The Business Review, Cambridge
Vol. 12 * Number 2 * Summer. 2009
The Library of Congress, Washington, DC * ISSN 1553 - 5827
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The Influences of Global Market and Local Cultural Forces on Management Accounting
Dr. Roberta J. Cable, Pace University, NY
Dr. Patricia Healy, Pace University, NY
Dr. Claudia (Chunyan) Li, Pace University, NY
This paper examines the impact of local cultural influences as well as global market forces on the use of management accounting tools (MATs). MATs broadly defined include accounting practices used in management planning, control and performance measurement systems. We surveyed the use of MATs by Indian firms that listed ADRs on the U.S. capital markets and compared our results with prior studies on firms from other developing countries as well as those from the U.S. We chose Indian firms because India is an important developing nation that has an important global presence. Our research extends earlier studies in several ways. First, it updated the use of MATs in India. Second, only firms that listed ADRs on the U.S. capital market were sampled. We chose these firms because they are likely to be influenced by both the local culture and the global market economy. Third, we surveyed MATs used in India compared to those used in the U.S. The surveyed MATs were used by more than 20% of U.S. firms in a previous study performed by the Institute of Management Accountants. Fourth, our study used a sample consisting of both manufacturing and non-manufacturing companies, which is broader than the prior studies done on firms in India. Fifth, we explored the impacts of size and industry classification on the choice of MATs. Overall, we found a high use of MATs by Indian firms. These firms are larger companies and are influenced by several factors such as local culture and economic development as well as mitigating global market forces. Contrary to prior findings that the use of contemporary tools is lacking in developing countries as compared to the U.S., we found that our sample of Indian firms had a high use of some contemporary MATs. Our results also indicate that size influenced the choice of certain MATs. In addition, industry classification did impact the choice of certain MATs, such as activity based costing, balanced scorecard and target costing. Based on the cross-country comparative analysis, our study supports the argument that global market forces are important in influencing managerial accounting practices. Our research contributes to the understanding that globalization has an important impact on managerial practices and decision making. This paper examines the impact of local cultural factors as well as global market forces on the use of management accounting tools (MATs) in India. MATs, broadly defined, include accounting practices used in management planning, control and performance measurement systems. Sledge (2007) suggested that firms from developing countries are becoming increasingly global but have not been studied as frequently as firms in developed countries. Further, the author concluded that firms from developing countries are becoming a greater force and are continuing to make up a larger percentage of the global economy. Radjou stated, “The latest foreign investment trends show that U.S. investors are fueling the rise of China and India as major supply bases for technology, R&D and manufacturing. By the same token, the U.S. is becoming a magnet for foreign investments targeting industries such as financial services, consumer goods, and pharmaceuticals” (2006, p.1). We surveyed the use of MATs by Indian firms and compared our results with prior studies on firms from other developing countries as well as those from the U.S. We chose India because it is an important developing nation, rich in cultural heritage and social structures that date back over 5,000 years. However, India has an important global presence as it provides many outsourcing activities to developed nations and is the second largest trading partner with the U.S. This country has become an attractive market for foreign investors because it is a large provider of experienced engineers and technicians. Our sample consisted of Indian firms that are cross-listed on the U.S. capital market. The globalization of U.S. financial markets is evidenced by the increasing number of foreign firms cross-listed as American Depository Receipts (ADRs). For example, trading volume of ADRs in 2000 was approximately $274 billion on the NASDAQ Stock Exchange (Chan and Li, 2005). We studied MATs used by Indian firms that listed ADRs on the U.S. capital markets because these firms were influenced by local cultural as well as global market forces. Prior research found that nation specific factors influenced the choice of MATs (Daley, Jiambalvo, Sundem and Kondo, 1985; Lincoln and Kalleberg, 1990). A number of studies focused specifically on the impact of culture on the use of certain MATs (Chow, Kato and Merchant, 1996; Harrison, 1992, 1993; Harrison and McKinnon, 1999). One recent study on India supports the influence of culture on the use of certain MAT’s. Joshi (2001), in his 1999 survey, found that Indian culture and values slowed the adoption of new management accounting practices. However, the impact of international markets on accounting choices cannot be ignored. With globalization advancing at a fast pace, market forces play an increasingly more important role than cultural environment, at least to a subset of firms which operate in the global economy. For example, Zarzeski (1996) found that market forces rather than the cultural environment influenced financial disclosures. Shields (1998) argued that globalization is one of the important factors influencing the adoption of new management accounting practices in Europe and other nations. Anderson and Lanen (1999) in their 1996 survey found that the changing external environment affected the evolution of management accounting practices in India. Our research extends earlier studies in several ways. First, we updated the use of MATs in India. Second, we chose a unique sample. Previous studies did not focus on companies that were listed on international markets. We selected Indian firms that listed ADRs on the U.S. capital market. These firms were influenced by both their local culture as well as the global market economy. Third, we surveyed MATs used in India and compared them to those used in the U.S. These specific MATs were used by more than 20% of U.S. firms in a previous study performed by the Institute of Management Accountants. Fourth, our study used a sample consisting of both manufacturing and non-manufacturing companies, which is broader than the prior studies done on firms in India. Fifth, we explored the impacts of size and industry classification on the choice of MATs.
Effective Communication in Health Care: Strategies to Improve Communication Skills for Managers
Kristina L. Guo, Ph.D., MPH, Associate Professor and Program Director
University of Hawaii-West Oahu, Pearl City, HI
The purpose of this paper is to discuss the key elements of the communication process, types of communication skills, and explore various strategies to improve communication. More specifically, the intent is to address professional communication skills needed by health care managers to direct overall organizational performance. Because effective communication skills is correlated with a manager’s functions to lead, direct, plan, and organize, a skilled manager must focus on ways to improve his/her communications to foster better understanding among employees, minimize conflicts, and influence attitudes and behaviors to maintain positive workplace interactions. Feedback, information that individuals receive about their communications, can be used to promote more effective communication. The mediums or channels of communication are the means by which messages are transmitted. Ineffective communication occurs when barriers distort the communication process. This paper discusses several ways to overcome these barriers to enhance communication. To improve managerial communication skills, health care managers are encouraged to must make conscious efforts to develop and apply the techniques and strategies outlined in this paper. To be successful in one’s career, an individual must master effective communication skills. Although we utilize various forms of communication on a daily basis, it is not the ability to communicate that we lack, but rather the ability to communicate well and convey our meanings as intended. We tend to believe that we are good communicators; after all, we have been communicating since birth. However, certain skills are more important than others in helping us to lead productive and rewarding lives. Similarly in our careers, we should improve job-specific skills that enhance our ability to become more valuable and effective employees. As in the case of communication skills, possession of superior oral and written communication knowledge will result in gainful and sustainable life-long employment so that we can ultimately reach our highest potential in our chosen professions. The purpose of this paper is to discuss the key elements of the communication process, types of communication skills, and explore various strategies to improve communication. More specifically, the intent is to address professional communication skills needed by health care managers to direct overall organizational performance. Because effective communication skills is correlated with a manager’s functions to lead, direct, plan, and organize, a skilled manager must focus on ways to improve his/her communications to foster better understanding among employees, minimize conflicts, and influence attitudes and behaviors to maintain positive workplace interactions. The health care environment is challenging, filled with uncertainty, rapid changes and new opportunities (Guo, 2003). Managers operating in this environment are held accountable for productivity and must enable employee participation in the decision making process. At each level of the health care organization, managers are responsible for performing specific roles and functions. All of these tasks and activities require managers to promote employee empowerment, foster team work, adapt readily to changes, reward efficiency, and concentrate on lowering costs (Guo, 2008). Major external environment factors that affect managerial decision making include economic, social, legal, and technological factors. In addition, specific industry environment consists of other health care organizations and internal and external stakeholders that managers must interact with to foster organizational survival and growth. For instance, economic conditions impact the overall health care industry and each and every single health care organization. Although health care is the largest industry in the United States employing more than 14 million employees, inflation, the gross national product, unemployment, and the recent massive economic recession have taken their toll on all employers (BLS, 2009). Rising health care costs heavily impact the health care industry as well (Guo, 2004). Ways to curb costs include the growing emphasis on providing services on an outpatient, ambulatory basis, reducing unnecessary services and focusing on preventive and wellness programs. There is an increased reliance on managed care programs such as preferred provider organizations (PPOs), health maintenance organizations (HMOs), and hybrid plans such as point-of-service programs (POSs). Furthermore, technological advances have made many new procedures and methods of diagnosis and treatment possible. Clinical developments such as less-invasive surgical techniques, advances in reproductive technology, and gene therapy have increased longevity and improved the quality of life. Advances in information technology are also improving patient care and worker efficiency so that administrative costs are dramatically reduced, and more processes are streamlined. The political climate also affects the health care industry. Our newly elected President Obama and his administration will not only be tasked with providing major economic relief for many large and small employers and tax payers but also overhauling the U.S. health care system, as more than 46 million Americans currently lack health care insurance. Health care organizations are increasingly burdened by more government regulations and mandates, such the Health Insurance Portability and Accountability Act and the Medicare Modernization Act which are contributing to rising organizational and administrative costs and reducing provider reimbursement and resulting in higher uncompensated care. All of these changes will continue to shape the health care workforce, the methods of health care delivery, and managerial decision making.
Cross-Cultural Conceptions of Organizational Justice: The Impact of Eastern Religions/Philosophies
Dr. Nina Cole, Ryerson University, Toronto, Canada
The extant academic literature on organizational justice has largely emanated from the West. Initial research on cross-cultural organizational justice suggests that perceptions of justice may be influenced by differing cultural values. Religious values have a profound influence on views of social justice and affect beliefs about the type of social order that will minimize societal well-being. Therefore in order to understand what constitutes organizational justice in Asian cultures, it may be important to consider the values in Eastern religions. A review of the major Eastern religions – Confucianism, Buddhism, Islam – indicates that the impact of these religions/philosophies on perceptions of organizational justice may be worthy of further research. The academic literature on organizational justice to date has largely been conducted by Western researchers using principles of justice derived from a Western perspective (Brockner et al, 2000; Greenberg, 2001). Thus the generalizability of knowledge regarding employee perceptions of organizational justice may be limited in non-Western contexts (Greenberg, 2001). It has even been suggested that the very meaning of justice might change radically across cultures (Kidder & Muller, 1991). Numerous researchers have called for more cross-cultural investigation of organizational justice and for more ethnographic, indigenous research to provide a basis for theory building (Greenberg, 2001; Leung & Kwong, 2003; Morris et al, 1999). Justice is a cognitively constructed interpretation of events (Morris et al, 1999), and although concerns about fair treatment in the workplace may be expected to be universal, operationalization of justice standards may be highly particularistic (Greenberg, 2001). Knowledge of the antecedents of justice judgments is important because employee perceptions of organizational justice in Western cultures have been found to have significant behavioral consequences. Employees who feel fairly treated exhibit decreased absenteeism and turnover, and increased employee job performance, job satisfaction and motivation (Colquitt et al, 2001). Managers who use this knowledge to make and implement decisions in a manner that will maximize employee perceptions of fairness can anticipate these positive outcomes. Initial findings suggest that the impact of perceived organizational fairness does extend across cultures, but that cultural factors may moderate the strength of these effects (Leung, 2005b; Morris & Leung, 2000). It is also important for managers to understand the consequences of employee perceptions of injustice in the workplace. Common responses to injustice in Western society include seeking redress or revenge; rebellion; cognitive re-conceptualization of the issue to decrease perceptions of injustice; righteous indignation; and passive acceptance (Leung & Stephan, 1998). All of these reactions can have negative consequences for organizational outcomes. Knowledge about what responses to injustice are typical in other cultures and how those responses affect organizational outcomes is extremely limited. One study found that perceived unfairness increased turnover intentions for Americans significantly more than for Chinese or Koreans, but not for Japanese (Kim & Leung, 2007). Western research has determined that there are three major categories of perceived organizational justice. First, distributive justice concerns the fairness of outcomes such as pay and promotions. Equity theory provides three major criteria - equity, equality and need – for making distributive justice judgments (Deutsch, 1985). Second, procedural justice concerns the fairness of the procedures used to determine outcomes. Two models of procedural justice have been proposed: the instrumental/self-interest model based on exchange theory and the relational/group value model based on group-interest criteria (Blader, Chang & Tyler, 2001). Third, interactional justice concerns the fairness of the interpersonal treatment received by an employee when procedures are enacted. Two dimensions of interactional justice have been identified: interpersonal (treating others with dignity and respect) and informational (providing communication and explanations) (Colquitt, 2001). The extant cross-cultural research on organizational justice is almost entirely based on Western measurement instruments using this categorization scheme (Begley et al, 2002; Fields, Pang & Chiu, 2000; Wong, Ngo & Wong, 2006). Only a few cross-cultural justice studies have acknowledged that the generalizability of the underlying three justice categories needs to be addressed. Beyond these individual efforts however, it has not been generally established whether this three-part taxonomy of categories of organizational justice holds across cultures, and whether the same criteria for assessing justice are used in different cultures. The definition and operationalization of culture have both proved to be challenging, and many attempts to categorize major dimensions of cultural variation have been conducted (Hofestede, 1980, 2001; House et al, 2002; Schwartz, 1992). Most of the research regarding cross-cultural justice has used the dimensions reported by Hofestede (1980), most commonly the individualism-collectivism and power distance dimensions (Begley et al, 2002; Chiang & Birtch, 2005; Fields et al, 2000; Kim & Leung, 2007; Leung, 2005b). It has also been suggested that the masculinity-femininity dimension may be central to cross-cultural differences (McFarlin & Sweeney, 2001). Distributive Justice. Distributive justice issues have been the focus of much of the cross-cultural justice research to date. A number of studies have focused on how cultural differences regarding individualism and collectivism affect preferences for the three distributive justice criteria in the reward allocation context. Collectivist cultures have been associated with the use of the personal need criterion in pay allocation (Ahmad, 2004). Although some studies have showed that employees in individualistic cultures tend to prefer equity whereas those in collectivist cultures tend to prefer equality (Leung & Bond, 1982), others have found no difference in preference for equity versus equality (Leung & Iwawaki, 1988). Other factors such as enterprise ideology (He, Chen & Zhang, 2004), in-group versus out-group status (Leung & Bond, 1984), and socioeconomic conditions and sociopolitical environment (Leung, 2005b) have been found to moderate the relationship between culture and preferences for distributive justice criteria. Cross-cultural differences in the definition of inputs and differences in the social comparison ‘others’ used in making equity judgments have also been found (Leung et al, 1996). Rather than weighing individual inputs and outputs, collectivists assess the actions of others using existing social cues and norms that are considered to be ‘correct’ behaviors for relationships (Lamertz, 2002).
The Market’s Response to Bundled Announcements: The Case of Equity Issues
Dr. Onur Arugaslan, Western Michigan University, Kalamazoo, MI
Dr. Yasemin Ulu, Temple University, Philadelphia, PA
Dr. Devrim Yaman, Western Michigan University, Kalamazoo, MI
In this study, we analyze the bundling behavior of firms around the announcements of equity issues. We find that the number of negative news announcements made one month before the equity issue announcement was about five times more than that made in the equity issue announcement period while the number of positive news announcements was about the same for both periods. Firms that bundle equity issue announcements with negative announcements obtain more negative announcement returns while positive bundling does not affect announcement returns. These results indicate that firms release their negative information prior to the equity issue announcement period in order to avoid worsening the negative stock price reaction to equity issues. We also find that bundling behavior is sticky; firms that have bundled their equity issue announcement with positive or negative information in the past continue to bundle with the same type of information in the current issue. Studies on the market reaction to the announcements of corporate events typically exclude firms that make other disclosures during the announcement period from their samples. However, there could be valuable information in the disclosures these studies exclude. Specifically, since negative market reactions are costly for firms, companies may combine bad news announcements with good news announcements in an effort to mitigate the negative reaction. In fact, De Roon and Veld (1998) show that for Dutch firms the announcements of negative news events of convertible bond and warrant bond issues are usually surrounded by announcements of good news and therefore these announcements result in positive stock price reactions. Broughton and Smith (1997) show that a similar effect exists for the option listings of US firms where the positive stock returns associated with the listings are a result of other contemporaneous announcements. Other studies show that prior announcements of various corporate events affect the announcement returns of the current corporate event. In this study, we provide a comprehensive analysis of the bundling behavior of US firms. Since bundling announcements affects security prices and returns, the results of this analysis have important implications for corporate financial decision making. We study equity issues as an example of bad news events since there is strong evidence in prior literature that equity issues reveal unfavorable information and result in negative announcement period returns (Asquith and Mullins (1986), Masulis and Korwar (1986), and Mikkelson and Partch (1986)). We study firms that release negative information as well as firms that release positive information when they announce equity issues. We first classify company disclosures as positive or negative events based on the findings of prior studies on the announcement returns of firm disclosures. We then identify the positive and negative events announced by each equity issuing firm during the equity issue announcement period and a control period defined as one month before the announcement. We study the extent, motivations, and the stock price effects of bundling with negative and positive information. Our sample consists of 1,995 equity issues made by industrial firms in US markets. We find that the vast majority of the firms in our sample release their unfavorable information in the control period rather than the announcement period whereas the number of positive announcements was similar in these two periods. Our regression analysis shows that the announcement returns are lower for firms that bundle the issue with negative information whereas firms that bundle with positive information are not able to obtain higher returns at the equity issue. Hence, the negative information announced contemporaneously with the equity issue decreases the value investors assign the firm while positive information is not sufficient to increase the firm value significantly. These results suggest that firms reveal their unfavorable information before the equity issue announcement in order to avoid the extremely unfavorable stock price reaction at the equity issue. Our results also show that the bundling behavior of firms is ‘sticky.’ Firms that have bundled the equity issue with positive information previously are more likely to bundle with positive information in the current issue whereas firms that have bundled with negative information in the past are more likely to bundle with such information in the current issue. Bundling decision is also affected by the announcement returns the firms obtain in prior equity issues. Firms are more likely to bundle with negative information if the announcement returns in the prior equity issue was not particularly low. Firms are also more likely to bundle the equity issue with negative information if they face low information asymmetry, lowering their chance of obtaining lower announcement returns. Several studies in literature analyze the bundling of two single corporate event announcements. However, to our knowledge the only other papers that look at the bundling of an event with all confounding events are De Roon and Veld (1998) and Broughton and Smith (1997), although the focus of these studies is not the analysis of bundled announcements. De Roon and Veld study the stock price effects of convertible bond and warrant bond issues for a sample of Dutch firms. They show that there are insignificant returns to convertible bond announcements and positive returns to warrant bonds. The latter result contradicts with the results for US firms which have insignificant returns for the announcement of warrant bonds. De Roon and Veld find that the differences in the results for the Dutch and US firms are not due to the differences in the corporate governance structures between the two countries. The positive abnormal returns for warrant bonds are caused by the bundling of their announcements with the announcements of other positive news in the case of the Dutch companies. The US firms, on the other hand, generally do not package these warrant bond announcements with other announcements. Broughton and Smith (1997) study the stock price effects of the introduction of option listings. Consistent with prior studies, they find that option listings result in positive announcement returns. However, Broughton and Smith argue that this result is due to other confounding announcements that take place around the option listing, particularly other contemporaneous listings. When the confounding announcements are removed from the sample, the stock price reaction to option listings drops to zero.
Toward a Multi-dimensional Understanding of Guanxi: A Study of Business Ethics in the Chinese Banking Industry
Dr. Kylie Redfern, University of Technology, Sydney, Australia
Cynthia Ho, University of New South Wales, Sydney, Australia
Guanxi, or social connections, has received increasing attention in the literature as the Western world grapples with the complexity of doing business with China. However the concept is often oversimplified in Western writings on business ethics. Networking and connections are seen as a business necessity, but on the other hand guanxi has been associated with corruption and calculative means of doing business. This study examines different dimensions of guanxi and their relationship to traditional vs modern value orientations. The study finds guanxi comprises two dimensions, one representing traditional Chinese values of reciprocity and face and the other a more modern networking style not dissimilar to that emphasised in the West. The need for a multi-dimensional approach to Guanxi is emphasised and discussed. Guanxi is a Chinese word literally translated to mean ‘social connections’, and regarded as a key determinant to business success in modern Chinese society, particularly mainland China (Luo, 2000; Leung, Wong & Wong, 1996). Since the open-door policy was introduced in 1978, China began to change from a planned economy to a market-oriented system. In the face of increasing business contact between mainland Chinese and foreigners in the late 1970’s, the word ‘guanxi’ has become popular business jargon in English (Gold ,Guthrie, & Wank, 2002). Nowadays, guanxi is used by Chinese and non-Chinese speakers to mean a mainland Chinese way of networking. Guanxi is different from the western approach of networking although they share some similarities. While they both are concerned about ‘knowing the right person’, Chinese guanxi has a uniquely Chinese dimension of ‘reciprocity’. Given the word ‘guanxi’ was not found in the old Chinese dictionary, some scholars argue that the concept of guanxi was a ‘new thing’ emerging in the late Cultural Revolution (1966-1976) and prospering in the economic reform period (Langenberg, 2007; Wilson, 2002; Yang, 1994). During the period of Cultural Revolution, China went through a dark period of political power struggle for the control of scarce resources. Under such circumstances, ‘knowing the right person/s’ and ‘obtaining favour‘ were a convenient way to gain advantages over the competitors. Hence, ‘who you know’ and ‘favour seeking’ have become the most important elements of ‘guanxi’. However, Yang (1994) states that the essence of guanxi reflects the important rules of Confucian relational morality - the five key relationships to promote solidarity among relatives and friends. Confucian called the five relationships ‘wu lun’ – emperor and subject (superior-subordinate), father and son, husband and wife, brother and brother, and friend and friend. Traditional Chinese are loyal to their relatives and friends. They tend to use the division of in-group and out-group as a guideline for favour related decision making. It has been widely recognised that such in-group oriented practice have extended to the Chinese business context (see Wank, 1999; Tsang, 1999; Fan, 2002; Hung, 2004; Xin & Pearce, 1996; Zhang & Zhang, 2006). The most powerful guanxi networks involve important people using their (position) power to grant favours for economic gain (Brick, 1996). Exchanging favour and in-group orientation are linked to the indigenous Chinese concept of ‘renqing’. Since guanxi practice is underpinned by the rule of returning favour for favour, gift-giving, and looking after in-group members, it has been seen as a mix of reciprocity and ‘renqing’ with instrumentality (Wilson, 2002; Langenberg, 2007). As mainland China lacks clear rules for economic interaction (Guthrie, 2002), using guanxi practice to facilitate business operations has been regarded as an effective business strategy (see Tsang, 1998; Wong & Chan, 1999; Wank, 1998; Park and Luo, 2001; Langenberg, 2007). Guanxi can perform a lubricating function in business development (Luo, 2000; Wong & Leung, 2001). Given guanxi is a potential shortcut to business success, it earns its reputation as a contemporary urban art of effective networking in mainland China (Wilson, 2002). However, from a business ethics perspective, it could be argued that the acts of gift-giving and exchanging favour are an instrumental means used to achieve a calculative guanxi end. Under the guise of guanxi building, collective corruption has become a phenomenon in mainland China (see Bian, 2002; Hung, 2008). To date, a myriad of business ethics scholars have critically questioned the instrumental aspects of guanxi practice (see Fan, 2002; Wright, Szeto, Cheng, 2002; Ang & Leong, 2000; Au and Wong, 2000; Dunfee & Warren, 2001; Su & Littlefield, 2001; Chan, Cheng, & Szeto, 2002; Tan & Snell, 2002; Su, Sirgy & Littlefield, 2003; Millington, Eberhardt &Wilkinson, 2005; Lovett, Simmons, & Kali, 1999; Provis, 2008). Instead of asserting guanxi as purely instrumental, Luo (2000:50) contends that “Guanxi includes all of the Western (networking) qualities, along with uniquely Chinese ones.” However, existing empirical studies on ‘guanxi and business ethics’ rarely explore the different dimensions embedded in guanxi practice and treat them accordingly. More importantly, the question as to “who will be more likely to rely on the instrumental dimension of guanxi for business development/success?” has not been adequately addressed. This study aims to bridge the gap in existing business ethics literature by 1) empirically examining the different dimensions of guanxi practice, and 2) exploring the influence of traditional value systems and westernisation in guanxi orientation among Hong Kong managers. Hong Kong is the largest Chinese society outside mainland China. Basically there are no major cultural differences between Hong Kong Chinese and mainland Chinese (Luo, 2006). However, under the British Government’s administration, Hong Kong underwent a significant urbanization and westernization process between 1841 and 1997. During that period, Hong Kong transformed from a rural community society to a modern and capitalist society. Such social evolution brought changes in the Hong Kong Chinese’s value system (Hwang, 1987; Bond & King, 1986; Leung, 1997). Hence, Hong Kong represents an ideal “mix” of the traditional and modern aspects of Chinese society. This study draws on data collected from managers working in a large international bank in Hong Kong. Building on a cultural paradigm, this study argues that, in the event of guanxi building, gift-giving, favour exchange, and in-group orientation are seen as natural practice among traditional Chinese.
The Euro: The Next Global Currency?
Andrew Foederer, Sam Houston State University, Huntsville, TX
Dr. Bala Maniam, Sam Houston State University, Huntsville, TX
Dr. Hadley Leavell, Sam Houston State University, Huntsville, TX
In the middle of the twentieth century, the United States dollar overtook the British pound as the world’s dominant global currency. The dollar became the conventional standard currency for international trade and debt financing. In 1999, a new currency was fashioned with the advent of the European Union (EU). The euro is now being touted as the ultimate replacement of the U.S. dollar as the premier monetary unit. With the growth of the EU, the euro is considered to have the foundation and backing to continue to grow and attain supremacy as the global currency. After a shaky start, the euro has rallied and established itself as a stable global currency. Still the euro faces several unique, methodical challenges to its long-term success. One overriding concern is the political volatility that threatens the compatibility within certain euro zone nations. However, the conglomeration of nations in the EU also provides ample influence and more than enough capital to remain a major player in the world’s financial landscape for decades to come. Will the euro realize its potential; will the euro supplant the dollar as the principal international currency? The study explores published works since the creation of the euro to analyze the prospects for the future preeminent currency. The euro was adopted a decade ago. The creation of a general currency represented the result of years of efforts by numerous European nations. Abandoning their national currencies in order to achieve the long-range goals of the member nations was a major political achievement. The unification of 11 national financial forces into one force was guaranteed to create waves in the international economy. The EU crafted a monetary standardization which leveraged and expanded the member countries’ clout. The EU’s influence directly impacts the euro currency itself to become major players on the world’s financial stage. Originally adopted by 11 countries, the euro has since spread to become the chief currency denominated in 26 European nations. When it was introduced, it was utilized solely for accounting purposes. There was a three year grace period for the nations with the euro, and on the first day of 2002, the euro was officially used as a method of tender when euro coins and banknotes were introduced into circulation. The question becomes how much influence does the euro develop as a player in the world financial markets? Will it replace the US dollar as the chief international reserve currency? This paper attempts to answer these questions by first outlining the creation and implementation of the euro and the European Central Bank. The paper also reviews the effects that the euro has had on foreign trade and the foreign exchange markets. Additionally, an analysis of the euro’s impact on the debt markets since its inception in 1999 will be made. Countless studies of the formation of the euro and its implementation and assimilation into the world markets have been published in the past decade. For this paper, a number of authoritative authors were reviewed. Arthur Cyr’s (2003) study describes the early years of the euro and its instantaneous impact. The euro’s ascendancy to the level of second most important currency in the world is chronicled. He goes on to record the years of fiscal and monetary policies that ultimately led to the design of the euro in 1999. Solomon (1999) also details the avenues the European nations traveled to construct this collaborative monetary union. From a historical point of view after the euro was implemented, Rich (2004) discussed how the euro has implemented, concluding that initially it is unclear whether the benefits outweigh the costs although a goal behind the euro implementation was political unity. Cohen (2003) examined issues with the euro as an international currency, and predicting that the euro will remain a secondary currency to the US dollar and not become a significant global currency. Frisch (2003) stated that the medium term outlook of the euro was good, and concluded that the euro can grow to equal the dollar given enough time. Neumann (2001) noted that the euro was on the rise, but needed significant growth to go to challenge the US dollar. Klaus (2004) stated that the EU continuous use of the euro would be costly – potentially both in economic and political terms – but the euro would continue to be the EU currency. Portes and Rey (1998) set the historical aspect of this issue with their exploration of numerous aspects of the financial system which were later altered by the introduction of a cross-country currency. In their work, they describe the state of the foreign exchange and bond markets prior to the introduction of the euro and hypothesize how the euro will impact each of them. They also recognize the dollar as the superior currency used in global transactions and laid the groundwork for the potential threat to the dollar which was anticipated with the introduction of the new EU currency. Hau, Killeen, and Moore (2002) provide a comprehensive study of the foreign exchange market statistics to determine the effects that the euro has had on the markets. They claim that the euro changed the market structure systematically due to its elimination of several different European currencies. Alternatively, Salvatore’s (2002) study focuses on the power of the European Central Bank. He explores the central bank’s accountability to create monetary policy and he asserts that the bank will face many new, unforeseen challenges as the euro grows as an international currency. Frieden’s (1998) study foreshadows potential challenges for the European Central Bank as well, and his work also predicts the winners and losers in the creation of the euro. He warns that by shifting to a continental-wide financial regime, at least one member country will almost certainly be negatively impacted by any monetary policy decision. After 10 years of use, studies have reviewed the euro’s position in the world currency arena. Rajan and Kiran (2006) believe that the world's reserve currency will shift to a combination of the dollar, the euro, and an undisclosed Asian currency. An editorial piece in the Economist (2009) holds the euro has weathered the early problems of implementation and is now a haven, along with the US dollar, for investors seeking safety in a financial crisis. However, the euro’s troubles are not over as full economic productivity expected from a single currency has not been achieved partially because weak governments have been protected from punishment by capital markets. The euro’s next 10 years will be successful if an irreversible entry into a system of a single currency forces the entrants into reforms for a more competitive economy.
Analysing the Impact of International Stock Markets and Macroeconomic Variables on the Thai Stock Market
Dr. Abbas Valadkhani, University of Wollongong, Australia
Surachai Chancharat, Khon Kaen University, Thailand
Charles Havie, University of Wollongong, Australia
The paper analyses the effect of various international stock market price indices and some relevant macroeconomic variables on the Thai stock market price index, using a GARCH-M model and monthly data from January 1988 to December 2004. It is found that, inter alia, that (a) changes in stock market returns in Singapore, Malaysia and Indonesia in the pre-1997 Asian crisis, and changes in Singapore, the Philippines and Korea in the post-1997 era instantaneously influenced returns in the Thai stock market; (b) changes in the price of crude oil negatively impacted on the Thai stock market only in the pre-Asian crisis period; (c) volatility clustering (i.e. ARCH and GARCH effects) as well as a GARCH-M model were statistically significant only in the pre-1997 era; and (d) stock markets outside the region had no significant immediate impact on monthly aggregate returns in the Thai stock market. Stock market volatility appears now to move rapidly across countries. This has been possibly affected by the liberalization of capital markets in the past two decades. A clearer understanding of stock market determinants is very important for investors, regulators and academic researchers. Therefore, increased knowledge of stock market determinants is necessary in the settlement of pricing, hedging and regulatory policy. A number of analysts have investigated the impact of macroeconomic variables and international linkages on stock returns. Most of these studies, however, have focused on developed markets by using the Autoregressive Conditional Heteroscedasticity (ARCH) model and the Generalized ARCH (GARCH) model. For instance, Schwert (1989) and Flannery and Protopapadakis (2002) tested the effect of domestic macroeconomic variables on stock volatility for the United States. They found weak evidence that such factors could predict stock market returns which are inherently volatile. Moreover, Hamao, Masulis and Ng (1990), Bae and Karolyi (1994) and Susmel and Engle (1994) focused on the international spillover of stock return volatility between Japan, the United Kingdom and the United States and found some evidence of volatility spillovers between these markets. In addition, the effect of foreign stock markets and macroeconomic news on the Australian stock market were further investigated by Kim and In (2002). The results indicated that the movements of the major stock markets (namely Japan, the United Kingdom and the United States) and some macroeconomic news significantly influence the Australian stock market. Other studies have examined the impact of macroeconomic variables and international linkages on the Thai stock market. Granger, Huang and Yang (2000) and Phylaktis and Ravazzolo (2005b) employed a cointegration model. Fang (2002) and Caporale, Pittis and Spagnolo (2002) used a GARCH model to analyse the relationship between stock returns and various exchange rates. Most studies find that the exchange rate leads stock returns, positively, in Thailand. In addition, Liu, Pan and Fung (1996) and Liu, Pan and Shieh (1998) used vector autoregressive analysis and cointegration models to investigate the international linkages between the stock markets of the United States and Asia-Pacific countries. The results indicated that the United States market influenced the conditional volatility of most Asian markets. Japan and Singapore had a significant and persistent impact on other Asian markets. On the other hand, Ng (2002), Baharumshah, Sarmidi and Tan (2003) and Phylaktis and Ravazzolo (2005a) reported no evidence to indicate that the international linkages among the South-East Asian stock markets was significant. In, Kim, Yoon and Viney (2001), however, used a GARCH model and found a significant volatility linkage between Korea and Thailand. Hence there is no consensus on the nature of these relationships. In the 1990s, most stock markets in Asia experienced considerable growth and turbulence. This process resulted in a profound change in Thailand’s economy. The Stock Exchange of Thailand (SET) significantly influences Thai economic development by providing a mechanism for resource re-allocation between different sectors of the Thai economy. As a rapidly developing emerging market the SET also plays an important role in a worldwide context by affecting international capital flows. The experience of the Thai stock market is probably typical of Asian stock markets in general because of its manageable size and diverse characteristics (Bos, Ding and Fetherston, 1998; Chusanachoti and Kamath, 2002). An understanding of the mechanisms of the Thai stock market’s dynamics is, therefore, very important. This is the first study to investigate the impact of international linkages and macroeconomic variables on the Thai stock market using a GARCH model. The primary objective is to examine the impact of international stock markets and domestic macroeconomic variables on the Thai stock market price return, in the pre- and post-1997 Asian crisis period, by applying various GARCH models. The main reason to use GARCH pertains to the fact that the variance of forecast errors depends on the size of the preceding disturbances. A generalized form of the conditional heteroscedasticity allows for lagged variances and further lagged values of the error term. Consequently, it is naturally expected that the GARCH model is an efficient way to deal with volatility clustering observed in residuals which usually occur in stock price data. The remainder of this paper is organized as follows. The next section describes the data employed and presents the summary statistics as well as the unit root test results. The third section briefly discusses the GARCH models from a theoretical perspective in identifying the major determinants of Thai stock price variations. The fourth section presents various estimates of a model capturing the volatility of stock price returns. The penultimate section discusses the major findings and implications arising from this study. Finally, the last section provides some brief concluding remarks.
China’s Entry into the WTO: Is It a Good Deal or a False Promise for US and Chinese Workers?
Dr. Ki Hee Kim, William Paterson University, Wayne, NJ
China’s entry into the World Trade Organization (WTO) in 2001 was a landmark event in the bilateral trade relationship between China and the United States. China’s entry agreement mandated market openings and other reforms that have significantly opened its economy to US exports and investment. China is now the fourth-largest market for US exports, compared with its position as ninth-largest at the time of WTO entry, and is our third-largest market if combined with Hong Kong (The US-China Business Council, 2008). Mr. Clinton argues that US exports to China now support hundreds of thousands of American jobs and that these figures can grow substantially with the new access to the Chinese market the WTO agreement creates (Scott, 2000). These claims are misleading. The growth of U.S. trade with China since China entered the World Trade Organization (WTO) in 2001 has had a devastating effect on U.S. workers and the domestic economy (Tasina, 2008). The Economic Policy Institute (EPI) calculates the job losses based on a model that determines the number of jobs displaced for each billion dollar’s worth of trade imbalance with China. While it is true that exports support jobs in the United States, it is equally true that imports displace jobs (The EPI Study, 2008). The growing U.S. trade deficit with China has displaced huge numbers of jobs in the United States, and has been a prime contributor to the crisis in manufacturing employment over the past six years. The number of job opportunities lost each year grew rapidly during the 1990s and accelerated after China entered the WTO in 2001. Fears about job losses and chronic job shortages are on the loose again. The purpose of this research project is to investigate complex impacts on US and Chinese workers after China’s entry into the WTO. This study will also review overall economic performance in US and China after China’s entry to WTO.
Selection of the Optimal Portfolio by Multicriterial Model using Industry and Company Evaluation
Dr. Zoran Babic, Branka Marasovic, MSc., and Dr. Neli Tomic-Plazibat, University of Split, Croatia
This paper presents a Two-step model for selection of the optimal portfolio. In the first step of portfolio optimization we evaluate the industries to which the stocks belong. Evaluation of industries is carried out by a multicriteria model and the obtained result is the share of each industry in the optimal portfolio. Having conducted industry evaluation, in the second step of model optimization we evaluate the stocks within each single industry by multicriteria model and define the share of each company stock in the industry portfolio. Finally, based on the shares of industries in the portfolio calculated in the first step and the shares of company stock in the single industry portfolio calculated in the second step, we determine the share of each company stock in the total portfolio. The contribution of this model is in the possibility to select the criteria characteristic for a particular industry, which are non-existent in other industries and are unavoidable for evaluation of company stocks in that particular industry. Another contribution of this model is in the possibility to evaluate stocks by criteria whose mean values are different in different industries while avoiding mistakes occurring just because of different criteria mean values for a particular industry. The multicriterial method applied in this paper is based on the PROMETHEE approach . The selected model has been applied in Zagreb Stock Exchange (ZSE) as a real case. In 1952 H. M. Markowitz developed the first model for portfolio optimization and with that model he placed foundation of the modern portfolio theory. His model is based upon only two criteria: return and risk. The risk is measured by the variance of returns’ distribution.
Can a State Funded Rural Economic Development Program Positively Impact the State’s Economy? A Case Study Application using 2007 Texas Department of Agriculture’s Rural Tourism Economic Development Program
Dr. Roger Hanagriff, Associate Professor, Texas A&M Kingsville, TX
Dr. Marcy Beverly, Associate Professor and Dr. Michael Lau, Assistant Professor
Sam Houston State University, TX
In this paper, we review the tourism impact from supported tourism events and measure their economic value to the local economy. The economic values are the result of visitor spending and when extrapolated to total event attendance creates economic values from the state-supported event. Communities receiving funding were responsible for collecting visitor surveys to measure consumer spending, and to record the investment cost of the event. The results were that state support represented 14 percent of the total event investment and total event value from visitor spending was $7.8 million for 31 events. The state percent share in value represented $1.1 million and considering the program expended funds of $147,276 there is a $7.50 return for every $1 of state funding. Economic impacts from the funds add additional value and measure total economic value to Texas. We conclude that state supported programs focusing in the area of partial marketing support can create positive return on investment value of state funding. The GO TEXAN Rural Community Program, formally Texas Yes! Hometown STARS program was developed to assist rural communities in advertising rural events, which leads to rural economic development. The program’s focus on developing rural tourism is a state program that is supported by a review of literature. The program is a competitive dollar-for-dollar matching reimbursement program open to community members, which are required to join TDA’s (Texas Department of Agriculture) GO TEXAN program. The program will reimburse communities for half of their promotional costs. Eligible communities apply for the funds by submitting a tourism event promotion proposal to TDA. Matching reimbursement funds can be used to offset the costs of the following materials and services to directly promote rural tourism events:
Strategic Control of Parent Companies, Commitments to Multiple Parties, and Intention to Implement Strategy: The Case of International Joint Ventures in Indonesia
Syukri Lukman, Ph.D., Universitas Andalas Padang, Indonesia
This study seeks to investigate the relationship between the strategic control of parent companies and the management team’s intention to implement a strategy of international joint ventures (IJVs) in Indonesia. The influence of management teams’ commitment to multiple parties as mediators in the hypothesized relationship is also examined. Using a sample of 113 IJVs, the statistical analyses show that most of the hypotheses are supported. The finding showed that the strategic control of parents does not directly influence the intention to implement strategy in IJVs, but does so indirectly through commitment to multiple parties in which the management team commitment to foreign parent companies and commitment to IJV itself have role significant than commitment to local parent companies and commitment to team. Implications, limitations, and suggestions for future research are presented. The globalization of businesses has created the need for many companies to collaborate and form strategic alliances. Kenichi Ohmae (1989, p.144) stipulated that “no company can stay competitive in the world today single-handedly.” In other words, for firms to remain competitive in their business operations abroad, they have to create strategic alliances. International joint venture (IJV) is one of the most frequently utilized forms of international cooperative arrangements. While a domestic joint venture operates like a stand-alone firm in engaging in all different types of regular business activity and external relationships, similar to that of any independent firm, an IJV is more complex than a single organization since it involves multiple internal inter-organizational linkages (Yan & Luo, 2001). In managing an IJV, managers must have a “dual commitment” because an IJV grows from two or more parent companies with shared ownership, resources, and strategic decision-making processes.
Classification of Insurance Companies in Turkey
Dr. Nursel Selver Ruzgar, Marmara University, Istanbul, Turkey
This paper presents a comparative study of the use of three different methods of data analysis on a common set of data. To investigate the comparative performance of these methods, discriminant analysis, logistic regression analysis and Rough set approximations, were applied to 24 non-life insurance companies in Turkey for the years 2004, 2005 and 2006. These companies were grouped as successful or unsuccessful according to geometric means of their total policy numbers and total premium products. The results indicate that predictions with the estimated logistic functions and the estimated discriminant functions obtained for the years 2004, 2005 and 2006 give identical values when compared with the actual values. While logistic regression analysis and discriminant analysis classified non-life insurance companies, Rough set approximation determined which policies have affected the classification procedures. Classification of data or the assignment of a set of alternatives into predefined homogenous classes in mathematical models constitutes a very important part of the statistical analysis. Most of the existing classification methodologies are based on absolute comparisons among the alternatives and some reference profiles (cut-off points) that discriminate the classes (Doumpos and Zopounidis, 2004). These techniques based on traditional statistical approaches include discriminant function analysis (DA) and logistic regression (LR) (Hair et al, 1998) among others. DA is a classical multivariate technique concerned with separating distinct set of objects and allocating new objects to previously defined groups. It has many restrictive conditions including multivariate normality, and equality of covariate matrix. If these conditions are violated the result may be questionable. DA is used to determine which variables disriminate between two or more existing groups.
Virtual Work and Its Challenges and Types
Gerda Mihhailova, Kandela Oun, and Kulno Turk, Ph.D., University of Tartu, Estonia
Research on virtual work is usually based on case studies, interviews or on some other small sample methods that affect results and allow limited conclusions. Current article is based on data gathered from 323 organizations. As use of ICT is one of the main characteristics of virtual work, the study concentrates on issues related to ICT-mediated communication for co-operation purposes. The results of the survey show that virtual work is used relatively often, but management techniques tend to suit better for ordinary work arrangements. The article’s novelty and theoretical contribution stems from presenting the results in a new model that uses virtuality as bases for drawing a typology of virtual work. Relatively recent developments in the field of information and communication technology (ICT) have enabled the organizations to start using virtual teams. Virtual teams have been defined as: “…groups of workers with unique skills, who often reside in different geographical places and who have to use for co-operation means of ICT in order to span the boundaries of time and space (Kirkman, Mathieu 2004)”. Virtual work is a broader term that can mean many types of new work forms, e.g. virtual teamwork, hot-desking, work from a satellite office, tele-commuting etc. Over the past 10-15 years, literature on the specifics of these new work forms has emerged, but as for any new phenomena, the articles tend to be descriptive and lack empirical research. Even when empirically researched, only a small sample (mostly case studies) is used in most cases.
A Business Case Study - The University Bookstore Limited
Dr. Zorah Abu Kassim, Universiti Malaysia Sarawak, Malaysia
Darshan Singh, Universiti Teknologi MARA, Malaysia
A University Co-operative with 6 store outlets finds that even though sales are rising, dividends to members are not increasing correspondingly. The main issue identified as the cause of the problem lies in the downward trend of sales of the grocery store outlet. As a result, the grocery store is draining the profits of the overall organization. Financial data were collected from annual reports and published documents. Additionally, interviews were held to gain insight into causes for the declining sales of the grocery store. Increasing competition, bad location, high overheads, unprofessional management were identified as some of the causes .A SWOT analysis is conducted to gain insights on recommendations to be forwarded to management. The management of the Co-op therefore, has come to a crossroads. Should they continue to operate the grocery store or should they close it down? The top management of the University Co-op is perplexed. Sales and profits of the Co-op have been rising from the year 1996 to 2002. Yet, the University Co-op grocery store located in the campus was consistently losing money over the years. For year 2002, there are 11 public universities, 5 private universities. 11 polytechnics and 3 branch campuses (Eighth Malaysian Plan, 2001-2005). In Malaysia, public universities are normally funded by the government or public funded while private universities are funded by fee paying students Majority of students studying in public universities get a scholarship or student loan to subsidize their studies. Student fees are usually much lower in public universities than in private universities. Private universities in Malaysia are sometimes funded by private corporations like Tenaga Nasional (National Electricity Company) and Telekoms Malaysia Berhad (National Telecommunication Company). Enrollment of students for their first degrees in public universities have increased dramatically from 170,794 students to 212, 326 students (Eight Malaysia Plan, 2001-2005)
What's in a Name? A Research Model to Explore the Community Impact of a Nonprofit Organization's Name and Identify Name-Change Opportunities
Dr. Amy Handlin, Monmouth University, West Long Branch, NJ
Nonprofit social service agencies have faced increasingly serious marketing challenges in recent years. The field has become so crowded that it is difficult for new or regional agencies to compete -- for both donors and contracts -- with established agencies, especially those that have a national presence. In working with new and regional agencies, the author has found that changing the name of a struggling entity can be an effective tool to help strengthen its positioning in the marketplace. Positioning, according to the classic theorists Ries and Trout (1986), is "not to create something new and different, but to manipulate what's already up there in the mind, to retie the connections that already exist." The purpose of this paper is to suggest a research protocol that can be readily adapted by agencies to evaluate the possible positioning benefits of a name change. Traditionally, nonprofits try to solve marketing problems one at a time, instead of thinking about each issue in relationship to others. This tendency is a consequence of limited time, resources, and in-house expertise. For example, a drop in attendance at a museum exhibit might bring about a push for more publicity for that exhibit -- but not a comprehensive look at competitor museums. Poor utilization of a public health clinic might be attributed solely to its location, without considering the reputation of its parent agency.
Reflections on Exhibiting Multicultural Fluency in the Modern Classroom
Thomas Clark, Ph.D., Professor, Xavier University
Julie Stewart, M.A., Doctoral Candidate, University of Cincinnati
This paper describes the benefits of business teachers interacting with their liberal arts colleagues to gain a better understanding of how to incorporate recent advances in multicultural learning into their pedagogy. It particularly focuses on helping students become aware of the impact of electronic media on their ability to think deeply and thoughtfully. Xavier University conducts an annual summer program, The Multicultural Fluency Institute, for faculty across fields to share best practices, with a focus on understanding how to teach an increasingly multicultural student body more effectively. My goal in attending as a Management and Entrepreneurial Studies teacher was to improve my ability to understand how current thinking about diversity impacts the way students communicate when they write and speak in their personal and professional lives. I found the workshop, by exposing me to the best thinking of my colleagues in the liberal arts and social science colleges, increased my sensitivity to a variety of issues including disability, age, gender, religion, race, ethnicity, incarceration, sexual orientation, and addiction, each of which students have raised in class and in one-on-one office hours’ interaction, and, most importantly, to issues of adapting our pedagogy to the new realities of living in an age of instant electronic communication, where using processes that encourage in-depth thought and critical thinking skills may be giving way to more compelling, yet intellectually shallow, dependence on unreliable electronic sources, such as Wikipedia.
Economic Effect of Fairs – The Kava Model Approach
Dr. Laszlo Karpati, Dr. Andras Nabradi, and Dr. Zsolt Csapo, University of Debrecen, Hungary
Complex economic evaluation of fairs / exhibitions can be considered as novelty in the literature. Each stakeholder group in connection with a fair is evaluated in numerical terms, taking into account the specific cash inflow and outflow categories of that group. The net cash flow is considered as economic value since it filters out the accumulations. Adding together all the categories, the so-called complex economic value and effectiveness is established regarding the surveyed fair. A numerical model titled: KAVA was elaborated to carry out the calculations for the complex economic effectiveness of the fair. Practical example of using the model is also shown in the paper. Fairs and exhibitions can be considered as one of the oldest means of marketing, looking back to several thousand years’ past. A lot of authors dealt with evaluation of these events, examining them from several viewpoints. Those evaluations, however, did not reach a level where the fair / exhibition were evaluated from economic viewpoint, complex way and together with its environment / region / settlement. In this article authors present a model that gives answers to the questions above, in complex way and by numeric figures regarding the economic effectiveness of a fair. The acronym of the elaborated model is KAVA. In this paper the authors present the theoretical approach of the KAVA model and one practical example. A lot of publications dealt with evaluation of different effects of fairs / exhibitions in marketing literature. Those publications’ approach is mainly qualitative, but sometimes quantitative, too. The main characteristics of the existing publications are that they investigate one or more from the stakeholders of fairs and generally do not analyze them together with the fair and its environment / region / settlement. The publications cited below, however, give invaluable components for creating a complex model since different approaches of authors can be incorporated into the model.
Competitive Advantage, Value Creation and du Pont Identity
Dr. Fen-may Liou, Yuanpei University, Shin-chu, Taiwan
Dr. Eing-chan Tang, National Chiao Tung University, Taipei, Taiwan
Much of the strategic research work defines competitive advantage as invisible resource bundles and/or the tacit capabilities of the firm, and suggests that such bundles of resources provide a competitive advantage or affect long-run firm performance. The problem is that resource and activity bundles are hard to reveal and very difficult to test. We propose that a firm’s competitive advantage can be inferred by financial performance. Thus through the segregation of the components of the financial performance we can investigate the competitive heterogeneity within industry. The present study presents that the du Pont identity of financial return is consistent with the concept of the competitive advantage in terms of value creation. The ten financial indicators derived from the expanded du Pont identity are used to investigate the source of the competitive advantage of the worldwide semiconductor industry. Much of strategic research has focused on resource and capability bundles as the sources of the competitive advantage. The problem is that resource and activity bundles are notoriously hard to dismantle since they include complex linkages, complementarities (Milgrom and Roberts, 1990; 1995) and tacit dimensions (Nelson and Winter, 1982; Reed and DeFllippi 1990). By promoting inductive Bayesian interpretation of the sustainable competitive advantage proposition, we (2008) proposed that “a firm’s competitive advantage, resource bundle configuration, and dynamic learning capability cannot be comprehended by outsiders. Its operational performance, however, can be captured by financial indicators.” From this viewpoint, the presence or absence of competitive advantage may be reflected in the causal relationship between resource configuration, dynamic capability and observable financial performance.
Understanding the Decline in Japanese Tourist Arrivals to Hawaii from 1998 to 2007: A Macroeconomic Perspective
Dr. Larson Ng, University of Hawaii at Manoa, Honolulu, Hawaii
Hawaii has historically been known as one of the top tourist destinations in the world. However, beginning in 1998, Japanese tourist arrivals to Hawaii began a negative trend, whose soon-to-be-realized long-term effects will only add to the mounting economic troubles facing Hawaii, since the global financial crises in 2008. In an effort to provide a macroeconomic perspective to assist with the state’s recovery attempts, this study researched the role of income, price, substitute price, and the exchange rate in Japanese tourist arrivals to Hawaii during its predominant period of decline from 1998 to 2007. Utilizing the Japanese Real GDP (i.e., income), the Honolulu CPI (i.e., price), and the Australian CPI (i.e., substitute price) as research variable proxies, along with the Japan-US exchange rate, a macroeconomic factor contribution analysis was conducted to discover the most positive, most negative, and least influential macroeconomic demand determinant during this period. Based on the study findings, the Japanese Real GDP (i.e., income) was the most positive, the Australian CPI (i.e., substitute price) was the most negative, and the Japan-US exchange rate was the least influential macroeconomic demand determinant, respectively, that contributed to Japanese tourist arrivals to Hawaii from 1998 to 2007. According to Hawaii’s State Department of Business, Economic Development and Tourism, tourism is the one commerce activity that greatly contributes to Hawaii’s economic base (Hawaii Department of Business, n.d.a). One of the most important sources of travelers to Hawaii is Japan. Prior to 1998, Japanese tourist arrivals to Hawaii enjoyed a nearly uninterrupted trend of growth. Since 1998, however, that trend of growth became a trend of unprecedented decline. In the wake of the global financial crises in 2008, this negative trend’s specific long-term financial effects are poised to threaten Hawaii’s already uncertain economic future.
The Model of Corporate Environmentalism: the Effects of Perceived Market Uncertainty upon Marketing, Environmental, and Social Performance
Apichart Kanarattanavong, JDBA Doctoral Student, Chulalongkorn University, Bangkok, Thailand
Dr. Guntalee Ruenrom, Chulalongkorn University, Bangkok, Thailand
Corporate environmentalism (CE) reflects the degree of integration of natural environmental issues into firms’ strategic decisions. This paper investigates two specific sources of perceived uncertainty (i.e., the perceived uncertainty of the environmental market and environmental regulation) and their effects on the CE. The perceived uncertainty of the environmental market and environmental regulation is proposed to have a main effect on CE, a moderating effect on the relationship between the resources and capabilities of firms and CE, and a simultaneous effect (the main and moderating effects). The study also examines the consequences of CE. It proposes that CE positively influences the marketing, environmental, and social performance of firms. Theoretical, managerial and governmental contributions are also discussed. Research on corporate environmentalism (CE) has adopted various theoretical perspectives to identify the antecedents of CE (i.e. the political economy perspective, stakeholder theory, the resource-based view, institutional theory, and/or a combination of two or more of the above). This current study takes a different approach by adopting marketing strategy formation: Varadarajan and Jayachandran (1999) argued that a strategy and its performance outcomes are influenced by the external and internal environments of firms. Adopting the approach of identifying antecedents of CE has several advantages. First, external and internal factors are simultaneously investigated. Second, the differential sources and effects of the external factors (i.e. the perceived uncertainty of the business environment) can be particularly examined. Supporting the specific source examination, Song and Montoya-Weiss (2001) asserted that “uncertainty should be studied in relation to specific components of the environment in order to properly attribute its effect” (p. 61).
Re-examining Causal Relationship between Stock Prices and fundamentals: Evidence based on Dynamic Panel Data Model
Dr. Chin-Chia Liang, Dayeh University, Taiwan
Dr. Jin-Ming Liang, Hsing Kuo University of Management, Taiwan
In this paper we investigate the causality relationship between stock prices and three key fundamentals including consumer price index, real gross domestic product and one-year maturity government bond yield as a proxy of interest rates in G-7 are sourced from DataStream. With the base year of 2000, all quarterly data spanning over 1998:Q1 - 2007:Q4 are surveyed, and all the variables including interest rates (here, one plus interest rate used) are in natural logarithm form. We employ the GMM-SYS approach for the estimation of the panel VAR model. Afterwards, the causal relation relationship between stock prices and some selected macroeconomic variables is tested and ascertained. We may conclude in the G7, empirical evidence indicates a uni-directional causality running from consumer price index to real gross domestic product. On the other hand, there exists evidence a bi-directional causality running from stock prices to interest rates, from real gross domestic product to stock prices and from consumer price index to stock prices. Based on the dynamic panel data (DPD) model, these uni-directional and bi-directional causalities give important implications for policy makers of these governments. The increased trend of international capital movements across countries accompanied by deregulation of trading stocks allowed much more investors with dominant information for seeking profitable opportunities in global stock markets. Furthermore, an aggressive interaction of monetary policy and integration of currency traded for financial assets in the markets of major industrial countries have facilitated international funds and useful information to go into the stock markets since the European Monetary System was established in 1999. Therefore, a large amount of international funds from financial markets has continued to influence somehow many real economic activities such as industrial production, employment levels and R&D capability and financial factors such as interest rates, the price level and money supply in these countries. It is apparent that a simultaneous consideration of share prices and some key macroeconomic factors reflecting a nation’s economic conditions for these developed countries as a whole is needed when real and financial variables are closely interacted.
The Empirical Study of the Impact of Product Innovation Factors on the Performance of New Products: Radical and Incremental Product Innovation
Danupol Hoonsopon, JDBA Doctoral Candidate, and Guntalee Ruenrom, Ph.D.
Chulalongkorn University, Bangkok, Thailand
Innovation strategy is an important factor that helps firms to cope with the pressure from several business environments and increase their performance. This study aims to identify what factors impacted each type of product innovation. The proposed framework demonstrates product innovation factors, radical and incremental product innovation, and performance which are antecedence, mediator, and consequence, respectively. In the present day, many firms encounter competitive pressures such as demand uncertainty, technological turbulence, and economic (Cooper (2000) and Zhou, Yim, and Tse (2005)). In strategic management, firm performance is determined by the strategic position of a firm that matches the characteristics of the marketplace and the environment (Narver and Slater, 1990). Innovation strategy is one of the important factors which help firms cope with pressure from several business environments (Ziamou and Ratneshwar (2003) and increase their sales, profits, and competitive strength (Govindarajan and Kopalle, 2006). Nevertheless, the rate of new products that fail is high (Goldenberg, Lehmann, and Mazursky, 2001). The reasons for failure are either that new products may not serve the needs of the customers (Zirger and Maidique, 1990) or the cost of the new products is higher than the sales of the new products (Goldenberg, Lehmann, and Mazursky, 2001). Therefore, firms must find the most appropriate way to develop new products to handle these situations.
Effects of Performance Management and Incentive Allocation on Development of Thai Public Services and Officers
Dr. Kalayanee Koonmee, National Institute of Development Administration, Thailand
The Public Sector Development Commission implemented a performance management system comprised of goal setting, performance appraisal, and incentives for performance in 2004. The ultimate objective was to improve the ability and standard of Thai public services and to continually improve the efficiency of Thai public officers. This study aims to investigate the effects of this performance management system during the period 2004-2007, and to give some recommendations on how to improve the system. The research methodology includes both secondary and primary data collection. In-depth primary data is obtained from interviewing top management and concerned officers from 20 selected units; broad primary data is obtained from questionnaires. There are two groups of respondents - management and staff. They are stratified using multi-stage sampling with a 37.1% response rate from management and 59.31% from staff. The findings are: (1) Both goal setting and performance appraisal, at almost equal levels, have a significant effect on the efficiency and effectiveness of both units and individuals. The effect on units is higher than the effect on individuals. (2) The effects of incentives vary between the two methods. Equal results for usefulness and not-usefulness to public sector development from the interview study, and some effect to public sector development (increasing unit efficiency, and employee satisfaction leading to efficient and quality working improvement) from the survey study, with more effect on organizations and units than individuals. Some management recommendations are also included in this research.
The Investment Development Path Hypothesis - A Panel Data Approach for Portugal and the Cohesion Countries, 1990-2007
Miguel Fonseca, Faculdade De Economia Da Universidade Do Porto
Antonio Mendonca, Instituto Superior De Economia E Gestão / Universidade Técnica De Lisboa
Jose Passos, Instituto Superior De Economia E Gestão / Universidade Técnica De Lisboa
Looking at the transformations that took place in the world economy in the last quarter of the 20th century, as a result of liberalization, deregulation and market opening process, one of the most striking features was the emergence of multinational enterprises (MNEs) in all sectors and countries of the world. Consequently, the Foreign Direct Investment (FDI) flows promoted by these firms have grown significantly, even faster than world trade and world output, in the same period. In this context, our analysis is based on the Investment Development Path (IDP) theory, according to which the inward and outward investment position of a country is tied with its economic development. In the present research, this hypothesis is estimated empirically for Portugal and other 24 countries in different stages of development, between 1990 and 2007, particularly comparing the Portuguese positioning on IDP with the other cohesion countries. Generally, our results find support for IDP paradigm, although it is impossible to capture all the stages predicted theoretically, given the lack of heterogeneity between the most countries of our sample and also the relatively short time period considered. The main purpose of this paper is to analyse the Net Outward Investment (NOI) position of Portugal, in the period 1990-2007 at an aggregate level. We have as methodological reference the Investment Development Path hypothesis, according to which the Foreign Direct Investment develops through a path that expresses a dynamic and intertemporal relationship between an economy’s level of development, proxied by the Gross Domestic Product (GDP) or GDP per capita, and the country's NOI position, defined as the difference between outward direct investment stock and inward direct investment stock.
The Convergence Analysis of Inflation and Unemployment Rates
Snjezana Pivac, Ph.D., Zdravka Aljinovic, Ph.D., and Maja Ivcevic
University of Split, Croatia
In the paper the time paths of the Croatian rates of inflation and unemployment are estimated. The model is based on three first-order differential i.e. difference equations and on the adaptive expectation hypothesis, what results with second-order differential i.e. difference equations for each variable. The data of the rate of inflation and the rate of unemployment are used for parameters estimation, while the expected rate of inflation are estimated by VAR model. The parameters of adaptive-expectations equations are estimated by standard methods. On the basis of the estimated time paths the stability and convergence analysis is done for the rate of inflation and the unemployment rate. The main aim of the paper is to estimate the expectation of the rate of inflation and the unemployment rate in Croatia using mathematical model based on the system of differential i.e. difference equations. The paper is organized in five sections. After this introductory section, in the second section the mathematical model is presented. The basic framework is taken from (Chiang, 1984) where the resulting equations are achieved according to the three differential/difference equations describing inflation-unemployment interaction. In this paper, in discrete form of the model, instead of monetary policy equation based on the rate of inflation from forward periods, the latter equation is based on the current rate of inflation. That implies new form of the resulting second order difference equation in the rate of inflation and the unemployment rate. The third section uses statistical-econometric methods for the parameters estimation from the previously derived model. All approximations are done using the monthly data of the rate of inflation and the rate of unemployment in Croatia in period from 1998 to 2008. The presented and used parameter results satisfy all appropriate tests, what is clearly exposed in this part of the paper.
Impact of Employees’ Social Characteristics on Companies’ Performance: Case of Croatia
Ivana Tadic, MSc and Zeljana Aljinovic Barac, Ph.D., University of Split, Croatia
Different researches from the human resource management showed that human resource practices had strong and positive impact on financial and productivity performance of different companies. The aim of this paper is to provide empirical evidence concerning impacts of human resource investments, more precisely vocational education and career development on companies’ financial performances. Verification of empirical evidence will be provided through the sample of Croatian labour intensive companies. All variables that will be used in this research will be based on previous researches on the similar topic, but also chosen according to the specificity of Croatia, as well as to the possibility of their implementation. The results of research confirm positive correlation between employees’ social characteristics and companies’ performance in Croatia. Contemporary human resource management has been changed from its traditional perspectives till nowadays. In the past, companies have not been disposed to human resource management, but to personnel management, which just included administrative practices regarding their employees. On the other hand, companies’ exposure to constant changes compelled them to develop the scope of its departments in order to achieve greater organisational success, which resulted with human resource departments. Companies, today, are aware of the fact that among all sets of assets, the “soft” one, meaning human resources, represent the key factor for organisational success. Many authors (Becker, Huselid and Ulrich, 2001; Huselid, 1995; and Ichinowski, Shaw and Prennushi, 1997) showed that human resource practices have strong and positive impact on financial and productivity performance of different companies. In order to use all the benefits from different human resource practices, there is evident and required investment in human resources (individual growth and human resource development), which will finally end up with development and increasing organisational performance.
The Marketing Plan Evolved: E2B Projects
Stacy M.P. Schmidt, Ed.D., California State University, Bakersfield
David L. Ralph, Ph.D. and John E. Richardson, Ph.D., Pepperdine University
The evolution of the business class has led to many innovations in learning and student engagement. The journey of the business class is the Lecture, the Case Study, the Hypothetical Business Plan, the Real Business Plan, to the Education to Business (E2B) project. As the class has evolved the old has not just been discarded for the new but has been complimented or altered to improve learning. The lecture provides a means for students to learn vital information about business. Professors, especially ones with real life experience, can relay this information to the students through discussion and examples. By introducing case studies into the classrooms students are able to gain more insight and hands on experience with the material. Case studies provide an opportunity to practice applying key concepts. Different courses have implemented variances of the Business Plan. In our study, we examined Marketing Courses that incorporated Marketing plans. The hypothetical marketing plan involved a marketing plan based often on real company but not with all of the real data required to do an actual real plan. Thus, it is has the actual components of a marketing plan but they are not implementable. The real world marketing plan is similar to the prior plan but that it requires students to work with a real company on a real plan that could actually be implemented. This provides an opportunity for students to get hands on experience with an actual business. Furthermore, this marketing plan integrates the theory with the application in a means that engages students and improve their retention.
Overcoming Economic Crisis in Romania
Dr. Cosmin Joldes and Dr. Alexandra Horobet, Academy of Economic Studies, Bucharest, Romania
Everybody feels the general tendency of pessimism regarding the future economic perspectives of the global economy. What began as turmoil generated by the bursting of the US real estate bubble and the sub-prime credit crisis induced losses in the summer of 2007 and turned into a financial crisis prompted by the Lehman Brothers bankruptcy at the end of 2008. Managing through crisis may be one of the most challenging activities in a manager’s lifetime. All the past managerial rules may be with no more value in turbulent times, the new rules occur. In times of turmoil, lots of opportunities abound. But taking advantage of them will require fast reflexes, an aggressive attitude, and serious changes to the companies’ status quo. Our paper explores the way that international economic crisis is perceived in Romania and how it may affect the companies. As an eloquent example for this framework we focus by the end of the paper to the Romanian banking facing crisis times. Researches show that many successful companies were born in a time when people through the world were falling apart. Carnegies Steel and Hewlett-Packard are only two of them. Business history tells that Andrew Carnegie launched his first steel mill during the Panic of 1873, the start of a ling depression. The businessman took advantage of low costs to build an industrial giant that made him the world’s richest man. In the same time, Bill Hewlett and Dave Packard showed similar courage when they launched HP from a Californian garage toward the end of Great Depression. History showed that crisis breeds always opportunities. Business leaders may have to cut costs to survive 2009, but the smart ones are looking for business prospects within this year, thinking to develop their business.
Variables Associated with Effective Management of the Multi-Channel Delivery of Public Services
Dr. Elizabeth Posada, Université du Québec à Montreal, Montreal, Canada
Dr. Yves-Chantal Gagnon, École nationale d’administration publique, Montreal, Canada
Dr. Mario Bourgault, École Polytechnique, Montreal, Canada
The strategic challenge today of all public administrations is effectively providing their services via many channels: in person (counter), mail, telephone, Internet, text, television, etc. Performance should be measured both in terms of customer, citizen or company satisfaction, and minimum cost for providing these services. It becomes increasingly necessary to design a model to appropriately manage this new reality. For this purpose, a field study, based on case studies, was conducted to better understand the process for developing and managing the multi-channel delivery of public services, and, more specifically, to identify the variables associated with its effectiveness (performance). This paper presents these variables briefly, going into more detail about the pivotal variable of vision, specifically looking at the elements essential for guiding management. The strategic challenge today for all companies and public administrations is the effective delivery of their services using many different channels. This performance can be measured in terms of both effectiveness and efficiency. In the first case, this means responding to increasingly specific needs, and fulfilling the ever-growing expectations of clients. In the second case, it must be done at the lowest cost possible, due to issues of company profitability and expenditure control, and the use of discretionary resources, which are becoming increasingly limited for the governments (Yang & Tho, 2007).
Cultural Influence on Loyalty Behaviors
Dr. Sungjip Nam, Chungbuk National University, S. Korea
This article compares an individual’s loyalty activity engagement from a cross-cultural perspective. International Business and cultural literature suggest that scholarly findings from one culture may not be valid in other cultures due to cultural effects. The cultural differences between the Eastern and the Western worlds are especially pronounced. In this article, an individual’s WOM referral and re-purchase activity engagement are compared between American and Korean consumer groups. The motivation of comparing their behavioral differences is based on cultural literature. Cross-cultural research on international marketing takes on a new importance as businesses expand their territory to other continents and countries. Hofstede (1983) argues that understanding different cultures is important because a culture is based upon political, sociological, and psychological values. Therefore, to know a region’s culture is to know its people’s consumer expectations and practices such as satisfaction or loyalty. Recent service and relationship literature stresses the importance of the variables of customer satisfaction and customer loyalty and their relationships to profitability. Reichheld and Sasser (1990) emphasize the importance of customer loyalty in sharpening a firm’s competitive edge. Customer loyalty will eventually become visible in a company’s bottom line through increased revenue, decreased customer acquisition costs, reduced costs of serving repeat customers, and increased profits.
Tests of the Market Models: Evidence from the Thai Stock Market
Dr. Chaiporn Vithessonthi, Mahasarakham University, Thailand
This paper investigates whether the
explanatory power of the market model varies, depending on the length of the
estimation period and the time period. For a set of resource firms listed on the
Stock Exchange of Thailand between 2006 and 2008, I find that there is no
significant difference in the explanatory power of the market models using the
240-day estimation period with respect to time period. However, I find that the
explanatory power of the market models using the 120-day estimation period
varies with respect to time period. Furthermore, the results suggest that there
is a significant difference in the explanatory power of the market models using
the 240-day estimation period and the market models using the 120-day estimation
period. In some periods, the market model using the 240-day estimation period
outperforms the market model using the 120-day estimation period, and vice
versa. The explanatory power of the return-generating models is of concern and
important to academia and practitioners. For this reason, several aspects of the
return-generating models (e.g., single-index models, multi-index models, Capital
Asset Pricing Model, and Arbitrage Pricing Theory), has been empirically tested
in numerous studies that have often offered mixed results (Barone-Adesi
and Talwar, 1992; Bey, 1983; Cable and Holland, 1999; Chang, 1991; Cochrane,
2005; Fama, 1980; Galagedera and Faff, 2005; Sharpe, 1964; Xiang, 1993). For
instance, empirical research on the accuracy and stability of historical betas
has been performed (Alexander and Benson, 1982; Alexander and Chervany, 1980;
Blume, 1970; Levy, 1971).
Consumption and Income in Greece 1960-1994. Relationship Using Error Correction Model
Dr. Paraschos Maniatis, Athens University of Economics and Business
Non-stationary behavior is typical in most economic and financial time series. There exist several ways to treat such series - investigation if the series can become stationary by differencing (stochastic stationary) or de-trending (trend stationary). However, a good approach is to check for cointegration. In the affirmative one has to build an error correction model (ECM) in order to correctly treat the relationship between the series. In this study we present the essentials of checking stationarity, cointegration and the ECM building. Then we apply the theoretical results to the case of relationship between national consumption and gross domestic product in Greece for the period 1960-1994. The findings do not reject the validity of an ECM for the given case. The most economic and financial time series are non-stationary and, hence, regressions involving non-stationary series give spurious correlations and exaggerated results. Besides, the investigator cannot use the mathematical and statistical apparatus designated for stationary time series. One possible approach would be to difference the time until they become stationary and then to use a VARMA model. Nevertheless, the VARMA models do not always lead to satisfactory results if the differencing order is not the same for all series or if the trend itself is of interest or if the non-stationarity of the series is of different character (some series are trend stationary and the other are stochastic stationary). One way to sort out is to check for cointegration: In case that two non-stationary time series move more or less in the same direction it is very likely that running a regression between them a series of stationary residuals will be obtained. But even in such cases it is not enough to simply difference the variables and then run a regression.
Characteristics and Marketing Elements Across Different Stages of the Life Cycle of Taiwanese Local Festivals
Yi Ming Tseng, Tamkang University, Taiwan
This paper seeks to report the findings of a survey aimed at understanding the marketing elements for festival in different stages of the life cycle (LC), and explore the characteristics of the LC that practitioners can detect when the festival is proceeding. The results can be useful to marketers of the festival to anticipate the type of strategic ML in future and this in turn can help in planning activities of other art and creative industries in Taiwan. This study adds to the body of literature, which proposes to plan marketing and business strategies differently at the different LC stages of the festivals. The economic pressure in Taiwan has led to intensive competition and shorter Festival life cycles. In such conditions to serve the needs of lower costs and higher participation, developments related to festival content and process improvements become crucial in success of any official and quasi official festival. The need for continuous changes in marketing elements is being felt by the marketers in these festivals, in order to obtain sustainable development and public preference through out the Festival.
Business Alliance & Partnership Performance and its Value Drivers: An Intellectual Capital Approach
Philip Vergauwen, Hasselt University, Belgium
Hanno Roberts, Norwegian School of Management, Norway
Sigrid Vandemaele, Hasselt University, Belgium
This paper contributes to the field of alliance research by extending and testing the research framework of Moeller (2006) in a specific research setting. Singularly relating behavioral value drivers to financial performance of alliances ignores intangible performance components. This research shows that behavioral value drivers directly affect alliance performance and, additionally, indirectly affect intangible performance. The direct relationship to tangible performance is found to be positively significant for six value drivers: trust, commitment, open communication, strategic interdependence, participation, and coordination of work. The only variable not being significant is the one of symmetry. The indirect relationship by means of intangible performance shows a positive effect of the value drivers of open communication, strategic interdependence, participation, and coordination of work. Overall, symmetry does not have any impact on performance. The closely related drivers of trust and of commitment are important for the overall performance of business partnerships but do not increase the performance of specific intangible components. Business alliances and partnerships have become increasingly important over the last decades. In fact, Anand & Khanna (2000) reported 20,000 new alliances worldwide in the two-year period of 1998-2000. However, the high popularity of alliances is connected to an equally high failure rate. Long-term successful alliances are rare, with reported failure rates of around 55% after one year and a further increase over time (Kogut, 1989). A multitude of problems, can lead to a breakdown of the inter-firm co-operation. For instance, the inappropriate choice of governance structures (Williamson, 1985), the incompatibility of corporate cultures and systems (Kale, Singh & Perlmutter, 2000), and the lack of trust (Arino & De la Torre, 1998) are reported as reasons of failure. The importance of business alliances and partnerships in the business world is also reflected in the academic literature. Over the last two decades, a vast amount of academic studies have focused on inter-organizational alliances.
Instinct in Organisational Research: Putting it back on the Agenda
Geoffrey Ross Chapman and Dr. Ann Dadich
Centre for Industry and Innovation Studies, University of Western Sydney, Penrith South, NSW
Although theoretical and empirical understandings of instinct have changed extensively, these have been largely overshadowed by cognitive psychology. Consequently, the role of instinct within organisations remains under-researched and poorly understood. The recent rise of evolutionary psychology, and its focus on universal mechanisms of behaviour, suggests an opportune time to explore this connection. Following an overview of human instinct, this paper argues that instinct research might enhance current understandings of organisational and workplace practices. By understanding human instinct, there is potential to significantly increase the level of effective communication within the workplace, which may lead to improved morale and productivity. The paper concludes with a discussion of implications for future research. To understand human activity, research in organisational psychology has largely focused on behaviour and cognition, much to the neglect of instinct. Consequently, contemporary understandings of workplace practices do not consider the role of innate drives and as such, are not necessarily well-informed (Markóczy & Goldberg, 1998). This conceptual paper addresses this imbalance. Through a discussion of instinct, its theoretical understandings, and its recent return through evolutionary psychology, this paper establishes the potential role of instinct in organisational psychology. Additionally, several possible directions that future research could explore are suggested, highlighting the diversity and value that this area of research offers.
Recommendation for Remuneration in Croatian Company Law and Corporate Governance
Dr. Hana Horak and Kosjenka Dumancic, University of Zagreb, Croatia
Corporate governance in Croatia has gained in its significance in the past few years, and Croatia has made a significant progress in developing the capital market which is to promote trade and good corporate governance. In the light of further developing the Croatian financial market, company law and corporate governance there was a need to harmonize and develop further with the instruments of the soft law as it was recommended by the EC Commission in the field of directors remuneration and independence.Latest changes of legislation governing the company law introduced monistic system into Croatian legislation. This also represents continuous harmonization of Croatian Company law with legal acquis of EU. Croatian company law is in constant modernization and harmonization since 1993 and adoption of the Companies Act. While there is now a possibility to organize management board in accordance with one tier or two tier system of corporate governance, and there is an obvious difference between the role of directors in two systems regarding their obligations, it was necessary to adopt two kind of recommendations. Croatian Association of the members of supervisory and management board adopted in September 2008 Croatian Recommendation on remuneration. In the article the authors represent the Recommendations, goals and aims of implementation as an instrument of soft law in Croatian law and practice.
FINALIST - Financial Literacy Stimulation: The Case Study of Cyprus
Dr. Maria Michailidis, University of Nicosia, Nicosia, Cyprus
Dr. Skevos Evripidou, University of Cyprus, Nicosia, Cyprus
Dr. Joseph Hassid, University of Piraeus, Piraeus, Greece
The main findings of the survey in economic/financial literacy stimulation have shown that, it is an absolute necessity to create educational and training programs related to the multiple economic/financial factors which influence us in our daily lives. These educational programs should target younger as well as older individuals, both males and females. They should give more emphasis on the female population and on younger groups, who appeared to be in greater need for developing more awareness related to the global and local economic and financial problems, and for acquiring and further improving key competences in financial awareness. In this way we develop more educated consumers, who are more capable of taking the right economic and financial decisions, and thus actively participating in the economic and financial development of Cyprus. The present paper is part of an extended report of a consortium of counties participating in the GRUNDTVIG Multilateral Project titled FINALIST. This is part of the European Union, Life Long Learning Programs. Participating countries are: Greece, Germany, Bulgaria, France and Cyprus. The questionnaires used were uniform for all countries, (with the exemption of some country specific questions). The questionnaires were also translated in each country’s language. This paper refers only to the questionnaires administered in Cyprus, and it does not attempt to present a full accounting of the existing financial educational needs of the other partners of the consortium, a task which is beyond the scope of this paper. This piece of research work is the first of its kind for Cyprus and one of the few done internationally with attempts to comparing situations in several/different, in many respects, countries.
The Pivotal Role of Trust in Customer Loyalty: Empirical Research on the System Integration Market in Taiwan
Nelson N. H. Liao, Chihlee Institute of Technology, Taipei, Taiwan
Tsui- chih Wu, Shih Chien University, Taipei, Taiwan
The paper uses the model of Harris and Goode (2004) and samples the business customers of one system integration provider in Taiwan to examine the associations among service quality, perceived value, trust, customer satisfaction and customer loyalty. The results indicate that service quality, perceived value and trust have significant influences on customer satisfaction and customer loyalty that trust serves as a pivotal driver of customer loyalty, and that customer satisfaction had no significant influence on customer loyalty. The Swedish Customer Satisfaction Barometer (Fornell, 1992), the American Customer Satisfaction Index (Fornell, Johnson, Anderson, Cha, and Bryant, 1996), and the European Customer Satisfaction Index have all demonstrated that customer satisfaction is the key issue for increasing customer loyalty (Gronholdt, Martensen and Kristensen, 2000). Therefore, many service providers are content with focusing on achieving customer satisfaction and think they can increase and sustain customer loyalty in service environments by doing so. They believe that loyal customers will keep coming back to buy more, will spend more, and will refer others (Stum and Thiry, 1991). But is a satisfied customer a repeat customer? Customer satisfaction is important, but it cannot explain all the variances of customer loyalty. It may even become independent of satisfaction such that satisfaction may not influence long-term loyalty intention at all (Chiou, 2004).
Revenue Recognition under US GAAP and IFRS Comparison
Dr. Hana Bohusova, Mendel University, Brno, Czech Republic
In 2001 the IASB was given a strong mandate by major constituents of the world´s capital markets to develop a single set of high-quality accounting standards. The effort was especially aimed at spreading of IFRS around the world and FASB – IASB Convergence Program. The most significant difference between US GAAP and IFRSs is in the area of general approach. IFRSs are based on basic accounting principles (1) with limited application guidance, US GAAPs are based especially on rules with specific application guidance. FASB and IASB initiated their joint project on revenue recording to converge IFRS and US GAAP in this area. The main objective of this paper is comparative analysis of revenue recognition under both systems and evaluation of the most significant differences in revenue recognition and measurements as a starting point for preparation of the new general standard for revenue recognition. The growth of cross-border investing and capital flows caused that the use of different national accounting systems makes difficult and costly for investors to compare opportunities and make financial decisions. Difference in national accounting systems imposes additional costs on companies that prepare financial statements based on multiple reporting models in order to raise capital in different markets. There are two significant systems of financial reporting for world capital market use. There are IFRS and US GAAP.
Consolidation and Changes in the Level of Ownership in the System of Common Consolidated Corporate Tax Base
Dr. Danuse Nerudova, Mendel University, Brno, Czech Republic
At present, the introduction of the system of common consolidated corporate tax base represents one of the main priorities of the European Commission. The aim of the system is to remove or decrease compliance costs of taxation, to increase cross-border trade and to increase the competitiveness of the European companies on global markets. Companies are not able to fully use the advantages connected with the Internal Market, for they are still facing 27 different tax jurisdictions. The introduction of common consolidated corporate tax base (as the optional system in the European Union) should help to solve the problems. The aim of the paper is to analyze the rules which were suggested under common consolidated corporate tax base system in the area of consolidation and changes in the level of ownership, to discuss the regulation suggested in that area by European Commission in the draft of the directive. At the end, there are also suggested solutions to questionable regulations. At present, the situation in the area of corporate taxation in the European Union is very complicated. Companies are not able to fully use the advantages connected with the Internal Market due to the existence of 27 different corporate taxation systems. That situation creates the obstacles to the cross-border business, mainly in case of small and medium sized companies (hereinafter SMEs). Those companies in comparison with large multinational companies (hereinafter MNEs) are not provided by sufficient human and financial capital for overcoming those obstacles. At present, small and medium sized companies represents around 98 % of the companies running business on the Internal Market. Those companies create 66 % of the jobs. Therefore they are very often considered to be the key elements of economic growth in the EU.
Crafting the Whole Employee: Job Satisfaction, Job Commitment, and Faith A New Conceptual Framework and Research Agenda
Issam Ghazzawi, Ph.D. and Yvonne S. Smith, Ph.D., University of La Verne, CA
Job satisfaction is one of the most researched constructs in management literature, partly because of its connection to job commitment. However, relatively few researchers have directly explored the idea that an individual’s religious faith might make a significant difference to his or her job satisfaction. While the reviews of the limited literature suggest that there is a positive relationship between religious faith, job satisfaction, and job commitment, this paper will extend the literature by proposing theoretical underpinnings for the correlations. The paper utilizes the life satisfaction literature to develop a new job satisfaction model that explores the antecedents contributing to satisfaction levels. It uses that framework to suggest several propositions concerning religious faith and job satisfaction, including the argument that when considering job commitment, under certain conditions religious faith can be a substitute for job satisfaction. Finally, the paper suggests a research agenda for the future. The subject of job satisfaction has attracted a considerable amount of research. By 1990 more than 12,000 job satisfaction studies had been published (Kinicki, McKee-Ryan, Schriesheim & Carson, 2002) and hundreds have been published since then. Job satisfaction is an individual’s positive or negative attitude toward his or her job (Brayfield & Crocket, 1955). Whether an employee likes a job tends to affect whether the person stays at the firm and how hard he or she works while there (Ghazzawi, 2008a; O’Reilly & Caldwell, 1980). Several important constructs correlate with job satisfaction. For example, high employee performance is a foundation of firm productivity (Allen & Meyer, 1996). Many scholars argue that job satisfaction is positively correlated with job performance - that is, employees who are more satisfied with their jobs tend to perform better than those who are less satisfied (Judge, Thoresen, Bono, & Patton, 2001). Others suggest that high job performance leads to job satisfaction (i.e Petty, McGee & Cavener, 1984).
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