The Business Review, Cambridge
Vol. 14 * Number 1 * December 2009
The Library of Congress, Washington, DC * ISSN 1553 - 5827
Online Computer Library Center * OCLC: 920449522
National Library of Australia * NLA: 55269788
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Relationship between GDP Volatility, Idiosyncratic Stock Price Risk and Firms’ Capital Structure: An Explanation within the Financial Accelerator Framework
Dr. Deniz Ozenbas, Montclair State University, NJ
Dr. Luis San Vicente Portes, Montclair State University, NJ
Over the last three decades the U.S. economy has experienced a sharp decline in the volatility of aggregate GDP growth. This period is called” the Great Moderation”. However, during the same period it has also been documented that the volatility of the firm level component of stock price returns has increased relative to the market and industry components creating a puzzle. Using a dynamic general equilibrium model that is based on the Bernanke, Gertler, and Gilchrist (1999) Financial Accelerator framework, we investigate whether firms adjust their capital structure if their stock price becomes more volatile, and the effects, if any, this has on the performance of the aggregate economy. We find that in the presence of larger firm-specific risk, firms indeed optimally shift the composition of their capital structure away from debt and towards more self-financing. Larger stock price risk translates into higher financing cost, and this provides an incentive for the firm to borrow less in order to avoid paying larger premia. Model simulations show that larger idiosyncratic risk dampens the financial accelerator and indeed leads to simultaneous reductions in output and investment volatility, and a significant decline in firm leverage. Over the last three decades, the volatility of the firm-specific component of stock returns has increased, while the volatility of GDP growth has declined in the U.S. The first of these trends was documented by Campbell, Lettau, Malkiel and Xu (2001), who report that while industry and market risk have remained basically unchanged, firm-specific risk has more than doubled. Meanwhile, since the late 1990's, a large body of research has shown a moderation in the volatility of U.S. output growth (ex. Kim and Nelson (1999), McConnell and Perez-Quiros (2000), and Blanchard and Simon (2001)). By some measures, output volatility has declined nearly by half. In other words, firm-specific risk has doubled and aggregate volatility halved during the same time period creating a paradox. This paper addresses this paradox by asking whether these observations are related, and if so what the link between them may be. Using a dynamic general equilibrium model that is based on the Bernanke, Gertler, and Gilchrist (1999) Financial Accelerator framework, we show that in the presence of larger firm-specific risk, firms optimally shift the composition of their balance sheets towards more self-financing and away from debt. In the presence of financial accelerator-like frictions, larger idiosyncratic risk translates into greater external financing premium steering firms to borrow less in order to counteract larger premia. The current global financial crisis has shown without doubt that idiosyncratic risk at the firm level and the general healthiness of the aggregate economy have become interconnected at unprecedented levels. As we observe that most of the industrialized world has fallen into a recession and emerging economies have drastically slowed down due to increased risk, particularly in the financial sector, an important question that we ask concerns the channels through which heightened firm-level risk influences the real economy. The financial accelerator framework of Bernanke et al (1999) is a particularly suitable model to study the increased correlation (ie. systemic risk) that we observe in the market due to its emphasis on frictions in the market that accentuate business cycles during both economic expansion and contraction periods. In fact, this point is made at an opinion article titled “The Financial Accelerator, Revisited” in the Wall Street Journal by Greg Ip in 2008 and Mishkin (2008) describes the financial accelerator in a recent speech given at the Federal Reserve Bank of New York in the following way: “An economic downturn tends to generate even greater uncertainty about asset values, which could initiate an adverse feedback loop in which the financial disruption restrains economic activity; such a situation could lead to greater uncertainty and increased financial disruption, causing a further deterioration in macroeconomic activity, and so on. In the academic literature, this phenomenon is generally referred to as the financial accelerator.” Acemoglu (2009) provides further conceptual support to our thinking when he recently argues that the notion of lowered aggregate volatility and the resulting belief in a more benign economy made us all more optimistic about the stock and the housing markets. According to Acemoglu, the same economic and financial changes that resulted in lower aggregate volatility also increased the interconnections between the firms, creating potential domino effects among financial institutions, companies and households. As a result, the importance of studying the relationship between the aggregate economy, and the individual firms’ financing and capital decisions has increased. Our main finding in this study is that in the presence of credit market imperfections, higher idiosyncratic risk raises the firms' external-finance premium, inducing firms to substitute external funding with internal financing. As firms become less levered, the propagation mechanism that arises from the credit market friction is dampened, leading to more stable patterns in both output and investment. In addition to our theoretical model summarized in the next section, we use output data from the Bureau of Economic Analysis NIPAs, and financial data from Flow of Funds Accounts from the Board of Governor of the Federal Reserve for the period of 1960 – 2004 to investigate the above questions. The top panel of figure 1 shows the Hodrick-Prescott filtered series, along with the ten-year rolling window volatility of U.S. quarterly real GDP. There we can see the decline in the economy's deviations from trend, underlying the decline in volatility. On the other hand, the bottom panel presents the dynamics of the U.S. non-farm non-financial businesses' capital structure, and shows a decline in credit market debt as a fraction of financial assets, as well as a decline in the share of debt in the firms' liabilities. The contribution of the paper is twofold as it provides a theoretical relation between these phenomena, and a complementary explanation to the moderation in output volatility. Our objective is to understand and quantify the effect of greater firm-specific risk on firms' financing decisions, and how these changes impact the economy on an aggregate level. Explaining the higher idiosyncratic volatility is beyond the scope of this paper, and it is taken as given.
Issue Contingency: A Review of Moral Intensity Components
Dr. Marilyn Waldron, University of South Australia, Australia
Jones’ (1991) issue contingency theory offers a basis for understanding ethical decision making complexities in terms of six moral intensity components. Researchers’ evidence validates two of the six components, but corroborating evidence is lacking for the remaining four. The present research investigates issue contingency theory with descriptive analysis supplemented by quantitative scaling relating to business vignettes. Results from a survey of accountants’ indicate that in some circumstances there is a relationship between ethical decision making and the four other components of the construct: concentration of effect, probability of effect, proximity and temporal immediacy. The results of the present research have implications for understanding ethical decision making in development of research vignettes and in the interpretation of research results. In a climate of prominent business failures, including Enron, WorldCom and Sunbeam, business executives’ reputations fell into disrepute in the early 2000s. Sarbanes Oxley (SOX) regulation (2002) was enacted in the U.S. to address the underlying reasons for the failures in response to unprofessional and underlying unethical corporate behavior. Flawed ethical decision making can translate into business collapse, as in the cases of Enron and WorldCom. Research in this area is important to improve knowledge of ethics, which is essential to decision making, and can contribute to a reduction in business failure. Waldron’s (2009) comprehensive model of integrated factors affecting ethical decision making incorporates Jones’ (1991) issue contingency theory as a critical factor. Jones (1991) describes ethical decisions as conditional on a moral intensity construct composed of six dimensions to explain moral imperatives in a business context. Moral intensity can be argued to present the starting point for understanding ethical dilemmas (Jones, 1991). Most research examines the moral intensity construct in terms of respondents’ assessment of the issues (Morris and McDonald, 1995; Frey, 2000; Cohen, et al., 2006). In contrast, Ng et al. (2009) approach the issue slightly differently in a context of earnings management to address the construct in the development stage for construction of single purpose vignettes, complemented by input from respondents. As a result, Ng et al. (2009) argue the moral intensity construct has only three dimensions. Results of the majority of studies add to this in validating only two of the moral intensity components. The present research adds to the moral intensity construct literature with the purpose of validation. The study extends Ng et al. (2009) in several ways. First, the present study examines six general ethical decisions, in contrast to Ng et al.’s (2009) examination of one. Second, the present research utilizes pre-tested vignettes in contrast to Ng et al. (2009) to assess moral intensity of the vignettes and, additionally, for comparison with ethical intention of respondents. Third, unlike prior research, assessment of moral intensity transpires through descriptive analysis with quantification in terms of relative measurement developed by the researcher. Fourth, in contrast to the majority of prior research, the examination encompasses all six components of the moral intensity construct. Emanating from these comparative differences, the present study refines the understanding of ethical decision making to guide future survey development and enhance the interpretation of research results. Jones (1991) bases his issue contingency theory on the work of Dubinsky and Loken (1989), Ferrel and Gresham (1985), Hunt and Vitell (1986), Rest (1986) and Trevino (1986). The theory argues that ethical decisions are contingent on six characteristics labeled as moral intensity components: magnitude of consequences, social consensus, concentration of effect, temporal immediacy, proximity and probability of effect. Jones’ (1991) theory has been the focus of numerous research studies probing to confirm validity. In a historical overview, O’Fallon and Butterfield (2005) note that 32 studies have examined moral intensity components and reported that at least one component displayed significance in each. Most commonly researchers describe support for components of social consensus and magnitude of consequences (O’Fallen and Butterfield, 2005; Morris and McDonald, 1995; Singer and Singer, 1997; Weber, 1996). Only sporadic support exists for the other four dimensions. O’Fallon and Butterfield (2005) note that fewer studies examine proximity (4 studies), temporal immediacy (4 studies), concentration of effect (4 studies) and probability of effect (5 studies). Temporal immediacy receives minimal support (Singer and Singer, 1997), and proximity has received mixed support (Singhapakdi et al., 1996; Carlson et al., 2002). Ng et al. (2009) contend the moral intensity construct consists of fewer components to support the arguments of other research, in contrast to Jones (1991) initial issue contingency theory. O’Fallon and Butterfield (2005) note the necessity for further research to investigate the four apparently weaker components of moral intensity, which have received less consideration and proved less significant. The purpose of the present research is to assess the relevance of these four moral intensity components. In the present research, examination of moral intensity proceeds with comparison to assessment of business vignettes representative of ethical intention. At least two choices for perspective exist for constructing vignettes. One alternative examines issues from the individual’s viewpoint, while another assesses other party perceptions (Carlson, 2002). Prior research suggests a bias occurs when examining the issue from the individual’s perspective. Thus, the present research chose the more traditional examination of decision making that encompassed scenarios from the perspective of others.
An Assessment of the International Competitiveness of Jamaican Manufacturing Firms
Dr. Michael Elisha James, University of Phoenix
Dr. Robert L. Johnson, University of Phoenix
This explanatory-mixed-method design research study assessed the international competitiveness of Jamaican manufacturing firms with reference to the Malcolm Baldrige National Quality Award (MBNQA) criteria for performance excellence. It evaluated the relationship between total quality management (TQM) practices and organizational performance in Jamaican manufacturing firms. The findings suggested that TQM firms implemented a quality management program with mean levels above 3.8 on the 5-point Likert-Type scale for all 7 MBNQA variables. TQM firms also outperformed non-TQM firms in terms of relative change in domestic sales, export sales, net income, return on assets, and productivity growth. The implications of this study for Business Leaders, Government Officials, and Academia are discussed. For example, Corporate Organizational Leaders wanting to implement quality management initiatives should conduct in-depth self-assessment to determine the extent to which managers within their organizations understand how, what, and why TQM practices enhance competitiveness. The main purpose of this empirical study was to evaluate the international competitiveness of the Jamaican manufacturing industry for TQM versus non-TQM businesses using the quality management model stipulated by the Malcolm Baldrige National Quality Award (MBNQA) Criteria for performance excellence. Approximately ninety percent of the studies conducted in Jamaica have not focused on the use of quality management models for assessing the country’s industrial rejuvenation and competitiveness. Studies have focused exclusively on the use of economic models for assessing Jamaica’s international competitiveness. The use of economic models alone at any level of competitiveness assessment is no longer adequate. There is a need to integrate quality management models and economic models to gain a better understanding of Jamaican manufacturing firms’ international competitiveness. The idea of integrating quality performance and economic performance has global significance as well because the Global Economic Forum (recognizing that the nature of international competitiveness is changing) has recently modified the concept of competitiveness (Frendel & Frenkel, 2005). The new Global Competitiveness Index “incorporates a larger number of factors than before to include human capital quality, the efficiency of the labor and financial markets, and the quality of the infrastructure” (Frendel & Frenkel, 2005. p. 32). Previously, “the Global Competitiveness Report of the World Economic Forum examined the relative competitiveness of economies [purely] on a broad basis of microeconomic and macroeconomic indicators” (Frendel & Frenkel, 2005, p. 29). Kumar, Motwani, Douglas, and Das (1999) were among the first to propose a “quality competitiveness index [QCI] to determine the degree to which a firm’s quality practices and policies are instrumental in improving competitiveness” (p. 12). A QCI has important implications for the trajectory of this empirical study because the ability of Jamaican manufacturers to export high proportion of sales abroad is an indication of international competitiveness. Three research questions guided the study’s research into the differences, if any, between TQM firms and non-TQM firms as reflected in the level of quality management practices and the relationship between quality management practices and organizational performance: 1. Are TQM firms different from non-TQM firms with respect to key quality-management-practices?2. Does a formal TQM program affect organizational performance? 3. Is there a significant difference in organizational performance between TQM firms and non-TQM firms? In order to answer the three overriding research questions, this study employed hypotheses testing to determine whether the empirical evidence does or does not support the following null statements: H10: There are no differences in the international competitiveness assessment of TQM firms and non-TQM firms, when measured by the extent of quality management practices. H20: There is no difference in the relative domestic sales of TQM and non-TQM manufacturers. H30: There is no difference in the relative export sales of TQM and non-TQM manufacturers. H40: There is no difference in the relative net income of TQM and non-TQM manufacturers. H50: There is no difference in the relative return on asset of TQM and non-TQM manufacturers. H6o: There is no difference in the relative productivity growth of TQM and non-TQM manufacturers. Total quality management philosophy has been applied world-wide for improving competitiveness (Hung, 2004). TQM strategy relies on comprehensive involvement from the whole organizational members (Andersen, Lawrie, & Savie, 2004), and every critical factor of TQM strategy can lead to excellent organizational performance (Abas & Yaacob, 2006). The elements or combinations of TQM elements represent a sound measure of quality management in the Jamaican manufacturing firms. The MBNQA model provides the framework that connects and integrates all seven TQM categories. For example, leadership, strategic planning, and customer and market focus categories collectively represent the leadership triad. Workforce focus, process management, and results categories collectively represent the results triad. Measurement, analysis, and knowledge management category serves as a foundation for the performance management system. All actions point toward results. Systems theory is the underlying theory of quality management for performance excellence. Systems theory proposes the arrangement of and relations between the parts and connecting them to the whole. This empirical study suggests that the international competitiveness of Jamaican manufacturing firms will depend on whether or not quality is built into every aspect of work processes. While no prior study coincided exactly with the scope or purpose of this research study, three major reviews discuss the most important relevant works that might shed light on the research problem. These are (a) empirical studies related to the international competitiveness of developing economies, (b) empirical studies related to the successful implementation of TQM, and (c) empirical studies related to failed TQM initiatives. In general, the literature review focused on empirical studies addressing TQM implementation issues in both developed and developing countries. Jamaica is one of the largest Caribbean countries with a population of approximately 2.75 million and was among the first Caribbean country to begin the process of economic liberation in the 1970s (Ramlogan, 2004). Weis (2005) argued that “trade liberalization (open economy) has produced massive growth of imports and sluggish export growth [because] inefficient domestic producers have reduced production and shifted to distribution of imported goods” (p. 122). For example, “from 1980 to 1990 to 2000, Jamaica’s trade deficit exploded from US $216M to US $785M to US $1907M” (Weis, 2005, p. 122). Tourism is the main export and services account for approximately 63.3% of Jamaica’s GDP (Jayawardena & Ramajeesingh, 2003).
Hedge Funds, Systemic Risk and Lessons for the Sub-Prime Financial Crisis
Dr. Mine Aysen Doyran, Lehman College, The City University of New York, Bronx, NY
Since the near collapse of Long-Capital Management (LTCM) in 1998 and the rescue orchestrated by the Federal Reserve, hedge funds have become major players in the capital markets as important sources of market liquidity, financial innovation and risk management. Hedge funds are unregulated investment vehicles for wealthy individuals and institutional investors that engage in the trading of various types of securities, and commodity futures and options. However, with AIG’s collapse in complex derivative instruments during the current period of market turbulence, hedge funds have once again made headlines about their potential for systemic risk and their ability to reinforce negative movements across markets. This paper examines the role and potential impact of hedge funds in the financial crises so far. It then examines the actions taken by federal regulators to monitor counterparty risk from hedge fund related activities. Effective market discipline requires that counterparty risk management must prove capable of preventing hedge funds from acting contagiously on other financial institutions. In illustrating circumstances such as LTCM and sub-prime mortgages where hedge funds can contribute to market volatility, the paper describes the steps that policy markers have done to preempt potential failures and promote investor protection.
The Behavioral Dynamics Associated with Marketing Rear Facing Airline Seats and Their Subsequent Acceptance by the Public
Dr. Marian C. Schultz, The University of West Florida
Major Brandt Lamont House, United States Air Force
Dr. James T. Schultz and Dr. Thomas Sieland, Embry-Riddle Aeronautical University
This study examined whether airlines could successfully market rear facing seats to the flying public. In a 2005 military aircraft crash, with 17 passengers on board, all passengers survived the crash—the passenger seats on this particular aircraft all faced the rear of the aircraft. Flying in backward facing seats would be an extreme paradigm shift for air travelers. This study sought to determine the effect of a rear-facing seating configuration on the decision of passengers to fly in a particular aircraft. The study found that if airline passengers perceive they would be safer flying in aircraft with rear-facing seats, they would significantly choose to fly on these aircraft, as opposed to ones with forward-facing seats. The study also found that if there was no difference in passenger safety between aircraft with rear-facing, as compared to forward-facing seats, passengers would select aircraft with forward facing seats. The study also found that there was no significant difference between individuals who had flown on aircraft with rear-facing seats, as compared to those who had not, on the question whether they would choose to fly on such aircraft, as opposed to ones with forward-facing seats. As airlines continue to purchase larger aircraft, some which can accommodate 500 to 800 passengers, the possibility exists for a greater number of fatalities in the event of a catastrophic mishap.
Dollar Vs Euro: Battle to be the Next Currency Superpower
Joshua Crews, Sam Houston State University, Huntsville, TX
Dr. Balasundram Maniam, Sam Houston State University, Huntsville, TX
The biggest concern among Americans today is the current state of the economy, as well as its future. A nation’s currency is a direct representation of the state of the economy. This investigation takes a straightforward glimpse at the current state of the two dominant world currencies, the dollar and the euro. It will look at the volatility of the U.S. dollar, and arguments about its future. Next, it will examine the euro as the next world currency, along with the effects it could have on the economy. It will also discuss the factors that ultimately make a country’s currency strong. Finally, it will delve into the dollar vs. euro as the future world currency in ten years. The world today is at a unique point in history, when both the U.S. and the world economy are experiencing numerous potentially threatening economic issues simultaneously. Many of these issues intertwine together. One of the greatest global issues is the battle to be the future currency superpower. But before that, we have to establish, what exactly is a strong currency? (Bowles & Wang, 2008). The Emergency Economic Stabilization Act of 2008 (EESA) has been one of the major issues in recent times for Americans (Emergency Economic Stabilization, 2009). Many congressmen and women, as well as numerous Americans, have asked where the money is expected to come from and who is intended to bear the burden of such an act.
Learner-Centered Teaching: One of the Alternative ways of Teaching and Learning in Economics
Dr. Joseph D. Ongeri, Professor of Economics, Spartanburg Methodist College, Spartanburg, SC
Through journaling, observations, and interviews, this study revealed that learning is enhanced when learner-centered principles are in place in the teaching of economics. The study found that if a teacher is able to clearly articulate the manner in which learner-centered teaching (LCT) is to be implemented, then the guardians of the institutional structures i.e. administrators, will likely support their efforts. The study also found that students, who initially resist the implementation of LCT, do it out of the perceived fear that LCT will lead to more work as well as deny them a source of authoritative academic guidance. The study showed that if a teacher can build a nurturing attitude towards students, they would reciprocate by taking responsibility for their learning. The quest to reform America’s education system has been at the forefront of educators’, policymakers’ and researchers’ efforts since 1983s Nation at Risk. Both educators and researchers have realized that educational practices need to be completely transformed and that a research-based framework should guide their reform efforts. One area where educational practices need to be completely transformed is in the teaching of economics. In recent years, the quality of economics instruction has received consistently poor reviews by undergraduate students across the United States. In response to these concerns, researchers have been studying ways of improving economics instruction.
Culture and Trade Freedom: A Comparison of Culture and the Degree of Economic Freedom in South American and Eastern European Countries
Dr. Edwin C. Moore Jr., ECM Associates
The purpose of this research was to find evidence of the relationships between institutional development, using trade as measured by the Economic Freedom Index (EFI), and culture, as measured by Hofstede’s Four Cultural Dimensions. A representative group of South American and Eastern European countries (EE) were chosen as sample countries. The research employed data from the period 1996 to 2007. The results would indicate that while culture may affect trade freedom a universal conclusion cannot be made. What can be assumed is that there is a cultural relationship between trade freedoms, but that relationship must be viewed on a region by region basis. It would serve a firm’s entry method strategy formulation well to consider not only current trade freedoms but the culture that they will evolve from as well. Institutions have been linked to economic growth throughout history. In most developed and developing economies those institutions, formal and informal, have evolved over a long period of time. Firms which are planning on doing business in new economies need to be aware of the evolution and future evolution of the institutions in the countries with which they plan to do business. While most marketing studies view the marketing of products and services from a micro perspective, cultural and institutional changes and conditions are important for market research (Buckley, 2002).
Can a Local Community Tourism Event Positively Impact a Communities Economy? A Case Study Application using 2009 Buccaneer Days Event in Corpus Christi, Texas
Dr. Roger Hanagriff, Texas A&M University Kingsville
Dr. Lindsey M. Higgins, Texas A&M University
In this paper, we review the tourism impact from the Buccaneer (Buc) Days tourism event and measure the economic value to the local economy. This study represents a first year assessment of the event that attracts over 90,000 to the Corpus Christi city center, helping to create scholarship support for local students. Buc Days has been around since 1938 and has expanded to over two weeks, hosting events such as a rodeo, carnival, parade, talent show and barbeque cook-off. The results of this event assessment showed the majority of visitors had annual household earnings ranging from $20k to $70k (23%+24% = 47%). However, the percent of visitors reaching household income values on end of that range is much higher than those below the lower level of under $20k. Nearly 42% of visitors had annual household incomes ranging from $70k to over $170k. The majority of visitors attending the event (60%) are day trip visitors that drive within twenty-five miles of the event, with a mere 6% of visitors staying in a local hotel room. The average visitor group size was four people, attending for an average of two days. Identification of group attendance characteristics serves as an important value estimation. Tourism attendance to events likely represents duplicate visitors, for example those attending the rodeo may have also attended carnival, barbeque area, parades or evening light show, thus making the measurement of economic impact challenging.
Maxims of Maximizing Organizational Change Effectiveness
Dr. Jeffrey R. Mueller, National University, Sacramento, CA
This paper reviewed seven ideas for successful organizational change and is based on lessons learned from successful and unsuccessful change efforts from the author’s own consulting practice, as well others’, and a perusal of classic and contemporary change management literature. Given the unprecedented increase in rate and amount of planned and unplanned changes, it is the author’s premise that executive change agents and organization development (OD) practitioners must return to certain fundamentals of change that may have been buried in the enormous mass of information on this topic. Adding to the fundamentals are a twist on Lewin’s concept of unfreezing and several recent examples of successful, pragmatic change management applications. Proverbs and adages regarding change abound but perhaps the Greek philosopher Heraclitus was the first to summarize the concept of change (~500 BC), “ Nothing endures but change”. His doctrines of universal flux, as well as the unity of opposites, seem to be holding up well throughout two-and-a-half millenia and into Century 21, particularly evident in the business world. Unity of opposites (Heraclitus cited in Kahn, 1979), also known as paradox, is well documented in a plethora of contemporary change management literature notably Handy (1994), Naisbitt (1995), Harvey “Abilene Paradox” (1996), Price Waterhouse (1996), Streatfield (2001), Mosby and Weissan (2005) and Gunderson (2006). It seems there is a paradox for everything!
Exchange Rates and U.S. Foreign Direct Investment in Asian and Latin American Countries
Dr. Christopher A. Laincz, Drexel University, Philadelphia, PA
Dr. Lei Zhu, West Chester University of Pennsylvania, West Chester, PA
This paper uses US FDI flow data from 1989-2004 to nine Asian and Latin American countries to assess the relationship between exchange rates and FDI. Previous literature, both theoretical and empirical, comes to different conclusions regarding the impact of the exchange rate on FDI. However, most previous empirical studies utilize bilateral flows only, whereas our data set allows for disaggregation at the industry level. In addition, we measure both movements in real exchange rate levels and its volatility by various trade weighting schemes. The preliminary results presented here suggest that: 1) using disaggregated FDI data, at the industry level, is essential in understanding the relationship; 2) weighting the exchange rate by competitor nations (for FDI) outperforms trade-weighted exchange rates; and 3) counterintuitively, volatility in the real exchange rate encourages FDI as suggested in the theoretical model of Sung and Lapan (2000) . Foreign direct investment (FDI) plays an increasingly important role as a source of economic growth in developing countries. It allows the host countries to learn new ideas, skills and technology through knowledge transfers and spillovers (De Mello 1997). In 2007, global FDI inflows rose by 30% and reached the new record of $1,833 billion. Among those, FDI inflows to developing countries increased by 21% to $500 billion (UNCATD 2008). Half of the FDI to developing economies flowed to South and East Asia, followed by Latin America and the Caribbean area.
Risk, Cultural Theories and Global Management
Jukka Ojasalo, Ph.D., Professor, Laurea University of Applied Sciences, Espoo, Finland
Cross-cultural issues as well as risk management are becoming increasingly important in the management of global companies. This is due to the strong globalization development and obvious need to better understand cultural and risk management. The purpose of this article is to examine the theoretical basis of cultural theory of risk. As a result, the present article finds that, despite long history of the research field in question, several contradictions exist in the literature. These contradictions are identified and explained. Cross-cultural research looks for differences across two or more populations, and attempts to explain them as due to culture (Johnson, 1991). Culture refers to a series of structured expectations for making action and language use routine. These expectations make, guide, and enable fluid social interaction (Ehrenhaus, 1983). Culture is understood as a historically transmitted system of symbols, meanings, and norms (Chang, 2002). Culture is based on: language, attitudes, religion, policies, social institutions, economy, class values, status, education, aesthetic values, manners, customs, and material items (Hofstede, 1991; Trompenaars, 1993; Czinkota et al, 1998). According to Hofstede (1980), culture refers to a collective programming of the mind which distinguishes one group from another.
Family-Supportive Policies: The Employer-Sponsored Child-Care Approach as an Influence of the Relationship Between Work and Family Outcomes
Dr. Jacquelyn Barcenas-Frausto, Argosy University, Chicago, Illinois
This paper investigates the potential benefits of implementing a family-supportive policy, such as employer-sponsored child care, to enhance organizational policies. There is a lack of present research on this topic, and this paper contributes a consideration of the availability of organizational policies relating to employees’ work-family balance and work-related outcomes in a nontraditional-hour workplace. It examines the existing literature and household employment configurations, including single and dual-career employees making strategic child care decisions. The Map of the Child Care Assistance Territory provides a model for considering the independent variables of household employment configuration, use of familial care, and dependent-care profile. The FLOR Plan uses the findings to provide an institutionalized mechanism that encompasses the creation of new family-friendly policies. Changes in family structure and in the number of dual-earning parents have altered employment patterns, the composition of the work force, and the roles that policy developers need to perform in their organization (Brandon & Temple, 2006). The new 24/7 economy has been noticed by organizations through the growing need of their consumers, the prospective highly-qualified employee who is seeking a “meaningful” organization to work for, and their competitors (Brandon et al., 2006). Indeed, a growing number of employers know that family and work demands often conflict, and that this conflict can affect the organization.
Professional Accountants: Void of “Soft Skills”?
Dennis C. Stovall, Grand Valley State University
Pamela S. Stovall, University of New Mexico Gallup
After nearly twenty years of accounting firms stressing the importance of proper communication skills for accounting graduates, America’s universities are still sending graduates void of these soft skills into the industry. Starting in the 1980s, warnings were made known by the major public accounting firms about how accounting graduates lacked appropriate oral and written communication skills to be effective in the field of public accounting. Even though some efforts were made to correct the problem, the turn of the century still saw the accounting industry clamoring for a more qualified pool of graduates to deal with the demands of globalization in the 21st Century. These calls for universities to emphasize communication skills as well as technical skills have gone unheeded. Today, as the markets fall, the economy contracts, and public accounting firms reduce their incredible hiring rates from previous years, accounting graduates who have not developed the essential communication skills may, for the first time, find it very difficult to find employment. The current economic downturn finally may be the catalyst that forces universities to design and implement accounting programs that produce graduates with the skills the accounting industry has wanted for years.
The Performance of Unpaced Lines with Unequal Buffer Sizes
Dr. Sabry Shaaban and Tom McNamara, ESC Rennes School of Business, Rennes, France
This paper studies the operating behaviour of unpaced production lines that are unbalanced in terms of their buffer storage sizes. The lines were simulated with various values of line length, buffer storage size, mean buffer capacity, and configuration of buffer imbalance. Idle time and average buffer level output data were analysed using a variety of statistical tools. Various relationships between the independent and response variables were determined. It was found that the best patterns in terms of generating lower idle times and average buffer levels as compared to a balanced line were to distribute total available buffer capacity as evenly as possible along the buffers and to allocate more buffer capacity towards the end of the line, respectively. Allocating tasks, operators and storage space for unfinished units along an unpaced production line to ensure the smooth running and effective performance of the line is a complex affair. For instance, where to place operators who work at different rates, or where to keep unfinished items along the production line are just some of the problems facing the line manager. In practice, the mean time taken to complete a task can vary considerably from one operator to another. The slow operators will therefore delay the work of preceding and succeeding servers, resulting in starving and blocking idle times.
Relationship between Corporate Governance Efficiency and Saudi Banks’ Performance
Dr. Adel H. Al-Hussain, Middle East Financial Investment Company, Riyadh, Saudi Arabia
Dr. Robert L. Johnson, University of Phoenix, Phoenix, Arizona
The study of corporate governance structure in banking sector is an important component within the enhancement of banks’ efficiency and performance. This current study investigated relationships between the efficiency of corporate governance structure and bank performance. The sample was comprised of nine listed banks in Saudi Stock Exchange. The sample indicated an overall support that blockholders play an important role in the enhancement of the efficiency of corporate governance structure of banks. The results reflected that there was a strong relationship between the efficiency of corporate governance structure and bank performance when using return on assets as a performance measure with one exception that government and local ownership groups were not significant. However, when using stock return as a performance measure, there was a weak positive relationship between the efficiency of corporate governance structure and bank performance. At the end of 2007, market capitalization of the listed commercial banks in Saudi Arabia constituted about 29.97% of the Tadawul All Share Index (TASI) of the Saudi Stock Exchange. For details, see the official web site of the Saudi Stock Exchange (Tadawul, 2007). This observation gives an indication that the commercial banks in Saudi Arabia play an essential role in the economy of the country.
Assessing the Predictability and Cost-Benefit of Admission Criteria of the Graduate Program in Business: A Case Study
Suppakorn Pattaratanakun, Chulalongkorn University, Bangkok, Thailand
Many graduate programs in business establish their admission processes without an understanding of the predictability and cost-benefit associated with each criterion. This descriptive research study is to demonstrate a way to understand both the predictability and cost-benefits of each selection criterion of the admission to a business program, by using the graduate program in marketing at Chulalongkorn Business School (CBS) as the case study. The study shows the need for a graduate program in business to carefully assess its admission criteria. For example, in the case of CBS, I found that three frequently used selection criteria, namely, work experience, undergrad GPAs, and unstructured interview scores, of the business program are not reliable and too costly. To better the program’s selection process, I propose new admission criteria which include only the GMAT (or its equivalent), the TOEFL (or its equivalent), and the university from which the student graduated. With the new selection criteria, the utility analysis calculation shows that the average final GPA of the students will increase from 3.55 to 3.63 and the program will get the dollar benefits of $120,100.2 per year. In the admission process of a master’s degree in business, many criteria; such as standardized tests, interviews, and GPAs, are used to ensure the quality of the incoming students. However, each program chooses to use and weighs each criterion differently and, more often than not, subjectively. (Ahmad et.al, 1997)
Designing Industrial Services –What is the Role of Customer?
Dr. Katri Ojasalo, Laurea University of Applied Sciences, Espoo, Finland
Many manufacturing companies have tried to develop industrial services to create new business with customers but many of them have failed. In many cases, customers have not valued the proposed service concepts because of the lack of added value to the current business between a manufacturing company and customer. In literature, customer involvement in service design processes has been recognized as an important factor for successful service development. Customers can be seen as a new source of competence and creativity for companies. This study is intended to shed some additional light on customer roles in designing industrial services from an empirically grounded perspective. Based on the empirical data of this study, two customer roles can be identified in service design: ‘Customer as Informant’ and ‘Customer as Co-designer’. The present study reveals that manufacturing companies in general understand the principle of having customers as idea generators and service designers but they seldom turn this idea into practice. Customers in industrial markets increasingly demand total solutions to problems instead of basic tangible products that partially solve their problems. This means that manaufacturing companies are required to bundle the product offering with services to create an integrated solution to customers’ problems. By offering an integrated solution including various services, manufacturing companies can differentiate themselves from competitors, create higher customer loyalty, new unique selling points, higher margins, and enable a higher speed of innovation (e.g. Frambach et al. 1997).
Effective Human Resource Management Practices for Continuous Quality Improvement Practices in SMEs
Dr. Sukree Kaeomanee, Nakhon Pathom Rajabhat University, Nakhon Pathom, Thailand
This study identifies effective Human Resource Management Practices (HRMPs) for Continuous Quality Management Practices (CQIPs) in Small and Medium-sized Enterprises (SMEs). Based on the previous literature, HRMPs and CQIPs were defined and a questionnaire was constructed to measure the extents of use of these practices in SMEs. The population of this study were the owners of SMEs in the food processing sector in Thailand. From the questionnaire responses, the statistical technique of Linear Multiple Regression is used to determine the HRMPs that accounted for the changes in CQIPs and the HRMPs that indicated statistically significant regression coefficients are construed to be effective for CQIPs. All of the HRMPs included in this study are effective for CQIPs. However, it is observed that some HRMPs, especially HRMPs in the functions of training and appraisal, affected a relatively large number of CQIPs while the other HRMPs affected a relatively smaller number of CQIPs. Furthermore, relationships between HRMPs and CQIPs indicated the importance of supervisors in SMEs. The implications for SMEs development are suggested including the training of owners and supervisors, the improvement of production information system, and the roles of the supporting organizations.
Procyclicality of the Banking System: The Prudential and Accounting Framework of the Procyclicality of Bank Balance Sheet
Ghada El Khoury, HEC- University of Liège
This article discusses the debate on the pro-cyclicality of finance and the movement of capital and credit which results from it. It describes the relationship between regulation and stability of the financial system and shows the potential impact of regulation on the behaviour of lending and the succession of financial crisis. More fundamentally, it would be subject to analyze the dynamics of capital under the new Basel II accord and observe its pro-cyclical effects through various types of instruments. However, it cannot be ignored that monetary policy is at the heart of discussions on measures to promote price stability in the economy. We examine the transmission mechanisms of monetary policy on the economy and its impact on the behaviour of capital and credit. We study the subsequent implementation rules for accounting standards associated to bank balance sheet and subsequently their cyclical effects. Furthermore, we examine the consequences of accounting standards on the supply of credit and capital. Finally, possible measurements and solutions are formulated to limit the effects of dynamic behaviour of credit and bank capital. The past decade has been characterised by numerous financial crisis. Any turbulence affecting the wellbeing of financial sector needs to be reviewed and integrated into the banking regulation. As a result, this increases the role of prudential regulation of banks. Hence, prudential regulation is important as it aims to increase the stability of the banking sector. It is largely inspired by the Basel Accord which dictates the standard in banking regulations.
Motivations for Chinese Outbound Tourists
Professor Ma Ai-ping, Beijing International Studies University, Chaoyang District, Beijing
Empirical evidence drawn from Fondness’ tourist motivation measuring study(1993) shows leisure travelers’ four functional motivational dimension, they are knowledge, utilitarian, social-adjustment and value-expression. This study mainly investigates which factors Chinese outbound tourists’ value most, and further analyzes Chinese outbound tourists’ characteristics. Exploratory factor analysis is used and three motivational factors have been found. They are self-utilitarian, social motivation; relax and stimulation; different natural & cultural appeal. On the basis of the results, independent t-tests and ANOVA are also used for further analysis. Among major motivations, relaxation is the most important one for Chinese outbound tourists. Tourist motivation is an important factor in tourist’s decision making process and it is the foundation for destination effective targeted marketing activities. China’s outbound tourist markets grow rapidly from mid-1990s (see table 1). Since China adopts open-door policy in 1978, national economy grows annually. In 2003, the annual GDP per person is 8214 RMB YUAN, exceed 1000 US DOLLARS. More and more people enjoy the benefits of economic development fruits. In 2003, the net travel propensity is 1.29%, that is to say, out of 100 Chinese; the person-time of travelling is 1.29. In 2002, the total number of world outbound tourist market is 692.30 million (person-time).
Investigating the Processes and Factors of Cross-disciplinary Knowledge Integration in Academic Entrepreneurship
Dr. Fu-ren Lin, Institute of Service Science, National Tsing Hua University
Dr. Sheng-cheng Lin, Department of Information Management, Tunghai University
Ching-ming Tsai, Institute of Technology Management, National Tsing Hua University
Academic entrepreneurship means to start up an enterprise based on the intellect assets generated by academic institutions. Several literatures indicated that exploitation of research results in universities did make a great impact on economics. However, the intention of academic entrepreneurship is general low in Taiwan. The difficulties could mostly lie on the complex processes of cross-disciplinary knowledge integration in academic entrepreneurship and specific context of academic entrepreneurs. For most technological personnel specialized in inventing new knowledge in universities, entrepreneurship could be an ad-hoc and unfamiliar mission. The research objective of this study is to identify the processes and factors of cross-disciplinary knowledge integration in academic entrepreneurship. Entrepreneurs can thereby facilitate the initial phase of entrepreneurship, and thus can catch up with the market pace to commercialize their invented technology. Academic entrepreneurship signifies to establish an enterprise based on the intellect assets invented by academic institutions. In America, academic entrepreneurships have been trending up, especially after the Bayh-Dole Act issued in 1980. The Bayh-Dole Act enables universities to own intelligence property rights (IPRs) of their research results which were originally possessed by the government. Therefore, universities have the authorities to transfer the discovered assets into industries and thus contribute to produce actual economical values for their nation. According to Chiesa and Piccaluga (2000), exploitation of research results in universities did make a great impact on economics.
Impact of the Global Economic Crisis on Consumers in Saudi Arabia
Iffath Sultana, Dar Al-Hekma College, Jeddah, Saudi Arabia
The current global economic crisis is the worst since the great depression, and there have been many reasons given that caused it, although the size and duration if the crisis remains uncertain. Given the rapid globalization the impact of the crisis is felt all over the world but at varying degrees. The paper will first attempt to explore the main causes of the current global economic crisis, then the impact of this on Saudi Arabia and some other GCC countries will be discussed. The next section will discuss the reasons for the moderate impact of the credit crunch on Saudi Arabia. Finally the results of a survey will be presented to analyze the impact of the credit crunch on consumers in Saudi Arabia. In spite of the fact that the source of the crisis is not yet fully apprehended, it is agreed to a great degree that its root lies in the growth of low-quality subprime mortgage loans and their securitization. The fall in the underwriting standards which increased the volume of mortgage lending and the how levels of interest rates acutely changed the magnitude of the indebtedness of US households.
Size of Government Expenditure and Economic Growth in Three WAMZ Countries
Eric Fosu Oteng-Abayie and Joseph Magnus Frimpong
Kwame Nkrumah University of Science and Technology, Ghana
The issue of whether increasing government expenditures are the cause of economic growth or economic growth is the cause increasing government expenditures is especially important for developing countries where the public sector absorbs a relatively large share of society's economic resources. This paper examines the causality relation between government expenditures and national income by testing for the Wagner's hypothesis and its reverse for three of the five countries in the West African Monetary Zone (WAMZ) comprising The Gambia, Ghana and Nigeria. Using the cointegration test and the Granger Causality test, we empirically find no causality in both directions; neither Warner’s Law nor Keynes hypothesis is valid for any of these countries. Unbridled deficit financing policy does not only fail to serve its intended purpose, it also executes the capital market. Perhaps there is the need to de-emphasize Keynesian economics a bit and tilt more in favour of monetarism for these economies. The debate about the relationship between size of government expenditures and economic growth has been one that is unending. There are deep concerns in resource-scarce developing countries about the continuous increases in general government expenditures. In the West African Monetary Zone (WAMZ), the requirement for meeting the convergence criteria for the introduction of the new common currency, ECO, has led to participating countries to fine tune their fiscal policy by controlling budget deficits by cutting expenditures in the face of limited revenue sources.
A Critical Examination of E-insurance: The Portuguese Case
Dr. Teresa Borges-Tiago, University of the Azores, Portugal
The purpose of this article is to redress the shortage of available research on “insurance Internet-culture,” which has had a direct effect upon the evolution of the insurance sector, particularly in crisis times, like today’s. With this study, we hope to assist e-insurance marketers to develop research-driven models that support strategic decisions on Internet and technology applications. Accordingly, we analyze the posture of agents and insurance companies in Portugal; an inquiry is set and data is collected from 209 firms. Results of the study suggest that Internet marketing practices could be reinforced in this sector and that the intensity of e-insurance activities varies according to differences in the investment levels required. Today, insurance is a major worldwide industry. In Portugal, this sector is crucial to the Portuguese economy. Constant advances in technology and in the Internet, in particular, are profoundly affecting the insurance industry. According to the Portuguese Electronic Commerce Association (2007), in 2006, Portuguese e-commerce, in its B2C (business to consumer) level, represented values near 602 million euros and at the B2B (business to business) level, around 1.620.000 million euros. B2C achieved 53% and B2B 48% of the country’s e-business activity; these numbers that are still rising.
Tourism Burden – Case Study of Southern Bohemia
Michaela Antouskova, Zdenka Kroupova, and Gabriela Cervena
Czech University of Life Science Prague, Czech Republic
The paper deals with sustainable tourism development in the Czech Republic and focuses on the burden by tourism in the South of Bohemia. It analyses several quantitative indexes of tourism burden (tourist density, Defert´s function), it monitors also the most burdened period and the most burdened region. Moreover the paper focuses on social impacts of tourism, which analyses through irritation index. Based on monitored indicators and the perception of tourism in the destination it identifies the phase of life-cycle of the destination. Pieces of knowledge introduced in this paper resulted from solution of an institutional research intention MSM 6046070906 „Economics of resources of Czech agriculture and their efficient use in frame of multifunctional agri-food systems.“ Beginning of perception of negative impacts of tourism on the environment can be dated in 80´s of the 20th century when new conceptions arose as a reaction to criticism of tourism, e.g. tourism friendly to the environment or responsible travelling. As Kostková (2007) presents, a key terminus for delimitation the term sustainable tourism was the Summit of Earth in Rio de Janeiro in 1992.
Performance-Pay Dispersion among Professional Baseball Players: Does Team Financial Status Matter?
Dr. Thomas Li-Ping Tang, Middle Tennessee State University, Murfreesboro, TN
Dr. Yuh-Jia Chen, Palm Beach Atlantic University, West Palm Beach, FL
This study examines the relationship between performance measures and players’ salary in Major League Baseball across seven years from 2002 to 2008. Agency theory predicts that teams with more winning games are likely to spend more money for players’ salary. We examined the relationship between performance measures and salaries and found that performance variables such as bases on balls (BB) and years of experience were consistent predictors of players’ salary throughout the seven-year period. The relationships between the team financial status and players’ performance were investigated as well. Across each quartile of team financial status, there were different predictors for baseball players’ salary suggesting the financial status of the team is a moderator related to specific pay strategy. Teams with different financial status look for players for different reasons: Teams try to identify players who can play the most games with less salary; who can score most runs; or who can get on bases the most. Further, small market teams sell expensive players in order to keep their salaries low and keep inexpensive players who can play more games without costing teams much money. Compensation refers to all forms of financial return; services and benefits employees receive as a part of their employment (Milkovich & Newman, 2008); and value returns offered in exchange for employee contributions (Bloom & Milkovich, 1998). It reflects the value of employees’ personal skills and abilities.
Service-Oriented Innovation Management of Organizational Portals
Peter Geczy, Noriaki Izumi, Koiti Hasida
National Institute of Advanced Industrial Science and Technology, Tokyo, Japan
Portals are integral part of knowledge-intensive organizations. They represent a common platform for accessing a broad range of vital resources and services distributed throughout the organization. Members reach available services and resources via web-based interface. Effectiveness of portal utilization affects working efficiency of members, as well as operating efficiency of organizations. It is desirable to maintain high portal usability. This necessitates continuous innovation. We advocate service-oriented innovation management. Service-orientation is advantageous for integration of distributed resources and services. It also facilitates effective upgrade/update and deployment of new services. Evidence-based innovation management is preferential in digital environments. It relies on accurate and timely analytics encompassing both system monitoring and elucidating human-web interactions. Analytics provide essential information about usability and designate innovation targets. Together with user feedback, they supply potent indicators enabling specification and deployment of new services. Organizations extensively utilize a wide range of information technologies in their daily operations. Information technologies serve various purposes and are significantly diverse.
Tools for Agriculture and Rural Development Policy Evaluation
Zdenka Kroupova, Gabriela Cervena, and Michaela Antouskova
Czech University of Life Sciences in Prague, Prague, Czech Republic
The evaluation of agricultural policy and its programs has a long tradition. More than 50 years economists are trying to evaluate public expenditure to agriculture and to create the criteria for comparing alternative programs. This paper is focused on the evaluation of agriculture policy and its efficiency of subsidies as well. It provides structured list of methods, which are used for subsidy evaluation. It also describes the method of measuring the income redistribution in agriculture policy. It is focused also on the second pillar of Common Agriculture Policy (CAP) - Rural Development. Interventions in this area are characterized by a multitude of intended and side effects on the income of rural population, on the production efficiency, on the environment and on the quality of life. These interventions need specific tools for evaluation. The description of specifics of these interventions and the creation of list of methods for its evaluation are partial goals of this paper. Pieces of knowledge introduced in this paper resulted from solution of an institutional research intention MSM 6046070906 „Economics of resources of Czech agriculture and their efficient use in frame of multifunctional agri-food systems“ and also from IGA 11110/1312/3106. Policymakers follow two main goals: economic growth and improvement of income distribution.
Competitive Advantage in Luxury Industry: Is It a Question of Size?
Carbonara Gabriele, Associate Professor and Dr. Caiazza Rosa, Assistant Professor
Parthenope University of Naples
At the turn of the 20th century Louis Vuitton, Thierry Hermes, and Louis Francois Cartier produced luxury goods that catered to the lifestyles of the successful pioneers of the industrial revolution. By the 1970s and 1980s, a number of well-established luxury goods retailers had entered the marketplace, appealing to a broader range of consumers. The retailers quickly learned how to cater to many facets of society, while still maintaining the exceedingly high profit margins that set their entities apart from mid-tier retailers. In 1987 a number of high-end retailers such as LVMH, Richemont, Swatch Group, and Gucci began to consolidate. LVMH spent the decade after its founding building a luxury conglomerate. During the most recent phase in which the luxury goods retailers have had to face a worldwide economic slowdown, LVMH have expanded its focus to include not only the acquisition of top luxury brand name retailers, but also the implementation of cost-saving synergies from acquisitions and alliances. In pursuing acquisitions, LVMH claims to look for timeless, modern, fast-growing and highly profitable brands. LVMH’s targets are mainly companies possessing heritage or brand aura, excellence and desirability.
A Review of Artificial Intelligence Techniques in Trading Systems
Abdalla Kablan, Center for Computational Finance and Economic Agents, University of Essex, UK
Financial systems are complex, nonlinear, dynamically and changing systems in which it is often difficult to identify interdependent variables and their values. The efficient market hypothesis states that the current price contains all available information in the market. This leads to the predictability of most financial time series as being a rather controversial issue. Experts have been forecasting and trading financial markets for decades, using their knowledge and expertise in recognizing patterns and interpreting current financial data. Artificial Intelligence has successfully been used as a tool for assisting engineers and physicists in developing and optimizing their models. This research explores the use of Artificial Intelligence in modern trading systems, and for the analysis of financial time series and models. Various approaches have been investigated, yielding to the conclusion that adopting artificial intelligence techniques for technical analysis of financial systems will provide positive results The modelling of financial systems continues to hold great interest for not only researchers but also investors and policymakers. Many of the characteristics of these systems, however, cannot be adequately captured by traditional approaches to financial modelling.
The Financial Incentives for Maritime Passenger Shipping Provided by Turkish International Ship Registry Law
Ceyda Kukrer, Anadolu University, Eskisehir, Turkey
Tourism based on maritime passenger shipping, such as modern ships with the latest amenities and comforts, is becoming very popular. As a result, new concepts are emerging in the field of international maritime tourism. These new concepts require the creation of updated legal regulations in the international tourism field. The Turkish International Ship Registry Law, issued in 1999, is one of these new legal regulations. The purpose of the Turkish International Ship Registry Law is to accelerate the development of Turkish maritime transportation; and moreover, to strengthen Turkey’s economic role by facilitating ships registered with the Turkish International Ship Registration and yachts with a tourism company’s inventory. Thus, the Laws aim is to promote tourism by maritime passenger shipping. Financial incentives set up by the Turkish International Ship Registration Law have been set up to perform this purpose. This paper will discuss the financial incentives provided by the Turkish International Ship Registration. It will also discuss changes in tax law related to the financial incentives of maritime passenger shipping and the existing deficiencies in the practice and effects of these financial incentives on the tourism field. The importance of maritime tourism, or appraising in its own regulations and locations, is increasing with each passing day. Turkey can offer maritime tourism form the countries of the Black Sea basin to the countries of the Eastern Mediterranean basin and Middle East Gulf countries, enabling them to open themselves up to the maritime and cruise tourism.
How Feasible Is a Switch From Fossil Fuel to Biofuel as a Permanent Energy Source?
Myrna Wilson and Dr. Balasundram Maniam, Sam Houston State University, Huntsville, TX
The intention of this document is to evaluate the socio-economic effects of switching from fossil fuels to biofuels. Dependency on fossil fuels is reaching a new pivotal debate point in the United States as fuel prices consistently increase to historic levels. Although biofuels are not a new idea, there is new pressure to transition to using biofuels as a permanent energy source across the energy spectrum. However, many scientists and economists alike have warned of the consequences of a major switch. Warnings related to true costs to create biofuels compared to the financial benefits gained and the current costs of using fossil fuels are observed in this paper. The journals researched for this paper focus on the production processes, costs and general impacts of biofuels as a prominent energy source. The past thirty years in the United States have given consumers their share of scares. From housing booms and busts to unemployment rates being blamed on immigration policies, panic over the economy is a guaranteed state of being for those living in the United States. However, more often there is a subject that constantly looms when discussing the US economy, and it no longer seems to ebb and flow with the trends in the news, but is a constant area of concern. Whether it is being discussed as dependency on foreign oil or effects of fossil fuels on the environment, when it comes to panic issues, energy is the king. Where do we get more of it? How much does it cost? Why does it cost so much? Why aren’t we looking for an alternative that doesn’t pollute the environment?
Review of Theories in Strategic Management field- toward the Creation of Schools of Strategic Management
Dr. Lara Jelenc, University of Rijeka, Croatia
The article offers an extensive overview of the body of strategic management literature from the early stages of development up to the most recent advancements. The review of theories is grouped according to the author's classification of schools of strategic management based on two criteria; time horizon and the role of the top manager in the process of strategic management. The essence of strategic management is the process of strategic management which could be viewed in a variety of ways, perspectives forming shared but distinctive paradigms. The proposed classification and the review of theories is the qualitative solid ground for the more advanced quantitative research. The review is supported by the list of major contributions, years and names of the publications combined with a short description of focus of the specific school of strategic management. The further research should be directed toward the more empirical, thus quantitative study which could justify the underlying logic of the theoretically proposed four schools of strategic management. The body of research in the field of strategic management is broad and consists of a variety of quite different point of views. However, all these point of views appear to be studying the same problem- the way top managers perceive process of strategic management.
Company Growth and Breakthrough to Leadership: Crisis Overcoming Guide
Professor Balashov Vladimir and Dr. Ivanova Sofya
The Moscow Institute of Physics and Technology, Moscow, Russia
In late 2008 almost all Russian companies and even earlier European and US companies started searching for the answer to the same question: What can we do to survive the world financial crisis? Many companies resorted to standard anti-crisis measures. They reduced their expenses including by cutting back on their staff. Is it possible to maintain the sales volume in the falling market? Most people believe that with the forecasted market decrease of 30-35%, it is practically impossible. Yes, it is impossible if you keep acting just as you did prior to the crisis. You need to act differently and use any available resources. You will certainly need to study successful experience and management technologies developed in Russia and abroad. First you need to assume a proactive approach and evaluate your development potential and only then you can give an answer to that question. Russian enterprises may be classified into four groups according to their risk level and bankruptcy probability. The first group includes enterprises which turned into lossmaking companies due to a sharp reduction in demand. They are in a significant and constantly growing debt. In fact they are already bankrupt. According to various estimations at least 25% of Russian industrial enterprises may be referred to this group.
Are Disciplined Acquisitions Able to Create Exceptional Financial Performance?
Carbonara Gabriele and Dr. Rosa Caiazza, Parthenope University of Naples
Nucor’s disciplined acquisition is characterized by its three main criteria: do not over-pay, stick with businesses Nucor understands and cultural compatibility. By applying the various frameworks we study Nucor’s acquisition practice in terms of target and method choice, deal structure, and integration to investigate how Nucor has been able to adjust and fit its acquisition strategy to the changing environment, taking advantage of secular and cyclical trends of the Industry. In particular, the time period between 2001 and 2008 is divided into two stages: 2001-04 and 2005-08, where in the first Nucor has been an astute buyer of distressed steel assets at the bottom of the cycle while during the second Nucor’s acquisition strategy became more dominated by systematical vertical integration both upstream for lower cost raw materials and downstream for a higher value-added product mix and diversification. In conclusion we discuss the potential challenges Nucor faces in pushing the envelope of its acquisition criteria and implications and lessons that are beyond the steel industry. The paper analyzes in detail Nucor’s acquisition strategy and its evolution. Nucor Corporation (NUE) is a leading company in the US Steel Industry, having superior strategic positioning as the market leader, with a roughly 18% market share and the most diverse product line-up in the US.
Strategic Monitoring of Competitors on the Market
Dr. Viorel Lefter and Dr. Alina Mihaela Dima, Academy of Economic Studies Bucharest
The paper analyses how well Romanian companies understand their competitors and to what extent they monitor their activity on the market. Information help decision maker to understand their rivals’ strategies to attract consumers and make market decisions based on competitive advantages. The results of the survey among 425 Romanian companies show that little importance has given to the competitors, either direct or non-direct, mass-media is the most important tool of information and details related to the product and price are the most useful elements to understand the rivals’ behaviour on the market. According to the Wong and Saunders (1996), in order to gain competitive advantage, companies should design offers that satisfy targeted customer needs better than competitors’ offers. Aaker (1995) believes that while the identification of competitors is crucial, it is often more complex than generally acknowledged. Key competitors will be those, which battle most fiercely and prominently with the basic business of the company. He suggested seven central to understanding competition.
The Relationships Between Service Attributes and Behavioral Intentions for the Real Estate Brokerage
Dr. Hsing-Ping Kuo and Yi-Chin Tsai, Southern Taiwan University of Technology, Taiwan
Real estate brokerage has an enormous impact on the national, state, and local economies. Promote with consumer's consciousness, the proportion of commissioned the brokerage raise gradually while they buying and selling the real estate. However, the real estate broker need to contact with customer frequently in the process of service delivery, evaluation of customer to service promoter service quality depends on the service attributions in the moment of truth. How to manage customer relation with the real estate brokerages and understand the customer future behavior they might take are the important issues in the real estate brokerage industry. Those issues are neglected regarding in the previous research. This study provides an overall model to explore the effect of soft service attributes, hard service attributes, relationship quality and behavior intention in a high service encounter context, namely in the real estate brokerage industry. This research employed structure equation Modeling (SEM) by the AMOS software to test the model. Data were collected from 353 experienced buyers and sellers. The findings support soft attributions are significant positive impact on the hard attributions. And relationship quality the fully mediates the positive effect of soft attributes and hard attributes on behavioral intentions. Real estate brokerage market is an industry of high service encounter and high customized service.
Improving Employee Attendance with No-fault Absenteeism
Dr. Frank Kuzmits and Dr. Art Adams, University of Louisville, Louisville, KY
The impact of a no-fault absenteeism control program was assessed in a large international chemical company. Because of excessive incidental absenteeism experienced under the previous personnel policy, no-fault absenteeism policies were implemented in 2007, and evaluated after a year’s worth of data had been collected. Absence measures included absenteeism occurrences (an absence of any length), full-day absences, tardies and leaves early. Results showed that all absence measures per employee, when compared to one years' absenteeism data prior to the implementation of no-fault, declined significantly in the year following the introduction of the program. Limitations of the study and suggestions for future research were discussed. Employee absenteeism ranks among one of the nation's most widespread and costly human resource problems. A 2008 Mercer/Kronos study, based on a survey of 455 employers, estimates the total cost of incidental (unplanned) absenteeism at 9% of total payroll costs. The study also showed that unplanned incidental absenteeism averaged 5.3 days per year across all employee classes; ranging from 3.8 for exempt employees, 4.9 for non-exempt employees, 5.6 for nonunion employees and 6.7 per year for union employees ("Total Financial Impact," 2008). Translated into economic terms, the Commerce Clearing House (CCH) estimates that the average direct costs of unscheduled absenteeism (such as lost wages due to an employee's absence) for 2005 at $660 per employee per year, up from $610 for 2004.
Improving Lighting Quality Satisfaction in Sporting Venues by Six Sigma: In-line Hockey Spectators
Chin-Hsien Hsu, National Chin-Yi University of Technology, Taichung, Taiwan R.O.C.
Globalization has provided new opportunities and challenges for the sporting markets, as numerous sports have spread to other countries from their places of origin. In-line hockey is quite new in Taiwan. It requires adequate skills, while providing intense excitement and whole-body workout. The sporting facilities of in-line hockey haven’t attained a comprehensive level of development, yet it attracts more and more sporting fans. Since related competitions keep increasing, the nighttime lighting at in-line hockey rinks has also become an important issue. The lighting quality is a key element which decides whether the spectators can enjoy the games. Thus, this article probes, by Six Sigma methodology, into the nighttime lighting quality in in-line hockey rinks, constructs a cause and effect diagram, and furthermore provides a few suggestions as references for related organizations to promote in-line hockey. As people have more free time and more flexible lifestyles, the numbers of spectators of nighttime competitions are also increasing. In addition, while northern Taiwan is classified as a subtropical zone, southern Taiwan has a tropical climate; as a result, the weather in the daytime is so hot that people are usually unwilling to watch such sports events. Not surprisingly, nighttime events are more appealing to the public as spectators; the result is greater attention being paid to the light quality of the rinks. The lighting at the venues of the World Games 2009 Kaohsiung, for instance, met a high standard.
The Innovation Event: An Insight into the Occurrence of Innovation
Dr. Falih M. Alsaaty and Dr. Marion H. Harris, Bowie State University, Maryland
The purpose of this paper is to conceptualize the innovation event, that is, the main force behind the occurrence of innovation in the business world. The thesis of the paper is that the lure of market opportunities is the main motivating factor for the firm to innovate. Successful opportunity exploitation helps the firm to improve its performance and, hence, long-term survival. Moreover, the firm’s stockpile of strategic resources can enable it to capitalize on opportunities as well as avoid threats by means of strategies aimed to achieve sustainable competitive advantage. Lack of attention to the firm’s external opportunities – in relation to its strategically relevant resources and sustainable competitive advantage – as the key determinant of organizational innovation has constituted a formidable obstacle toward the development of a comprehensive innovation theory. This analysis draws upon concepts typically associated with the following streams of research: (1) inside-out, outside-in, (2) resource-based view, and (3) the industrial organization view. The economic crisis that swept the world recently demonstrates the volatility of the external business environment, and the need for firms to innovate. A new reality is emerging that could bring about huge market opportunities and challenges for the business community. To explain the emerging global situation, Beinhocker, Davis, and Mendonca (2009) identify ten major trends (1), of which the need for innovation is among them.
Lessons Learnt from Business Mentoring Practices
Professor Jamaluddin Husain, Purdue University Calumet, IN
This paper reviews business mentoring practices and summarizes lessons learnt by the authors during the past several years of businesses mentoring at the Entrepreneurship Center of Purdue University Calumet. Extensive literature showed that not many studies have been conducted on business mentorship, and therefore, the findings and experiences of the authors, as captured in this paper should be valuable for those currently involved and also for those who are planning to be involved in business mentoring programs. The paper lists (a) different types of mentees and how their expectations can be different, (b) how to attract and retain business mentors, and (c) summary of key lessons learnt from the many years of managing business mentoring programs. Legend tells that centuries ago, Odysseus, king of Ithaca in Ancient Greece, went off on one of his long adventures and left his son Telemachus behind in the care of his trusted friend, Mentor, with the knowledge that his son would be cared for by someone who had the boy’s best interest at heart and would willingly counsel him. (Kaplan, 2005). Thus a mentor as a trusted teacher or counselor who has his mentee’s best interest at heart and voluntarily helps him learn the ways of the world – or the ropes of a business.
Category Management and Customer Satisfaction – Study of the Kuwaiti Grocery Retail Sector
Dr. Khurram Sharif, College of Business & Economics, Qatar University, Qatar
The main objective of this study was to investigate the relationship between Category Management (CM) practices and their impact on customers (both loyal and normal) within the Kuwaiti grocery retail sector. A six variable Framework (based on product assortment, product pricing, product presentation, product promotion, product availability and customer service) was formulated to conduct the outlined investigation. The results indicated that as far as customer satisfaction was concerned there were no clear differences between normal and loyal customers. This outcome could have been due to CM related miscommunication between the management (decision makers) and the shop floor staff (implementers). Additionally indifferent attitude to CM could have been due to misunderstanding the cultural and social context of the retail environment in which it was being implemented. Eroding profit margins in the US grocery retail sector in the early 1990s initiated the strategic change process (later named as CM) where different ways to improve the selection, presentation and labeling of displayed merchandise were considered and applied (Descrochers and Nelson, 2006; Efthymiou, 2003; Pellet, 1994).
Determinants of Interest Rate Spread in Mauritius
Seetaram Navneet, Seetanah Boopen, Ramessur Shalini and Rojid Sawkut
University of Technology, Mauritius, Pointes aux Sables, Mauritius
This study examines interest rate spreads in Mauritius over the period 1975-2004 by modelling the effects of bank-specific and macroeconomic determinants on the ex-post spread using cointegration and error correction model. At the micro level, results show that when the profit margin is threatened by increased operating costs, banks sustain a widening spread. Faced with a rising credit risk due to distress borrowing, banks are also observed to charge higher risk premiums on their lending rates. Increase in non-interest bearing reserve requirements causes the Mauritian banking spread to widen as banks face reduced liquidity. At the macro level, it is observed that banks tend to profit in inflationary environment as the spreads widen with banks charging higher risk premium due to increased interest rate volatility and reduced repayment capabilities of borrowers, thereby increasing default risk. The effectiveness of the banking system in providing intermediation services has often been gauged by examining the interest rate spreads, that is the difference between the lending and deposit rates. These increased consideration for interest rate spreads lie mainly in the fact that such spreads are indicative of the efficiency of the financial intermediation process and ultimately of the soundness and efficacy of the banking system.
Chinese Outbound Tourist Market to Turkey
Dr. Serdar Ongan, Istanbul University, Istanbul
China’s GDP and middle class will reach approximately 21 trillion dollars and 392 million by 2020 and 2025 respectively. With these huge economic magnitudes, at least 100 million Chinese tourist will travel the world and China will be the fourth tourist generating countries in the world in 2020. Therefore, the concept of "Chinese visitors" is becoming more current issue rather than “visiting China”. Today, China is primary tourist market for many countries.In this paper,it will be emphasized the vital importance of Chinese outbound tourist market for Turkey which has been grappling with economic problems such as large current account deficits and high rates of unemployment for many years. Turkey, with its rich natural and cultural values, must benefit from this market.
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Copyright 2000-2018. All rights reserved
Copyright 2000-2018. All rights reserved