theoretical background is the indirect relationship; therefore, a regression was conducted to test if cultural distance predicts uncertainty and if uncertainty affects relational energy. Even though uncertainty did predict relational energy (p <.05), only Dummy 1 had a significant effect on uncertainty (p=.03). Taking into account the four steps of Baron and Kenny (1986), there is only possible ground for mediation for dummy 1 because dummy 2 does not predicts the mediator.

However, according to Hayes (2004), the four steps approach mentioned above is the lowest in power and it is more likely that this approach is not able to detect the indirect effect. For that reason, a regression analysis was conducted to test the bootstrap indirect effect of cultural distance on relational energy when mediated by uncertainty t1 and controlling for uncertainty t0 . In terms of direct effects, neither dummy 1 (R²=.06;

B=.19; p>.05;95% CI [-.10, .49]) or dummy 2 (R²= .06;B=-.00; p>.05; 95% CI [-.35,

.34]) had a significant effect on the dependent variable. Moreover, as shown in Table 4,

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Table 3

Regression of direct effect of cultural distance on relational energy

DV= Relational energy R² B SE t p LLCI ULCI Model 1 .03 Control: Unc t0 -.01 .01 -2.30 .02* -.02 -.00 Model 2 .06 D1 .19 .15 1.28 .20 -.10 .49 D2 -.00 .17 -.01 .99 -.35 .34 Unc t1 -.01 .01 -1.62 .11 -.02 .00 Control: Unc t0 -.00 .01 -.71 .48 -.02 .01 Note. ∆R²=.03; N=170; *p<.05 Table 4

Mediation Effect: Indirect Effect of Cultural distance on Relational Energy when mediated by Uncertainty t1

Effect SE (boot) LLCI ULCI

Dummy 1 .04 .04 -.01 .14

Dummy 2 -.03 .03 -.11 .03

Note. N= 170

Hypothesis 2 : Moderation analysis

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18 Table 5 Moderation Effect DV= Uncertainty t1 R² B SE t p LLCI ULCI Model 1 .44 Control: Unc t0 .65 .06 11.51 .00** .54 .77 Model 2 .48 D1 -3.32 1.75 -1.90 .06 -6.78 .13 D2 2.78 2.01 1.38 .17 -1.19 6.76 Empathy -2.03 1.83 -1.11 .27 -5.64 1.58 Control: Unc t0 .67 .06 12.04 .00** .56 .78 ∆R²=.04 Model 3 .48 D1 -15.93 14.14 -1.13 .26 -43.84 11.98 D2 -14.14 17.67 -.80 .42 -49.03 20.74 Empathy -5.24 3.62 -1.45 .15 -12.39 1.90 D1 × Empathy 3.96 4.37 .91 .37 -4.68 12.61 D2 × Empathy 5.37 5.56 .97 .34 -5.62 16.35 Control: Unc t0 .67 .06 12.07 .00** .56 .78 ∆R²=.00 Note. N=170; **p<.01

As visible in Table 5 the direct effects of dummy 1(B=-3.32;p<.05; 95% CI [-6.78, .13]), dummy 2 (B=2.78;p<.05;95% CI [-1.19, 6.76]) and empathy (B=-2.03;p<.05; 95% CI

[-5.64, 1.58]) on uncertainty t1 are not significant. Furthermore, the interaction effect is

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Graph 1

The effect of Empathy on Uncertainty

Note. Uncertainty is measured with a scale from 0 to 100 and empathy from 0 to 5.

Hypothesis 3

Moreover, hypothesis 3 proposed that empathy moderated the indirect effect between cultural distance and relational energy. In other words, it was hypothesized that empathy would weaken the positive relation between cultural distance and uncertainty affecting consequently relational energy. Hypothesis 3 was tested through PROCESS.

As shown in Table 6, hypothesis 3 is rejected because the indirect effect of cultural distance on relational energy is not significant when mediated by uncertainty and moderated by empathy. For instance when empathy takes the value 3.20 dummy 1 has a 95% CI of [-.01, .12] while dummy 2 has a 95% CI of [-.12, .03]. Nevertheless, is possible to observe the different effects on the dummies. For group 3 (Dutch × Asians) the indirect effect of cultural distance on relational energy when mediated by uncertainty is negative for any empathy value, comparing to group 1 ( Dutch × Other Europeans). Despite the fact that the hypothesis 3 was not supported, the tendency is that the indirect effect of higher cultural distance on relational energy is negative when compared to low/medium cultural distance.

41,37 39,02 36,56 36,33 35,76 35,16 41,99 42,04 42,1 30 32 34 36 38 40 42 44 2 , 7 5 3 , 2 3 , 6 7 UNC E R T A INT Y EMPATHY

Group 1 (Dutch × Dutch) Group 2 (Dutch × Other Europeans)

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Table 6

The indirect effect of cultural distance on relational energy when mediated by Uncertainty and moderated by empathy

Dummy 1

Empathy Effect SE (boot) LLCI ULCI

2.75 .05 .05 -.02 .18

3.20 .04 .04 -.01 .12

3.67 .02 .04 -.04 .11

Dummy 2

Empathy Effect SE (boot) LLCI ULCI

2.75 -.01 .04 -.08 .08

3.20 -.03 .04 -.12 .03

3.67 -.06 .07 -.22 .03

Note. N=170; Empathy was measured in a scale from 0 to 5.

DISCUSSION Hypotheses and Findings

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observe the tendency of both groups although the results were not significant; higher levels of cultural distance had a negative indirect effect on relational energy when compared to medium level of cultural distance.

Hypothesis 2 proposed that empathy would moderate positively the negative relation between cultural distance and perceived uncertainty. Although this hypothesis was rejected, it should be noted that the effect of empathy on uncertainty was the same for group 1 and group 2: the more empathic the participants were the less uncertain they felt. Group 3 reported the opposite effect, but uncertainty only increased slightly ( in average .05 points); these results may also be associated with the fact that group 3 had the smallest sample (19 dyads).

The third and final hypothesis combined the first two hypotheses. It was proposed a negative indirect relationship between cultural distance and relational energy when mediated by perceived uncertainty and moderated by empathy. As expected, from the previous results, hypothesis 3 was not supported. Nevertheless, the tendency of both groups were the same as in hypothesis 1. For different levels of empathy (moderator) the indirect effect of cultural distance on relational energy when mediated by perceived uncertainty was different for group 2 and group 3. Group 3, Dutch × Asians, had a negative effect. Despite the fact that the results were not significant, the tendency is that higher cultural distance would have a negative indirect effect on relational energy when compared, to low/medium cultural distance.

Theoretical Implications

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energy and how individual differences are likely to affect the relations individuals engage to. Previous research from Cullen-Lester, et. al. (2016) as shown that individuals that scored higher on extraversion are more likely de develop energizing relations than individuals that are more introvert. By taking into consideration cultural distance as a predictor, focusing on how individual characteristics affects interpersonal relations by constraining or enhancing the development of energizing relations, this research contributes to a wider understanding of relational energy and to cross-cultural research. In addition, it was proposed that perceived uncertainty would mediate the relationship between cultural distance and relational energy. Even though the mediation effect of perceived uncertainty, resultant from cultural differences , was not statistical significant it is still possible to note different tendencies of the groups. The results show that for higher level for cultural distance, (i.e. Group 3), perceived uncertainty was higher when compared to low/medium cultural distance groups. Furthermore, the results from Group 3 indicate a negative indirect relation between cultural distance and relational energy when mediated by perceived uncertainty. Moreover, Gudykunst (2005) stated that more empathic individuals are less likely to experience uncertainty and anxiety. Although the moderation effect was not significant, the results are consistent with Davis (1983) and Gudykunst (2005), as empathy increased, perceived uncertainty decreased.

Practical Implications

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learning, innovation, creativity, team performance, motivation and job engagement (Cross, Baker & Parker, 2003; Owens, et. al., 2016). Understanding the effect of cultural distance on the formation of energetic relations is essential in today’s labour composition. Practically, this research will help managers to have a better overview of the effects of cultural diverse teams on the formation of relational energy. By taking into consideration that not all team members will perceive the same level of energy from the interactions, managers can try to reduce uncertainty resultant from cultural differences and challenge their capability to boost employee satisfaction and performance.

Limitations and Future Research

There are several limitations to take into account when interpreting the results. First of all, the sample is not big enough for a proper statistical power, especially for group 3, only 19 dyads. The experiment was conducted for as long as possible at the FEB Research Lab (five weeks) but unfortunately it was not enough to collect a appropriate amount of data to draw precise conclusions. In fact, some of the hypotheses were almost supported but due to the small sample size it was not possible to support them. Secondly, it is important to note that this was a lab study and the participants were all students which creates some difficulties when it comes to generalization for real working contexts. Moreover, the duration of the experiment ( approximately 50 minutes) may not be enough to truly evaluate relational energy. Even though the study is based on the effects of cultural distance on relational energy in initial states, in a real context this same initial state would have a greater duration.

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also the effect of cultural differences and/or multilingual teams on energy-in-conversation. Furthermore, it would be interesting to test other potential moderators such as situational variables. For instance, how task conflict within a cultural diverse environment would influence relational energy.

CONCLUSION

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29

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30 Appendix: Regression Analysis, according to Baron and Kenny steps

Table 7

Linear Regression: Direct effect of X on Y DV : Relational energy R² B SE t p Model 1 .03 Control: Uncertainty_t0 -.01 .01 -2.30 .02* Model 2 .05 Dummy 1 .23 .15 1.56 .12 Dummy 2 -.03 .17 -.18 .86 Control : Unc_t0 -.01 .01 -2.470 .02 Note: ∆R²=.04; N=170; *p<.05;p<.01 Table 8

Linear Regression: Direct effect of X on M DV : Uncertainty t1 R² B SE t p Model 1 .44 Control: Uncertainty_t0 .65 .06 11.51 .00** Model 2 .48 Dummy 1 -3.68 1.72 -2.14 .03* Dummy 2 2.75 2.02 1.37 .17 Control : Unc_t0 .67 06 12.02 .00** Note: ∆R²=.02; N=170; *p<.05;p<.01 Table 9

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31 Appendix: Survival Task

Lost in the Sea

You have rented a yacht with three friends, for the holiday trip of a lifetime across the Atlantic Ocean. Because none of you have any previous sailing experience, you have hired an experienced captain and two-person crew.

Unfortunately in mid Atlantic a fierce fire breaks out in the ships galley and the captain and crew got lost at the same time they were trying to fight the fire. Much of the yacht is destroyed and is slowly sinking.

Your location is unclear because vital navigational and radio equipment have been damaged in the fire. Your best estimate is that you are many hundreds of miles from the nearest landfall.

You and your friends have managed to save 15 items, undamaged and intact after the fire. In addition, you have saved a four man inflatable boat and a box of matches.

Your task is to rank the 15 items in terms of their importance for you, as you wait to be rescued. Place the number 1 by the most important item, the number 2 by the second most important and so forth until you have ranked all 15 items.

Instructions

1. Please rank the 15 items individually in terms of importance in column 1. You have 10 minutes.

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32 Lost at the Sea ranking Chart

Items Column 1 (individual

ranking) Column 2 (group ranking) A sextant A shaving mirror A quantity of mosquito curtain A 25 liter container of water

A case of army rations Maps of the Atlantic

Ocean

A floating seat cushion A 10 liter can of oil/petrol

mixture

A small transistor radio 2 meters of opaque

plastic sheeting A can of shark repellent One bottle of 160 proof

rum

15 meters of nylon rope 2 boxes of chocolate bars

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