The Business Review Journal
Vol. 10 * Number 2 * Sum. 2008
The Library of Congress, Washington, DC * ISSN 1553 - 5827
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Variations in an Operational Theory Integrating Cash Discount and Product Pricing Policies
Dr. William Lim, York University, Toronto, ON
Dr. Muhammad Rashid, University of New Brunswick, Fredericton, NB
Building on Lim and Rashid’s (2002) operational theory of cash discounts and product pricing, this paper: (i) explains survey evidence that customers with higher borrowing costs are offered higher cash discounts; and (ii) suggests that demand elasticities and interdependencies are quantitatively more important than default risk. Many theories have been proposed to explain the use of trade credit by vendors. Credit terms specify when invoiced amounts are due and whether a cash discount could be taken for earlier payment. The credit period is the length of time allowable for payment of the invoice amount. The cash discount is the percentage amount that can be subtracted from the invoice if the customer pays within the discount period. Smith (1987) and Ng, Smith and Smith (1999) show that credit terms involving a cash discount provide better screening and monitoring of a buyer’s financial position to protect potential rents from non-salvageable investment in the buyer. The determination of an optimal cash discount from a theoretical perspective originated with Lieber and Orgler (1975), who developed expressions for the expected net present value or NPV of accounts receivable and implicit form solutions of the optimal discount. Later, Hill and Riener (1979) derived an explicit form solution of an optimal discount in a situation where the firm has no bad-debt exposure and the fraction of buyers discounting is certain. In further work, Beranek (1991) provided analysis of behavioral factors determining the optimal discount. Recognizing that a cash discount is equivalent to a reduction in price, Rashid and Mitra (1999) linked it to the price elasticity of demand.
Exploring Facets of Job Satisfaction: Lessons for Expatriate Managers in Vietnam
Dr. Kathryn J. Ready, Winona State University, MN
Van Dinh, Hanoi Economics University
Understanding job satisfaction measures is crucial in retaining experienced employees in a global economy, yet job satisfaction measures vary across countries. This study examines differences between American and Vietnamese students in their expectations of factors which are important to overall job satisfaction. Two samples, taken separately from the U.S. and Vietnam, were used to test differences in job satisfaction measures. The results show that while both groups agree on factors contributing to job satisfaction, differences are found in the importance of factors such as job security, recognition for work, creativity on the job, relationship with supervisors, and benefit packages. Theoretical and practical implications of the finding as well as directions for future research are discussed. Employees’ job satisfaction has been studied widely in the United States in order to understand the concept and its causes as well as its consequences. Researchers have identified factors such as recognition, working conditions, relationships with coworkers and supervisors, wage and benefits, promotional opportunities, fairness of treatment, as well as many others (e.g., Locke, 1976; Witt & Nye, 1992; Vander, Emans, & Van DeVliert, 2001) as being important to an employee’s job satisfaction. Understanding facets of job satisfaction is important for today’s managers because it is associated with many critical organizational outcomes. For example, employees who are more satisfied with their jobs are less likely to be absent (Hackett & Guion, 1985), less likely to leave the organization (Carsten & Spector, 1987), are more likely to display organizational citizenship behavior (Organ & Konovsky, 1989), and more likely to be satisfied with their lives overall (Judge & Watanabe, 1993).
Small Business Taxation: An Evaluation of the Role of Special Treatment Policies
Dr. Jeff Pope, Tax Policy Research Unit, Curtin University, Perth, Australia
In many countries small businesses expect and generally receive special treatment, concessions or arrangements regarding taxation compared with medium and large business. Such policies are based primarily upon the role and importance of small business in economic growth and especially job creation, and the high administrative and compliance costs of including a large number of small entities in the tax system. This paper focuses on the latter aspect, using examples and data from various countries in the world, particularly the UK, USA, New Zealand and Australia. The arguments for special treatment seem compelling, particularly lower administrative and compliance costs, although difficulties usually arise at the margin or threshold where the special treatment ends. However, an often neglected argument is that small business often engage in high levels of tax evasion, based on the so-called ‘cash economy’, an opportunity generally denied to large business (at least domestically). It can be argued that benefits arising from evasion roughly approximate to the higher compliance costs endured by small business, particularly for income taxation. This paper evaluates this argument and the extent that special treatment taxation arrangements of small business are warranted. The conclusion sums up the experiences of the countries considered, the key policy implications, the limitations of the analysis, and indicates areas for further research. In various countries throughout the world, both developed and developing, small business has long enjoyed favourable tax policy treatment. Generally, the term ‘small business’ is used favourably by politicians and bureaucrats, and others in the community.
Content Oriented Development of a Situational Interview
Dr. Douglas Flint, University of New Brunswick
Lynn Haley, University of New Brunswick
Content validity is typically determined qualitatively after test development. This study conducted a quantitative content validation early in the development of a situational interview (SI). By conducting quantitative content validation immediately following job analysis, important items were identified and the task field narrowed for further development. The identification of those items early in the developmental process increased the criterion validity of the selection instrument. The only quantitative content validity measure currently in use is the content validity ratio (CVR) developed by Lawshe (1975). Even with the relatively small sample size in this study, most task and KSA items had significant CVRs. In order to provide better discrimination among items, a confidence interval measure was developed. Cronbach (1970) stated that content validity was “evaluated by showing how well the content of the test samples the class of situations about which conclusions are to be drawn.” Content validity is usually assessed by examining the extent that subject matter experts (SMEs) agree that success on a test item is essential for doing the job (Carrier, Dalessio & Brown, 1990). SMEs, are usually job incumbents, their managers, or supervisors. Content validation is commonly a qualitative report in which consensus is achieved between SME’s on two levels. First, agreement is sought as to whether particular items sample the content domain. Second, consensus is sought on the issue that, collectively, test items reflect a representative sample of the content universe of the particular job.
Examining the Bank Service Quality from Personnel Point of View: The Comparisons of State,
Private and Foreign Banks in Turkey
Dr. Musa Pinar, Valparaiso University, Valparaiso, IN
Dr. Zeliha Eser, Baskent University, Ankara, Turkey
This research examines the bank personnel’s perceptions of the quality of banking service offered by the Turkish banks. Specifically, the study is aimed to: (a) examine the perceptions of the bank personnel regarding the importance of the bank services; and (b) to compare the perceptions of the bank personnel at state, private and foreign banks. The study, which provided some insights into the personnel perceptions in identifying the strong and weak areas of banking services at Turkish banks, found a significant difference between the personnel of private vs. state bank, foreign bank vs. state bank, but not between private vs. foreign personnel. These differences, or “gaps”, if not taken care of, could have an adverse impact on bank customer satisfaction and bank performance. The study also presents the implications of the results for service quality and competitiveness of the banks in Turkey. In today’s dynamic, global marketplace, consumers have more choices and a wide variety of alternative banking services. A main challenge for banks is to understand how a customer decides which bank to choose when many of the banks offer similar products and services, such as extra services, free checking, phone access, and on-line and/or mobile banking, to name a few. Stickler (2001) states that two things that can differentiate one bank from another and attract the customer are (1) customer service and (2) how the banks present and sell their products and services. Customers tend to go where they are made to feel welcome and offered the best quality service (Stickler, 2001). As the domestic and global competition has intensified, the above differentiating factors have become even more critical for the survival of the banks.
Foreign Products Images and Ethnocentrism among Consumers in Five Latin American Countries:
An Analysis of Their Similarities and Differences
Dr. John E. Spillan, Pennsylvania State University at DuBois, PA
Dr. Orsay Kucukemiroglu, Pennsylvania State University at York, PA
Dr. Talha Harcar, Pennsylvania State University at Beaver, PA
All over the world consumers are attached to countless products and services that arrive to their ports as a result of global trade. Rapid communication and transportation has provided consumers with far more knowledge about products than any time in history. The results of this timely information accessibility allow the consumer to investigate the product’s country-of- images more thoroughly. Consequently, their information and opinions about the country and its products affects the consumer’s behavior. This situation is a major concern of marketers. The aim of this paper is to report the results of a study that was conducted to analyze the views of five Latin American Country consumers concerning country of origin images of products that they receive from other countries. Additionally, these counties ethnocentrism tendencies were investigated to develop a view on what other factors may be influencing their buying patterns. The findings of the study discovered that various perspectives exist among the five country consumers which have an influence on their ethnocentric buying tendencies. Country-of-Origin (CO) is a compelling image concept that can be used to affect a product or company’s the competitive positioning and success in the global market-place foreign products. Research on Country of Origin effects has a long history. Over time, an increasing various new aspects and further aspects of this construct have been accounted for. The country of origin literature indicates that consumers assign predetermined ideas about countries and their products during pre-purchase assessments. Country-of-Origin (CO) image refers to "buyers' opinions regarding the relative qualities of goods and services produced in various countries" (Bilkey 1993, p. xix).
Guidelines for Retirement Net Income Replacement Ratios
Dr. Ginette McManus, Saint Joseph’s University, Philadelphia, PA
Dr. Rajneesh Sharma, Saint Joseph’s University, Philadelphia, PA
Dr. Ahmet Tezel, Saint Joseph’s University, Philadelphia, PA
Our main objective is to simulate retirement net income replacement ratios that can be achieved under both constant and variable real savings rate scenarios over a 30-year pre-retirement wealth accumulation period. Retirement income replacement ratios are estimated using an historical overlapping periods methodology and Ibbotson quarterly data over the 1926-2007 period. Our methodology is performed for 10 portfolios, 5 having various fixed asset allocation percentages to equities and bonds and the remaining 5 providing life-cycle or shifting asset allocations. Our results support that individuals need to save more than 10% of their pre-retirement annual gross income to have an acceptable chance at maintaining their standard of living in retirement, more so with more conservative asset allocations. Given that individuals are most likely to stop saving in retirement, the most useful target value for pre-retirement planning is the retirement net income replacement ratio. It expresses the level of retirement income needed to maintain pre-retirement standard of living upon entering retirement. The retirement income replacement ratio (R) is best defined as the ratio of the annual withdrawal amount for the first year in retirement (Wn x w) over the pre-tax pre-retirement annual net income at the end of the savings period (In (1 – s)) as follows: where Wn is the pre-retirement wealth level or the wealth level accumulated at the end of the savings period of n years (or the beginning of the retirement period), w is the withdrawal rate in retirement or the percentage of wealth paid out as annual retirement income at the beginning of the first year in retirement, In is the annual pre-retirement gross income, and s is the pre-retirement savings rate.
Exchange Rate Regimes: Challenges from the Globalization for Emerging Market Countries
Dr. Chaiporn Vithessonthi, Mahasarakham University, Thailand
In light of recent currency and financial crises, this paper reviews the literature on exchange rate regimes and evaluates the fixed and flexible exchange rate regimes with the focus on the possible choices of the exchange rate regime for emerging market countries. Given the recent trend of World’s financial integration, as a result of the globalization, has pushed most countries towards the full financial integration, the analysis touches upon the topics of roles of monetary policy, fiscal policy, currency crises, inflation, credibility, employment, and income under different exchange rate regimes. Overall, the results indicate that the complexity of the economic system and the dynamics of the economic development in emerging market countries have proven the difficulty of sticking to one exchange rate regime for a long period of time. Consequently, an emerging market country should consider a change of the exchange rate regime upon changes in the priority of its economic objectives. Over the past decade, many developing countries such as Thailand, Indonesia, Mexico, or Argentina as well as developed countries such as England or Sweden have experienced currency crises, and thus have changed their choice of exchange rate regime towards either the extreme of floating rates or fixed rates. The debate on the causes of the crises is still ongoing. However, it is apparent that the financial markets of the emerging market countries have gradually been integrated into international financial markets in recent years. That means that the countries lifted the control on capital mobility and consequently opened up their domestic financial market. A surge in capital inflows into emerging market countries was initially due to domestic developments. However, large and persistent capital inflows can also create undesirable effects, including, for example, rapid monetary expansion, real exchange rate appreciation, inflationary pressures, and moral hazard problems.
The Performance of Filter Rules for the Norwegian Stock Index
Dr. Massoud Metghalchi, University of Houston-Victoria, TX
Dr. Vera Adamchik, University of Houston-Victoria, TX
This paper tests various filter rules for the Norwegian OBX stock index. Our results indicate that trading filter rules do indeed have predictive power and could discern recurring-price patterns for profitable trading. Moreover, our results support the hypothesis that filter trading rules can outperform the buy-and-hold strategy. A dominant theme in financial economics since the 1960s has been the concept of an efficient financial market. Fama (1970) defined an efficient financial market as one in which security prices always fully reflect the available information; any new information will be quickly and instantaneously reflected in prices. Furthermore, since news on any company, by definition, is unpredictable (arrives randomly), price changes will be unpredictable, or follow a random walk. Fama made a distinction between three forms of Efficient Market Hypothesis (EMH): (a) the weak form, (b) the semi-strong form, and (c) the strong form. Advocates of the weak-form market efficiency hypothesis believe that investors who use any trading rule that depends solely on past market information (such as price or volume) cannot drive profits above a buy-and-hold strategy, implying that technical trading rules are useless. The early results from the literature about the profitability of technical trading were overwhelmingly negative. For example, Larson (1960), Osborne (1962), Alexander (1964), Granger and Morgenstern (1963), Mandelbrot (1963), Fama (1965), Fama and Blume (1966), Van Horn and Parker (1967), Jensen and Benington (1970) all showed that the stock market was weak-form efficient.
Total Quality Management Practices and Performance
Dr. Esin Sadikoglu, Gebze Institute of Technology, Kocaeli, Turkey
There are mixed and unclear results about the relationship between total quality management (TQM) practices and firm performance in the previous studies. In conjunction with this, the models developed in these studies lack a complete nature of the direct and indirect relationships among all important TQM practices and key performance measures in. For this purpose, this study developed a model of the direct and indirect relationships among total quality practices of leadership, strategic planning, training, employee management, information and analysis, supplier management, process management, customer focus, and continuous improvement and performance measures of employee fulfillment, innovation performance, operating performance, quality performance, customer satisfaction, and financial performance based on a comprehensive literature review. The model explains complex relationships among TQM practices and performance clearly. It is more comprehensive than the models developed in the previous studies as well. The model developed in this study can be tested to support the hypothesized relationships in the future study. Total quality management (TQM) is a holistic quality improvement approach to firms by means of continuously improving products, services, people, processes, and environment involving all employees to satisfy customers, and maximize competitiveness of the firms. The benefits of TQM are improved customer satisfaction, quality of goods and services, productivity, delivery times, employee participation, and employee satisfaction as well as reduced waste, inventory, cost, product development time, and work-in-process among others (Evans and William, 1993; Lowery et al., 2000; Besterfield et al., 2003; Goetsch and Davis, 2006).
Predicting Organizational Commitment: A Field Study of Full-Time and
Part-Time Retail Employees
Stefanos K. Giannikis, University of Macedonia, Thessaloniki, Greece
Dr. Dimitrios M. Mihail, University of Macedonia, Thessaloniki, Greece
In the current empirical research we attempt to shed light on the organizational commitment of full-time compared to part-time retail employees. For this purpose, we develop a theoretical framework in order to evaluate possible differences in affective, continuance and normative commitment between these two groups. Apart from just identifying whether employees “want to”, “need to” or “ought to” remain in retail firms, this research discusses why full-timers and part-timers might differ on attitudes. The sample consisted of 275 full-time and 213 part-time retail sales employees. Regression Analysis revealed that full-time and part-time sales workers differ on organizational commitment. Such knowledge is vital for retail firms that seek to retain a highly committed workforce in their demanding work environments. Theoretical and managerial implications for human resource management are discussed. In recent years, organizational commitment has attracted considerable attention due to its impact on both work and life behavior of employees. Specifically, previous research has documented that organizational commitment is positively related to job performance and organizational citizenship behavior, while it is negatively related to turnover and absenteeism rates, as well as to stress and work-family conflict (Meyer et al., 2002; Tett and Meyer, 1993; Mathieu and Zajac, 1990; Mowday, 1979).
Strategic Implications for the Future of the Texas Wine Industry
Dr. Michael H. Lau, Sam Houston State University, Huntsville, TX
Dr. Roger D. Hanagriff, Hanagriff Consultants, Huntsville, TX
In Texas there are currently 113 bonded wineries. Even with this growth, Texas wine is losing market share to out of state and out of country competitors. The Texas Department of Agriculture (TDA) is searching for industry strategies to slow this trend. The market analysis objective was to gather market information and create a comprehensive strategic outline that analyzes the Texas wine market. The results indicate wineries have goals to increase production, but cost of production, grape supply and maintaining quality are concerns. According to a recent report by the Texas Wine Marketing Research Institute (2006), wine consumption is on the rise across the United States. Over the past ten years, total consumption of wine in the U.S. has increased by 39%. Total wine consumption in the U.S. has reached a high of 279 million cases in 2006, a 3.3% increase from 2004-2005. The increased consumption is the result of young adults finding greater interest in wine. The Gallup Poll results show an 11% decrease in preference for beer and a 12% increase in the preference for wine from 2004-2005. With this increase in consumption, production of U.S. wines is also on the rise. Texas is one state which has seen major growth in wine consumption and production over the past several years. Texas is currently ranked 4th in U.S. wine production but is facing major challenges due to grape production and the changing structure of the industry. These challenges must be met if the Texas wine industry is to maintain its status as a top 5 producing state. The Texas wine industry is defined by three major stakeholders; wineries who produce grapes, wineries who do not produce grapes and grape producers who do not produce wine. These three stakeholders must work together to produce a “Texas made wine”.
Regime-switching in Dow Jones EUROSTOXX 50 Spot and Futures Index Markets
Jose Luis Fernández-Serrano, National Institute of Statistics, Spain
M. Dolores Robles-Fernández, Universidad Complutense, Madrid, Spain
This paper analyses the behavior of spot and futures DJ Eurostoxx 50 returns from the regime-change model perspective. We study a daily sample from January 1999 to June 2006. We consider different patterns in the mean and variance of both series allowing changes in the parameters depending on the state of the economy. Regime changes are governed by a first order Markov process. We find very strong evidence of switching behavior in Eurostoxx markets returns. The first one is characterized by low level of volatility and no dynamic behavior in the mean. The second one shows high volatility level and autoregressive behavior in the mean. The main objective of this paper is to provide new evidence about the nonlinear behavior of stock returns by analyzing cash and futures DJ Eurostoxx50 indexes. It has become clear over the last years that nonlinear processes can explain the behaviour of different financial variables better that the linear ones. Financial markets have typically shown periodical switches from a low-volatility regime to a high-volatility regime related with jumps or crashes in the markets. There is a consensus in the literature about the linkage among speculative and noise trading and fads, bubbles or even market crashes. Furthermore, regime shifts may also be caused by changes in monetary policy or technological shocks. Flood and Hodrick (1990) indicate that misspecified fundamentals could cause this kind of behaviour.
Insider-Outsider Hypothesis Revisited: The Context of Tunisian Business Environment
Dr. Mohieddine A. Ghecham, Sheffield Hallam University, UK
Atef Albahri, Manchester Metropolitan University, UK
The paper endeavours to discuss insider-outsider hypothesis in the context of the Tunisian business environment. By doing so, the paper expands our understanding about the underperformance of Tunisia in attracting fair level of foreign direct investors. The paper argues that privatised firms with domestic owners perceive the constraints imposed by the institutional framework differently than the privatised firms of foreign owners. Institutional constraints are less important to privatised firms with domestic owners than to privatised firms with foreign owners. Domestic owners have a better endowment with information that allows them to cope with institutional constraints hence can minimise the associated the transaction costs. Moreover, the paper shows that the difference in the perception appear to be more pronounced with regards to informal institutional constraints than with regards to formal institutional constraints. This underlines the importance of tackling the informal institutions before reforms in formal rules achieve their expected outcome in the business environment. This paper aims at enriching the recent debate that covers the role of institutional factors in the international business field (e.g. Weitzel and Berns, 2006; Kwok and Tadesse, 2006). It does so by adding to the discussion of the insider-outsider hypothesis that has emerged in some studies (Hellman, et al, 2000; McDonald and El-Said, 2002).
Energy: The Financial Dilemma of the Century
Dr. Flory Anette Dieck-Assad, Instituto Tecnológicoy de Estudios Superiores de Monterrey, Monterrey, N.L., Mexico.
Petróleos Mexicanos (PEMEX), a Mexican state-owned company, is the only authorized by law to produce oil and gas in Mexico. PEMEX can neither issue equity nor borrow money by selling bonds; however, it finances one-third of the Federal Government expenses, leaving scarce money for drilling activities and, thus, restricting its ability to develop new reserves. PEMEX requires huge flows of investment in order to avoid its financial bankruptcy and secure the energy supply for Mexico’s sustainable development. The objective of the case is to place the student in the debate about sustainable development that encompasses political, economic, financial, and ethical decisions, in a geopolitical changing scenario where the “global warming” issue is presenting a new challenge for doing business in the future. A detailed Teaching Note is available from the author. In the foggy morning of April 7, 2006, Elba Esther Gordillo Morales, national president of the Education Syndicate—Sindicato Nacional de Trabajadores de la Educación (SNTE)—was staring through the window. Suddenly, she decided to call for a reunion in her office with Expert Consultants, Inc. (EC, Inc.). She needed their evaluation to know if what she did in 2003 to support the energy reform was the right decision. As a member of the Mexican Congress, she had supported the energy reform even though the rest of the members of her political party, the PRI, decided not to support it. As a result, she was expelled from her political party. She worried about the repercussions that her decisions had caused. When she read the statement of José Ramón Ardavín, undersecretary of Natural Resources and Environment—Secretaría del Medio Ambiente y Recursos Naturales (Semarnat)—on April 1, 2006, she was reminded of the effects her decision would have on Mexico’s energy future.
Challenges in Teaching Business Studies
Dr. Tahir Ali, University of Karachi Pakistan
Effective teaching of business studies can be linked with the economic development of a country due to its unlimited, multiplier effects. In the present fast moving digital world, teaching of business demands acquaintance of latest teaching methods and techniques on the one hand and knowledge of global business activities on the other. In most of the developing countries, there is a gap between the methodology of teaching business studies and its application in the market. The situation has been further deteriorated by the uncooperative behavior of business industries towards business education institutions. Effective teaching of business requires leadership qualities not only for better career counseling and development of students but also contributes to the resolution of business issues. Most of the teachers of business studies in such countries are deprived of good returns, recognition and growth opportunities in their field, resulting in low motivation and performance. To overcome these issues, a twofold strategy, comprising improvement of teaching methodology through concept development techniques and practical exposure of students to the business world and the development of research oriented environment for teachers with close liaisons with the business and industries is needed. Market is the best judge and its response would be the source of evaluation and modification for both the teacher and student. In the present scenario of globalization and digital revolution, effective teaching of business studies is a challenge for teachers. However, it is expected that the suggested model and strategy will considerably help in understanding the issues and improving the standard and overall environment in business institutions in the developing countries in particular and the world in general.
The Anti-Competitive Effects of Entry Barriers on the Market: The Case of the Romanian Tobacco Industry
Dr. Alina Mihaela Dima, Academy of Economic Studies, Bucharest
Dr. Radu Musetescu, Academy of Economic Studies, Bucharest
Dr. Alina Popescu, Academy of Economic Studies, Bucharest
Economists suggest that although contestable markets are a refined extension of the competitive markets theory, almost all real markets have some entry barriers, which could have strong implications for the market structure. Government intervention through fiscal measures might have adverse effects, especially on the concentrated markets, where competition is shared by few important players. The paper analyses from the economic perspective the impact of the entry barriers on the Romanian cigarette market, especially the negative effects of the measures taken by the government in order to comply with EU requirements and their impact on the competition. Adoption of EU’s acquis communautaire necessitates the raising of cigarette taxes to levels determined by EU directive 92/79/EEC, amended by directive 2002/10/EC. These established limits for cigarette excise in EU countries, but national authorities have the right to find the most appropriate way to implement them. As the Romanian cigarette market is characterized mostly as an asymmetrical oligopoly, the structure of the excises, along with other entry barriers, will distort severely the competition within the market. The prices in a competitive market are the result of an equilibrium position that is considered optimal. The optimum is defined in Pareto’s sense, meaning that no individual can be made better off without another being made worse off. The imposition of a specific excise is an intercession of this kind, because it changes the relative price rates and therefore leads to a resource allocation that is not optimal. Pareto’s optimum is more a necessary condition than a sufficient one. It doesn’t take into account a model of distribution of the existing income, nor does it forecast a unique optimal point.
Strategic Orientation and Performance: The Case of Equifinality from a Developing Market Perspective
Dr. Sarwar M. Azhar, IQRA University, Karachi, Pakistan
This paper tests the hypothesis of equifinality inherent in Miles and Snow’s (1978) research on strategic orientation and business performance. The results show that equifinality may not necessarily hold for firms in developing economies. Further, the present research also suggests that its underlying logic, which holds that research applicable to one business environment can be assumed to apply to other business environments, cannot be accepted as an assumption, as Sis also inherits from Miles and Snow typology. The research further suggests that the typology proposed by Miles and Snow does not work in the clear cut manner that is proposed by the authors; rather configurations of various orientations may be the norm in developing market contexts. The author notes that this research does not intend to suggest a new characterization of ideal types of strategic orientations, but shows that such ideal types do not necessarily exist, as proposed, in business environments. Extant research is concerned with the role of business strategy or strategic marketing behavior (used synonymously in this paper) in the overall performance paradigm and value creating capability of the firm (Stoelhorst & Raaij, 2004; Slater & Olson, 2001; Doyle & Wong, 1998; Appiah-Adu, 1998). With regard to the positive association between strategies and firm performances, there is unequivocal evidence. For example, in a recent study, Yoon and Lee (2005) find that business strategy has a positive relationship with performance (p. 14). “Marketing strategy and marketing planning are also highly correlated with performance” (Doyle and Wong, 1998, p. 531). On the other hand, Stanley (1995), finds no empirical evidence as to the direct contribution of marketing strategy to firm performance.
The Application of Structural Equation Modeling (SEM) in Determining the Antecedents of
Customer Loyalty in Banks in South Thailand
Nattakarn Eakuru, Universiti Utara Malaysia
Dr. Nik Kamariah Nik Mat, Universiti Utara Malaysia
The purpose of this study is to examine the relationships of several antecedents of customer loyalty in the banking sector in South Thailand. Customer loyalty is crucial in bringing long term profitability and managing services in tandem with the development of the global sector. From the literature, six antecedents of customer loyalty were identified. Each variable is measured using 7-point Likert-scale: perceived service quality (13 items), perceived value (11 items), trust (5 items), image (15 items), customer satisfaction (7 items) and commitment (6 items). Using survey method, 150 questionnaires were distributed to customers of four bank branches in the South of Thailand. The responses collected were 140 completed questionnaires representing 93 percent response rate. The data were analyzed using Structural equation modeling (SEM) method using AMOS 6. Confirmatory factor analysis of measurement models indicate adequate goodness of fit after a few items were eliminated through modification indices verifications. Goodness of fit for the structural models of hypothesized model shows promising findings. Four hypotheses were asserted: H1, H5, H8 and H9. H1: Perceived service quality is related positively with customer satisfaction, H5: Image is related positively to customer loyalty, H8: Image is related positively to commitment, H9: Trust is related positively to commitment. With the increasing importance of relationship marketing in recent years, particularly in the service industries, the emphasis now is on customer loyalty. Several authors emphasize the positive relationship existing between customer loyalty and business performance (Reichheld and Sasser, 1990; Reichheld, 1993; Sheth and Parvatiyar, 1995).
Catastrophic Risk Management Mechanism for Tourism Industry
Dr. Chung-Hung Tsai, Taiwan Hospitality & Tourism College, Taiwan
The risk analysis of earthquake is provided and developed by special modeling organizations that have developed portfolio loss models for the tourism industry. For a long time, it has been applied in the insurance industry to estimate loss by traditional empirical approach. An event-based probabilistic seismic risk assessment model was established for The Taiwan Tourism Earthquake Insurance Pool (TTEIP). Based on the request of TTEIP, the risk assessment analysis results were provided to TTEIP as reference for capacity adjustment, reinsurance arrangement, and exercise plan of claim process. The purpose of this study is to build a mechanism of catastrophic risk assessment and management for tourism. The mechanism integrates knowledge from many fields including earth science, structural engineering, and the insurance profession. Finally, management methods and pricing of earthquake risks are provided for government agencies, insurance/investment banking industries, and tourism asset owners. Earthquake risk, a long-time concern in Taiwan, is increasingly being recognized as a concern in insurance industry and government. The Taiwan Tourism Earthquake Insurance Pool (TTEIP) was proposed to facilitate a risk sharing partnership between private insurance companies and the Government covering insured tourism earthquake losses. TTEIP collects premium for the earthquake risk from the insurance companies and redistributes the premium to the various risk sharing entities (including itself). If losses occur, TTEIP collects the appropriate funds from the risk sharing entities and reimburses the direct insurers for their payments to the policyholders.
Antecedents of Compensation and Relationship Among Compensation, Motivation,
and Organizational Profitability
Imran Ahmed Shahzad, Mohammad Ali Jinnah University, Pakistan
Komal Khalid Bhatti, Mohammad Ali Jinnah University, Pakistan
The purpose of this study was to find antecedents of both financial and non financial compensation, to investigate the relationship between compensation and employee motivation and impact of employee motivation on organizational profitability. The researchers used a single questionnaire containing three types of questions. Regression analysis, correlation and other statistical calculations proved that basic pay, indirect pay, variable pay and social pay have positive impact on employee motivation. Further sufficient evidence is available to support that variable pay and social pay are major antecedents of compensation whereas basic salary has maximum influence on employee motivation. Study shows that there is a positive correlation between compensation and motivation whereas motivation is also highly correlated with organizational profitability. Finally it was concluded that organizations having proper and updated compensation plans as per industry trends are more profitable as compared to rest of the organizations, which do not update pay plans according to the current trends. Today at the turn of the millennium, Pakistani textile industry is at critical juncture. While the WTO agreement has shifted the paradigm of quality of products for different market segments, skyrocketing competition among profit making players further compelled organizations to think more seriously about their cost cutting at every level. WTO has triggered a race of quality and price where cost of production is becoming question of time to business community not only in South East Asia but all over the world.
Is Training Evaluation Necessary? What Are The Constraints that Might Exist in the Evaluation of
Training Programmes in Taiwan? How Can the Constraints be Overcome?
Hsien-Mi Lin, Cardinal Tien Hospital, Taiwan, R.O.C.
Training is one of the human resource development strategies, and training programmes have been seen as an essential feature of organizational life. Furthermore, Mann and Robertson(1996, p14) pointed out that “the evaluation of the effectiveness of training programmes is critical because without it, organizations have no good way to know whether training pounds are being spent wisely”. This study, which reports the findings of training evaluation issue, is divided into four major sections. The first section gives a brief exploration of the evaluation of training. In the second section, the reasons why training evaluation is necessary are provided. It then considers some of the constraints that might exist in the evaluation of training programmes in Taiwan and attempts to show that these are related to Taiwan’s culture, economy and politics in the third section. The final section gives some suggestions on how to overcome these constraints and follows by a conclusion. Training programmes have been seen as an essential feature of organizational life. However, in spite of the heavy investment in training, organizations often find that they fail to evaluate adequately the value or success of their training programmes. Following Lewis and Thornhills’ study of training in Britain (1994, p25), they revealed that “85 percent of British employers make no attempt to assess the benefits gained from undertaking training”. It seems that training evaluation is the least well conducted aspect of all training activities. But this should not be the case, the evaluation of training programmes is an essential part of the training process, although there are many constraints exist in it, such as a country’s culture, economy and politics.
The Significance of Relationship Marketing Orientation on International
Joint Venture (IJV) Performance in Thailand
Wanida Wadeecharoen, University Utara Malaysia, Kedah, Malaysia
Dr. Nik Kamariah Nik Mat, University Utara Malaysia, Kedah, Malaysia
Relationship Marketing Orientation (RMO) has played a vital role in successful relationship management and firm’s performances. This paper reviews and synthesizes prior studies to address the significance of relationship marketing orientation (RMO) towards IJV firm performance specifically in a developing country like Thailand. In addition, this study investigates the conceptualization of relationship marketing orientation (RMO) within IJV context, as well as examining the relationship of RMO and IJV performance by past researchers. Finally, this paper proposes a research framework to investigate the relationship of RMO with IJV performance in Thailand. The international joint venture (IJVs) foreign investment has increased in the last three decades across all business sectors worldwide. IJVs represent one of the most popular strategies for firms from multiple countries to share risk and resources, to gain knowledge, and to obtain access to new markets. IJV enable firms to bring in foreign expertise and then upgrade their operating competencies. Hence, IJVs play a significant role in the dynamic world economy not withstanding Asian countries like Thailand. It can shown in the doubling of Thai foreign investments in 2007 as compared to 2006 (27 billion baht in 2006 compared to 42.8 billion Baht in 2007) (Board of Thailand Investment, 2007). International Joint Venture (IJV) is formed when two or more firms form a third party entity to carry out a productive economic entity (Harrigan, 1985).
Determining the Service Quality Dimensions and Zone of Tolerance for Hospital Services in Malaysia
Dr. Ahmad Azmi M. Ariffin, Universiti Kebangsaan Malaysia
Norzalita A. Aziz, Universiti Kebangsaan Malaysia
This paper attempts to identify the dimensions of service quality for hospital services in Malaysia and subsequently examine the gap between the expectation and perception on the various aspects of the services. The conceptualization of the hospital’s service quality of HOSPIQUAL in this study was developed based on SERVQUAL scale. A total of 210 respondents from Kuala Lumpur and a smaller town known as Batu Pahat involved in this study. The results of factor analysis revealed that HOSPIQUAL comprised of four dimensions namely tangible, empathy, reliability and responsiveness, in the sequence of their importance. This study also indicated that customers (patients) are most tolerable with factors related to tangible dimension and least tolerable with factors related to reliability dimension. In this overall, the size of zone of tolerance for hospital services was 0.81 on the scale of 5-point. The gap analysis between service expectations and perceptions showed that all scores for expectations were lower than their perception scores, indicating that there are a lot of service improvement efforts need to be carried out to enhance the quality of services rendered by hospitals in Malaysia. The key to competitive advantage in today’s challenging business environment lies in delivering notable high quality service that resulted in satisfied customers (Shemwell et al., 1998). Generally, service quality promotes customer satisfaction, stimulate intention to return and encourage recommendations (Nadiri and Hussain, 2005).
Impact of Employee Participation on Job Satisfaction and Perceived Organizational
Performance in Banking Sector of Pakistan
Komal Khalid Bhatti, Mohammad Ali Jinnah University, Pakistan
Imran Ahmed Shahzad, Mohammad Ali Jinnah University, Pakistan
It is widely believed, employee participation in decision making can effect their level of job satisfaction; productivity, commitment and turnover intentions. These variables can create comparative advantage for organizations. Study provides empirical evidence to support theoretical models that link job satisfaction, productivity, commitment and turnover intentions with organizational performance. For this purpose 34 banking organizations were selected. Response rate was 100%. Findings show that employee participation is an important determinant of job satisfaction components. Increasing employee participation has positive impact on job satisfaction but it also strengthens the link between other outcomes of job satisfaction. Naturally increasing employee participation is a long-term process that requires management interest and employee initiative. The concept of employee participation as a more effective approach for managing human resource of an organization has attracted enormous attention and initiated significant debate among academics and practitioners. Employee participation practices have to be introduced in organizations so that everyone is given an opportunity to participate, work is conducted by consensus and multidisciplinary teams are utilized to implement processes. All this demands a change in organizational culture, in which everyone particularly top management must adopt the new principles and values. Here corporate culture means collectively held perceptions about organizational life and its identity; it also means organization shared expectations for consensually approved behavior as the most important component of culture. If the organizational culture is democratic, it will be easy to change to a culture based on employee participation.
Impact of Compensation on the Turnover Intentions of Employees:
A Case of Pakistan Telecom Sector
Kashif Amin Butt, Mohammad Ali Jinnah University Islamabad, Pakistan
Main problem for today’s employer is to hire and retain talented employees. All over the world every organization has realized the importance of human capital. It is perceived notion that compensation is accurate measure to reduce turnover. The present study will examine the impact of compensation on the turnover intentions of telecom sector employees of Pakistan. For this research 15 telecom companies were selected and 300 questionnaires were distributed physically for better response rate; the response rate was 89%. For the data analysis, Correlation and stepwise forward regression analysis were performed. The result showed that compensation has direct positive impact on employee retention and consequently reducing turnover intentions. As technological development and competition are continuously growing, the requirement and demand for skilled labor is ever on increase. The organizations are regularly trying and developing such policies, which are employee friendly. Therefore all HR practices may it be hiring, developing compensation packages or plans for the development of employees are aimed at attracting, retaining and further developing good employees. Turnover is prevailing almost in every industry and sometime uncontrollable and can create severe problems for the organizations. There are many reasons of turnover but the main problem might be the failure of management to provide appropriate working environment or wrong induction at the time of hiring. In such a situation, the organizations in which members feel themselves responsible and involved in the success of organization are most successful (Lawler, 1992).
Perceived Fairness of and Satisfaction with Employee Performance Appraisal and Its Impact on Overall Job Satisfaction
Zara Sabeen, Muhammad Ali Jinnah University, Islamabad
Syed Ali Abdullah Mehboob, Muhammad Ali Jinnah University, Islamabad
Employee performance appraisal is one of the most commonly used and widely researched management tools in the world. Recent research has moved to themes of employee reactions towards performance appraisal as indicators of system satisfaction and efficacy. This study investigated employee reactions to fairness of and satisfaction with an existing performance appraisal system and its impact on overall job satisfaction, utilizing a survey questionnaire, from 500 participants from eighteen private banks of Rawalpindi, Islamabad (Pakistan). The findings of the study indicated that respondents perceived the performance appraisal system to be fair. Satisfaction (although not too high) was indicated with the performance appraisal system overall. The overall job satisfaction was explored to be least affected by the appraisal satisfaction. The performance appraisal process, whereby a supervisor monitors the employee performance, compares it with the expected goals and targets, and then uses it for the further improvement of the performance and outputs, is, a common practice all over the world now a days, (whether formal or informal) The purpose of use and scope of the practice may range from very effective , future progress and career growth as well as organizational growth oriented to the least effective just for the sake of monitoring, promotion, punishment, and termination purposes. Whatever the purpose would be, it is an essential part of the organizational systems and processes. Performance evaluation has been the area of interest for the researchers for very long time and a lot of research has been done in this area for the improvement of the system.
An Empirical Analysis of Association between Operating Cash Flows and Dividend Changes in Pakistan
Nousheen Zafar, Mohammad Ali Jinnah University, Islamabad
Syed Zulfiqar Ali Shah, Mohammad Ali Jinnah University, Islamabad
Miller and Modigliani’s 1961 work for establishing relationship between dividend changes and management’s expectations of future earnings and cash flows, which has not been proved to be a success is again tested in this paper. A data set of non financial companies of KSE 100 index is taken as a sample. OLS regression is used on cross sectional data for 40 firms to test the relationship between operating cash flows and dividend changes. Despite of the importance of operating cash flows in assessing dividend policy of a firm, this study has not found any significant relationship between dividend changes and level of operating cash flows of a firm. In order to check the importance of cash flows in determining dividend policy of the firm, whole sample is divided in three sub samples as per their growth levels. OLS regression is applied on each sub sample but again this study failed to develop any positive relationship between operating cash flows and dividend policy of the firm. This means that there are certain other factors which are responsible for the changes in dividend policy. Corporate finance is almost always invariably based upon dividend policy. Corporate dividend policies are special point of interest for all theorists these days. The most initial idea developed about dividend policy changes was that dividend changes are associated with the earnings of the firm (Lintner, 1956).
Nature of Managerial Decision Making Along the Continuum of the Decision Making Pyramid
Ivana Pavic, University of Split, Croatia
Decision making is immanent to any managerial function, because managers are not only administrators. By profession they are decision makers. Having that imperative their importance for organizational existence is not doubtful. Managerial decision making is not easy to describe because managers largely use intuition, instincts, feelings and judgments in everyday decision making (Harrison, 1999), avoiding hard systematic thinking and analysis of data, relying more on intuitive judgment (Tipuric, Prester and Hruska, 2003:366). But the framework for understanding managerial decision making lies in the piece of evidence that managerial work is largely the work of making decisions. What is more important is the fact that since management realizes itself through decision making processes, (Harrison, 1999) with the purpose of fulfilling various business tasks, managers have to act rationally in dynamic and turbulent settings. They, as decision makers, are expected to implement a high level of decision making quality, which depends on a variety of factors: managers' knowledge and experience, their ability to grasp and understand a problem, ability to analyze and synthesize, on one hand, availability of information in their environment and their use of decision making techniques and methods, on the other hand. Different levels of management (on management pyramid) use different approaches to the decision making process what implies the existence of the decision making pyramid.
Syed Shahbaz Ali Shah, Mohammad Ali jinnah University, Islamabad, Pakistan
Syed Zulfiqar Ali Shah, International Islamic University, Islamabad, Pakistan
Nausheen Zafar, Mohammad Ali jinnah University, Islamabad, Pakistan
The study examines the relationship between Non Executive Directors and performance of the listed companies in an emerging South Asian market. Performance of the firms has been quantified by using market based measures as well as accounting based measures. Marris Ratio and Tobin’s Q represents the market based measures of companies performance whereas Return on Equity and Return on Investment captures the financial reporting perspective. Percentage of Non executive Directors present in Board of Directors has been used as the proxy for Non executive Directors. Sample has been divided into three groups by using Cluster analysis. It is evident that companies which are having more non executive directors in board show good performance whereas the companies with weaker Board perform unfavorably. Descriptive statistics also confirms the result. The study reveals Non executive Directors are positively related with the performance of firms. Therefore we can safely say that a more independent and effective board of Directors accelerates a firm’s performance. Firms are defined by a network of relationships representing contractual arrangements for financing, capital structure, managerial ownership, and compensation, though from the earliest of business history these relationships had conflicts with each other, but the objective of every relation was same that is good performance of the business.
Leadership Styles’ Specifics in Large Croatian Companies
Danica Bakotic, University of Split, Croatia
Leadership could be observed through different leadership styles which influence on work efficiency and business success (Skansi, 2000, p. 54). Leadership style is the manner and approach of providing direction, implementing plans, and motivating people. There are a number of different approaches, or 'styles' to leadership and management that are based on different assumptions and theories. The style that individuals use will be based on a combination of their beliefs, values and preferences, as well as the organizational culture and norms which will encourage some styles and discourage others. So it could be stated that there are as many leadership styles as there are leaders. Many authors deal with this issue, so there are many different leadership styles classifications. For the empirical research in this paper, the Likert classification is used. Considering the decisions and the degree to which subordinates are involved in the decision making process, Likert define one of the most used leadership style classification. According to it the leadership style could be job based or employee based. Job based leadership styles are Exploitive-authoritative type or Benevolent-authoritative leadership style. Employee based leadership styles are Consultative leadership style or Participative group style. The purpose of this paper is to identify the dominant leadership style in large Croatian companies as well as to find out some specifics of large Croatian companies concerning the different leadership styles applied by managers in those companies, and to identify the correlation between manager’s personal characteristics and organizational characteristics and leadership styles.
An AHP-based Mutual Fund Portfolio Selection Model
Dr. Susila Munisamy, University of Malaya, Malaysia
Lee Kee Huat, University of Malaya, Malaysia
One of the important areas of research in finance is mutual fund portfolio selection. In this paper we present a model which can be used to help decision makers select a suitable mutual fund portfolio based on Analytic Hierarchy Process (AHP) that allows both the investors unique preference structure and their options to be taken into account. The model is set up according to the specialty of the Malaysian mutual fund market which includes attributes unique to a Malaysian investor such as preference in Islamic funds and the option to use the Employees Provident Fund savings as an additional source of investment. The model presented here recommends asset allocation and identifies the most suitable mutual funds within an asset class, consistent with the needs of the investors. This model is utilized to conduct an empirical analysis to select mutual funds offered by Public Mutual Ltd. for five prospective investors. The results indicate that investors should hold diversified portfolios of asset classes with the weights for each asset class adjusted to reflect one’s attributes and preferences. The model can help financial advisor to serve prospective investors better and will significantly improve the professionalism in the mutual fund industry. Portfolio investment in mutual fund has become a very common investment instrument and has grown tremendously in the world economies over the last decade. According to statistics from the International Investment Funds Association (IIFA), there were well over 54,000 funds being registered for sale worldwide at the end of 2004, with total assets under management in excess of USD 16 trillion (approximately RM59.2 trillion) (Koh, 2005).
Would its Past Reflect its Future Performance: Indian Banks?
Gurcharan S. Pritam Singh, University of Malaya
Dr. Susila Munisamy, University of Malaya
This paper investigates the technical efficiency and productivity of the Indian banking sector over the period spanning 2002 to 2006 using data envelopment analysis (DEA). The empirical findings indicate a wide diversity of efficiency and productivity exists among Indian banks. Our productivity estimates show an overall productivity growth of 7.7% over the span of 5 years. The productivity trend was largely led by technological trends rather than technical efficiency. The foreign banking group is found to be more productive as compared with nationalized and private banking groups. Over the last two decades, banking industries have witnessed widespread regulatory reform around the world (Zahid, 1995; Fanelli and Medhora, 1998). This involved a range of policies for the liberalization of interest rates, the removal of controls on lending and lending diversification, the lifting of barriers to competition, the privatization of the public financial institution and the introduction of market based securities (Hardy and Patti, 2001). Regulatory reforms are widely recognised to be an important tool for enhancing efficiency, productivity and quality in the provision of financial services to all sectors of the economy. India’s banking sector underwent a period of major regulatory reforms during the early and late 1990s. The major thrust of the financial reforms was to promote better use of resources by banks management which will bring about productivity enhancement.
Consumer Brand Choice Behavior When Selecting a Specialty Good as a Gift:
An Extensive Field Study on Mobile Telephones in Eskisehir, Turkey
Dr. N. Figen Ersoy, Anadolu University, Eskisehir, Turkey
Dr. Nuri Calýk, Anadolu University, Eskisehir, Turkey
Social and psychological factors are regarded as more important than economical ones in determining the consumer’s brand choice behavior in the gift-giving process of a specialty good such as an expensive mobile telephone to their family members, close friends and colleagues. The purpose of this paper is to find out the major determinants of consumer gift-giving behavior and whether demographic differences of consumers play a significant role in brand choice behavior. The paper consists of three main parts. The first part deals with theoretical background and prior research. The second part explains the essentials of the research model and formulated hypotheses. Finally the third part comprises analyses and conclusions. Consumer brand choice behavior in the gift-giving process of specialty goods like mobile telephones has recently evolved from the traditional approaches in this subject matter wherein price or value have the priority for analytical purposes. Now, social norms and high involvement with the product is the main concern and the starting point, as seen in recent research. High degree of involvement with the goods purchased as gifts for family members—along with some social benefits and some psychological impacts like brand loyalty and brand trust—regulate brand choice and brand purchase behavior on the part of the consumers. In short, brand relationship norms are the starting point, and they are major determinants of brand purchase behavior of consumers in the gift-giving process of specialty goods with respect to their close environment.
Have Earnings Lost Value-Relevance? Revisiting Latest Evidence on EVA
Annette Holler, European School of Business (EBS), International University
Schloss Reichartshausen, Germany
Value-based management, aiming at the maximization of shareholder wealth, gained global recognition. Whereby, Economic Value Added (EVA) has become the central metric for executives to evaluate, remunerate and communicate corporate performance and for investment managers to supervise portfolio performance. Research of Stern Stewart & Co. initially manifested EVA’s usefulness via superior associations with stock prices. However, numerous studies by academicians refuted those claims. While few recent studies suggest that EVA ultimately gained superiority over earnings, changes in market recognition without analogous changes in financial reporting give rise to serious doubts. Further, ambiguous results reopen the financial management debate on EVA’s utility. Thus, this study revisits the value-relevance of EVA, residual Income (RI), earnings and operating cash flows. After reducing survivorship bias and estimating independent firm-specific EVA data, 2,147 annual observations from U.S. firms over the period 1995-2006 serve to assess the capability of competing performance measures to explain the firm’s market value and stock returns. Relative tests show earnings’ and RI’s dominance over EVA; further, incremental tests find that solely earnings’ accruals provide considerable and significant additional information, while EVA’s accounting adjustments imply just marginal incremental information. To conclude, findings do not support suppositions on today’s superiority of EVA but prove earnings’ enduring predominance over the last decade. Nevertheless, results advocate adoption of RI for management compensation, external communication and security analysis and disclosure of EVA and RI in financial reporting, to align management objectives with shareholders’ interests and facilitate value-based performance monitoring.
The Personal Income Tax applied in the Member States of European Union: The Case of Spain
Dr. Maria Luisa Fernández de Soto Blass, University CEU San Pablo, Madrid, Spain
Dr. Santiago Alvarez García, University of Oviedo, Oviedo, Spain
In the Communication on "Tax policy in the European Union - Priorities for the years ahead" (COM/2001/260 of 23 May 2001), the Commission reiterated its belief that there is no need for an across the board harmonisation of Member States' direct tax systems. For tax policy, the Communication established, as a main priority, the need to address the concerns of individuals and businesses operating within the Internal Market by focusing on the elimination of tax obstacles to all forms of cross-border economic activity, in addition to continuing the fight against harmful tax competition. This approach was confirmed in the Communication "The contribution of taxation and customs policies to the Lisbon strategy" (COM/2005/532 of 25 October 2005) (European Commission, 2006) As far as direct taxes are concerned, Article 94 provides for the Council, acting unanimously on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, to adopt provisions for the approximation of such laws, regulations or administrative provisions of the Member States that directly affect the establishment or functioning of the common market. Some recommendations and legislation have been adopted in the personal tax, company tax and capital duty areas. The present paper introduces new figures and formulas never seen before at book of taxes, makes a brief approach to the harmonisation in the European Union, analyses the concept of the Spanish Personal Income Tax, studies the elements of this tax as the beneficiary, taxable person, territoriality, basis of assessment, exemptions, explains the basic mechanism of the tax, deductions, the taxable base, the tax rates, collections and examples.
Online Shopping Behavior and Characteristics of Consumers in Eskisehir, Turkey: Who, What, How Much and How Often?
Dr. Nuri Calýk, Anadolu University, Eskisehir, Turkey
Dr. N. Figen Ersoy, Anadolu University, Eskisehir, Turkey
This paper tries to bring about a better understanding of the online shopping behavior of consumers who reside in Turkey. It attempts to draw a profile of them with respect to their demographic traits. The study consists of three parts. The first part deals with the theoretical background based on literature review and summarizes past research dealing with this phenomenon. Consumer online shopping behavior, perceived quality of the services rendered by the establishments, risks attached to online shopping, mall and user characteristics, and the typology of online shoppers are discussed in this section. The second part mainly discusses the survey of online shoppers, the research model and the basic premises of the model, and the hypotheses formulated. The third part discusses the outcomes of the analyses in terms of bivariate and multivariate tests and evaluates the relative attitudes of the consumers with respect to their demographic traits. With these results, we try to bring forth the typology of such consumers. Internet shopping in Turkey first started almost two decades ago with banking transactions. The ease and comfort provided by the services rendered in these transactions attracted many consumers to Internet usage for shopping purposes. A rapid growth is observed, in recent years, in the number of shoppers and malls where consumers have started to satisfy most of their needs—from foodstuffs to durable goods and especially sophisticated electronic equipment. Of course considerable risks are also taken with the widespread use of the Internet for shopping purposes. But the majority of these risks are addressed by adding more security precautions (passwords, digipasses, e-cards, firewalls, private information interrogations etc.).
Conceptual Model on Leadership Process in Chinese Knowledge-Based Companies
Dr. Li Zhang, Harbin Institute of Technology, Harbin, China
Qiong Jia, Harbin Institute of Technology, Harbin, China
Baowei Liu, Harbin Institute of Technology, Harbin, China
This paper constructs a conceptual model on leadership process in knowledge-based companies under the Chinese cultural context. Based on the difference between traditional leadership style and knowledge leadership style, this paper describes the leadership characteristics in knowledge-based companies. According to the research of KM (KM) implement stages and knowledge leadership characteristics, this paper presents the leadership process model, finally delineates the different characteristics in different KM stages. The results show that there is a correlation between leadership characteristics and KM; leadership characteristics play different roles in the process of KM development. A transformation is occurring from the Old Economy to the New Economy, from an emphasis on the main factors of production, namely capital, land and labor, to an emphasis on information, knowledge and technology . Knowledge is the main factor of competitive advantage, which has been the most essential flowing resource in the knowledge-based companies. But how can the knowledge resource be managed effectively in the organization? The answer is leadership. In the knowledge-based companies, without leadership, the knowledge can’t be well utilized. Leadership in the knowledge-based companies has new characteristics in the globalization and digital times. The performance is up to what degree the leaders melt knowledge into organizational culture, and how they transform these invisible resources to the concrete actions for the enterprise to get more value in the intense market competition [2,3]. While business leadership styles in China have been changing with the open-economy development.
Monetary Tightening and Bank Financing of SME and Large Companies in Croatia
Damir Baran, University of Split, Croatia
Ana Rimac Smiljanic University of Split, Croatia
This paper presents and analyses the results of the survey of Croatian banks carried out by researchers of Faculty of Economics in the autumn of 2007. The empirical survey has been conducted as a part of the research project - Financial Policy and Financial and Economic Framework of SME Support in Croatia. The main objective of the research presented in this paper is to arrive at a better understanding how recent monetary tightening of Croatian National Bank influences credit policy of commercial banks towards SME and large companies. Our basic conclusion is that new monetary tightening will significantly influence corporate asses to bank credit. The influence on the SME should be more significant than on the large companies. Nevertheless, according to our results, the volume of the corporate lending should be at the levels achieved in 2006. Prompted by high bank loan growth rates, at the end of 2006 Croatian National Bank adopted a decision of the mandatory inscription of treasury bills. With this decision, that has started to implement at the beginning of the year 2007, Croatian National bank intends to restrict the growth of bank loans to 1% per month, i.e. to 12% per year. Indirectly, the intention of the Croatian National Bank is to restrict commercial banks in their routine to take loans abroad, which threatens to cause the acceleration of the external debt.
Monday Effect and Stock Return Seasonality: Further Empirical Evidence
Dr. Rengasamy Elango, Majan College (University College), Oman
Nabila Al Macki, Majan College (University College), Oman
This study investigates whether the anomalous ‘weekend effect’ found in many developed and developing markets around the world is also present in the rapidly emerging Indian equity market. We use the real-time data of three of the major indices of the National Stock Exchange of India (NSE) for 1999-2007 period. Standardizing the data, we apply a set of descriptive and inferential statistics on the above three indices. Our analysis produced mixed results indicating that the Monday returns are negative and low in the case of two out of three indices. The K-W test, which is a non-parametric test applied to examine whether the ranks of mean returns for each day of the week are equal, shows evidence of a statistically significant difference in the case of one sample index, CNX S&P Nifty Junior. The implication is that the weekend effect is present in small stocks. Dummy variable regression, which again examines the weekend effect shows that Monday returns are negative in one of the bench-mark indices, the NSE S&P Nifty confirming that the Indian Market is inefficient and could be exploited to maximize returns. Surprisingly, Wednesdays have yielded the highest mean returns across indices. However, volatility is also higher in these stocks. These findings offer interesting opportunities for individual investors and portfolio managers to place bid/ask orders in order to maximize their returns. However, due caution needs to be exercised while making the above decisions. The efficient market theory states that an informationally efficient market is one where the market price is an unbiased estimate of the true value of the investment.
Destination Attractiveness: Are There Relationships with Destination Attributes
Dr. Sebastian Vengesayi, University of Tasmania, Hobart, Tasmania Australia
This paper investigates the effects of Destination Attractions (DA) and Destination Support Services (DSS) on Destination Attractiveness (DAtt). The aim is to highlight how destination supporting services influence destination attractiveness. Researchers have highlighted the importance of various destination attributes as determinants of destination attractiveness, but rarely has the relationship been empirically tested to examine the influence of these attribute on destination attractiveness. This study uses Structural Equation Modeling to empirically examine this relationship. A study of 275 tourists reveal that not all destination attractions have direct influence on destination attractiveness. On the other hand destination support services have both direct and indirect influence on destination attractiveness. This study focuses on the research stream that has been well developed over the years on tourism destination attractiveness. Research studies, both conceptual and empirical, have examined the determinants of destination attractiveness. Various destination attributes have been identified as determining the attractiveness of tourism destinations. These attributes have then been used to assess the level of attractiveness of destinations but there appears to be no s attempt to empirically measure the significant effects of these indicators/attributes on destination attractiveness. What is lacking are studies that investigate the direct and indirect influence or destination attractions and destination supporting services on destination attractiveness.
Policy Driven Networks: A Case Study of Malaysian Multimedia Super Corridor (MSC) Smart Card Flagship Initiative
Kamarulzaman Ab. Aziz, Multimedia University, Malaysia
Mohammad Poorsartep, Multimedia University, Malaysia
Tremendous changes in technology, political and social frameworks as well as the impacts of globalization have put pressure on countries to become competitive. One strategy for creating an engine of economic growth is the creation of networks designed to jumpstart identified key sectors. These networks be they naturally or artificially conceived hold the promise of becoming the economic weapons of a country. Unfortunately, just like the usual business entities, some networks succeed, while others fail. Many studies have been done to understand the factors behind the success and failures of networks. This paper aims to provide further insights on policy driven networks through the case study of the Malaysian example – the MSC Malaysia Smart Card Flagship initiative. Wave of globalization is washing away geographical boundaries and sway resources which have made developing nations to experience demanding challenges to survive and thrive. Malaysia in its efforts to become a developed nation, focus on initiatives designed to increase its innovative capacity so that it can develop sustainable growth engines and a prosperous economy. Information and Communication Technology (ICT) was identified as the enabler to realize that vision. Hence, the Multimedia Super Corridor (MSC) Malaysia was conceptualized. It’s a policy-driven cluster-oriented initiative launched in 1996, aimed to help the country on its transition effort from an industrial society to a post industrial one. Multimedia Development Corporation (MDeC) based in Cyberjaya, is the organization mandated by the government to oversee the development of the MSC Malaysia project.
A Study of Social Responsibility of Sri Lankan Immigrant Entrepreneurs in Australia
Dr. Fara Azmat, Deakin University, Melbourne, Australia
Dr. Ambika Zutshi, Deakin University, Melbourne, Australia
Increasing globalisation, technological advancement and migration waves in the last few decades have changed the look of many advanced countries to be more cosmopolitan and Australia is no exception. The number of South Asian migrants in Australia is steadily increasing. Among the South Asians, there are 31,482 Sri Lankans in the state of Victoria and the majority of them are entrepreneurs. Social responsibility perceptions and practices of these entrepreneurs have not been researched. The study aims to fill this gap by undertaking a triangulation method to investigate the social responsibility perceptions and practices of these entrepreneurs and identify whether or not they are influenced by home country contextual factors, specifically national culture, and business environment. The study is a work in progress and the survey will be undertaken in the second quarter of the year. Socially responsible businesses have the potential to promote an overall approach to quality and sustainable development as they can have positive impacts not only on their own businesses but also on the community and the environment in which they operate. This study is thus significant as it will deliver economic, social and environmental benefits to Australia. The aim of this study is to investigate the social responsibility perceptions and practices of Sri Lankan immigrant business entrepreneurs in the state of Victoria (Australia) to identify whether or not they are influenced by their home country contextual factors, specifically national culture, and business environment.
Globalization Aspects of the World Pharmaceutical Industry
Dr. Dragan Kesic, University of Primorska, Slovenia
World pharmaceutical industry is one of the most innovative, so called »high-tech« world industries, however it has been changing profoundly in the last decade. Intensive globalization processes, increased competitiveness, fast changing structure of competitors, a complex strategic positioning and a fight for global market shares, create new challenges for the world pharmaceutical companies. In our research work we found out that fast globalization processes definitively reinforce the consolidation of the world pharmaceutical industry. Alliancing in forms of mergers and acquisitions prevail more and more as a strategic orientation for numerous world pharmaceutical companies. We may forecast that intensive alliancing processes in the world pharmaceutical industry are to continue to form even bigger pharmaceutical concerns and to speed up the oligopolization of the global pharmaceutical industry. We may point out that fast consolidation of the world pharmaceutical industry is a strategic and market driven process and conditioned by typical strategic management issues, like a lack of brand new products, an intensive and even more and more increasing competitiveness, a fast globalization processes, an increased global marketing and sales activities, a fast changing structure of global competitors, and a furious fight for global market shares and customers' loyalty.
Entry Modes Employed by Multinational Manufacturing Enterprises and Review of
Factors that Affect Entry Mode Choices in Russia
Alex Kouznetsov, Melbourne Institute of Technology, Australia
Through analysis of secondary data available on foreign enterprises in Russia and from the academic literature, this study attempted to summarize what were the most popular entry modes into the Russian market employed by multinational manufacturing enterprises, in order to serve as the theoretical and factual platform for further research on country conditions in Russia and their effect on entry modes which is not available in the literature yet. The study was limited to exporting and investment modes as these entail greater risk than other modes and require greater resource commitment. The study found that the most preferred mode of entry into Russia was exporting followed by modes such as joint venture and wholly owned subsidiary. However, an overwhelming number of exporting firms entered this market in the mid 1990s, through setting up representative offices in Moscow which required substantial funding thus indicating that this market, although risky, was still very attractive for direct investors. Based on this and on the fact that majority of foreign manufacturing firms in Russia were big multinational enterprises with readily available resources and international business expertise, it would be quite logical to assume that most manufacturing multinationals there adopted the contingency prospective by taking up a greater than in the case of mere exporting risk.
Social Interaction and Knowledge Sharing Behaviors in Multinational Corporations
Dr. Chaiporn Vithessonthi, Mahasarakham University, Thailand
The transfer and exploitation of knowledge and capabilities across national boundaries has been viewed as a critical element of creating sustained competitive advantages of multinational corporations (MNCs). Consequently, knowledge transfer became the focus of academic research by strategy and international business scholars. The objective of this study is to identify and discuss factors that have considerable influence over the transfer of knowledge between organizational subunits. To advance this research agenda, I propose that interpersonal trust, interpersonal commitment, and perceived interpersonal support exert influence over the formation of an employee’s attitude toward knowledge sharing that, in turn, influences his or her knowledge sharing behaviors. For management, this agenda raises the question: to what extent should social interaction between members of the organization be promoted so as to enhance the firm’s knowledge transfer capability? As global competition has greatly intensified in recent years, scholars from many fields have sought to identify explanations for the conditions under which multinational firms might outperform competitors. The literature on international business suggests that the extent to which multinational corporations (MNCs) create and transfer knowledge and capabilities across national boundaries matters to the ability of the MNCs to compete effectively in multiple markets (Jensen and Szulanski, 2004; Kogut and Zander, 1993; Teece, Pisano, and Shuen, 1997; Zaheer, 1995).
The Main Principles of Performance Related Pay. To What Extent Is It Applicable in Public Sector Organizations
Hsien-Mi Lin, Cardinal Tien Hospital, Taiwan, R.O.C.
Performance related pay is one of the terms covering a performance-based approach to rewarding management, it is seen as a way to motivate directors and senior managers to perform better so as to achieve objectives of organization. The versions of performance related pay have been discussed in the private sector organizations, and they have been extended to the public sector organizations. Therefore, the public sector managers have to understand the lessons of the private sectors have leaned on the management of performance related pay, the setting of objectives as well as the motivational issues involved (Murlis, 1987). This study will focus on the performance related pay, and is structured into two main sections. In the first section, I shall clarify the main principles of performance related pay and explain how it works. Then, in the second section, I will demonstrate what extent performance related pay is applicable in public sector organizations and give further summaries and recommendations. Finally, a conclusion will be produced. Performance related pay is one of the terms covering a performance-based approach to rewarding management, and has been broadly adopted by private as well as public sector organizations, such as local government, the Civil Service, and the National Health Service. It is seen as a way to motivate directors and senior managers to perform better so as to achieve objectives of organization.
The Opportunity Model of Organizational Commitment
Elif Cicekli, Bogazici University, Istanbul, Turkey
This paper analyzes the under-researched concept of opportunity and ties together what have been separate streams of opportunity research. It also highlights two antecedents of commitment that have been examined in very few studies: alternative opportunities in other organizations and the importance of opportunity for employees. Based on a literature review in the areas of organizational commitment, opportunity, alternative opportunities, and importance of opportunity for employees, an opportunity model of organizational commitment is developed and related propositions are presented. This is the first model to tie together three aspects of opportunity and their effects on organizational commitment. Organizational commitment has been empirically shown to be related to many important work-related outcomes, such as turnover, withdrawal cognition, absenteeism, job performance, organizational citizenship behavior, stress and work-family conflict (Meyer et al., 2002), job satisfaction (Hunt et al., 1985), and financial performance (Rashid et al., 2003). To attain the positive work-related outcomes and to avoid the negative ones, it is important to investigate major factors that affect organizational commitment, one of which is perceived level of opportunity at work.
Proprietary Costs, Ownership Structure and Credibility of Voluntary Disclosure of Malaysian Listed Companies
Dr. Faizah Darus, University Technology MARA, Malaysia
Roshayani Arshad, University Technology MARA, Malaysia
Dr. Dennis Taylor, RMIT, University, Australia
Suaini Othman, University Technology MARA, Malaysia
It is important to understand what influence managers to provide voluntary information to outside investors and whether the information provided by management is perceived to be credible by outside shareholders and stakeholders. Using the annual reports of 155 Malaysian listed companies, this study investigates the competing effects of information costs and ownership structure on the extent and perceived credibility of corporate voluntary disclosure during the period when public listed companies in Malaysia faced new corporate governance regulation. Results of this study provide evidence that management does not perceive their voluntary information to have sufficient signalling potential to create competitive disadvantage for their company. Findings from the study also indicate that higher percentage of outside block holder ownership has the potential to strengthen corporate transparency. However, the return-earnings relation revealed that the extent of voluntary disclosures does not give sufficient confidence to analysts and outside investors in evaluation of their stocks. Corporate disclosure has been subjected to calls for transparency as part of the corporate governance movement, in particular among companies in the East Asian countries. Disclosure of voluntary information, in particular is a sensitive management decision which can reveal proprietary information to user groups such as shareholders and also competitors who can act on the information disclosed to the competitive disadvantage of the disclosing companies (e.g. Darrough & Stoughton, 1990; Hayes & Lundholm, 1996; Newman & Sansing, 1993; Verrecchia, 1983; Wagenhofer, 1990).
Prof. Umberto Filotto, University of Rome Tor Vergata, Rome, IT
Dott. Annalisa Ferrari, University of Rome Tor Vergata, Rome, IT
The European household borrowing has been rising significantly for different years, mainly fed by the residential mortgage demand. This phenomenon has persuaded many European banks to valuate strategically the possibility to seize the development opportunities of this business area as regards foreign mortgage markets. The main theory about the productive asset landscape location (Von Thǘnen J.H 1826, A. Weber 1909, Camagni R.P.1993, etc.) shows that the different attraction degree, or the different ability in attracting new businesses (Ciciotti E. 1993), is driven by a multiplicity of territorial, social and economic factors and by their specific combination. The attraction meaning, that is the attraction ability of the landscape, is directly related to the definition of material and non-material elements that contribute to the added value creation with reference to a specific system of preferences, aims and expectations shown by potential users. Thus an area can be defined as its direct use value (benefits for resident users), its indirect use value, or option value, (benefits for neighbouring users), and its intrinsic value (Fusco Girard L., Nijkamp P. 1997). Borrowing this view to identify the residential mortgage market attraction, this paper aims at testing the assumption that the value of residential mortgage markets is a function of a set of variables strictly correlated to the two fundamental dimensions of residential mortgage markets: total outstanding residential mortgage lendings and gross residential mortgage lendings.
Studies on the Financial Market Integration and Financial Efficiency: Evidences from Asian Markets
Dr. Hong Rim, Shippensburg University, Shippensburg, PA
Dr. Robert Setaputra, Shippensburg University, Shippensburg, PA
This study employs a GARCH model to examine the financial contagion effects and financial market efficiency in East Asia. This study uses daily returns of the Morgan Stanley Capital International market indices during 1992 - 2006. Empirical results show that 1) financial markets in East Asia gradually became more integrated during this period; 2) the US influence remained strong, especially, after the Asian economic crisis; 3) financial integration was accompanied by financial efficiency; and 4) there were observed strong financial contagion effects across financial markets in this region. In recent years, emerging financial markets have been open to foreign investments. Financial openness may help to discipline domestic economic policies, develop the domestic financial sector, and increase financial efficiency for domestic firms through global competition. When the barriers to financial integration are gradually eliminated, (1) firms can allocate funds to the most productive projects and choose the most efficient sources of funds in such a way to minimize the cost of capital. With more foreign capital flowing in, financial integration may increase competition in less developed and/or developing economies and thereby improve efficiency of their financial systems.
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