The Business Review Journal

Vol. 15 * Number 2 * Summer. 2010

The Library of Congress, Washington, DC  *  ISSN 1553 - 5827

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Quilts As A Real Investment Instrument: Creating an Index to Measure Risk and Return

Dr. Julie-Anne Gasper, Creighton University, Omaha, NE

Dr. John R. Wingender, Jr., Creighton University, Omaha, NE



The purpose of this study is to create the first price index for quilts in order to facilitate the study of how investment in quilts may be analyzed by collectors, dealers, investors, galleries, and portfolio managers.  Over the last several decades corporations have been diversifying their investment portfolios with real assets.  Quilts have migrated from the bedroom to the corporate boardroom.  The starting point for investigating the risk and return characteristics of the quilt market is to construct an index of quilt sales prices.  After deriving the Quilt Price Index, the mean annual quilt price change is calculated to be 21.83 percent, with a standard deviation of quilt price changes of 54.02 percent and a coefficient of variation of 2.47.  These risk and return characteristics indicate that there are high returns possible from investing the real assets of quilts.  However, the risk of investing in quilts is quite high. Over the last several decades corporations have been diversifying their investment portfolios with real assets.  These real assets include collectibles such as quilts, art, stamps, and sports memorabilia.  Real assets provide a different dimension for investment portfolios composed of standard financial securities.  Each of these assets provides different return, risk, and diversification characteristics, especially when compared to equity investments.  For many of these types of real asset investments, there are indices that enable an investor to track changes in the general market value of the assets.  However, there is no such index for quilts.  The motivation for our study is to create an index for quilts and to use the quilt index to calculate measures of return, risk and diversification for this collectibles market.  Quilts have migrated from the bedroom to the corporate boardroom.  As many corporations join with quilt enthusiasts to become quilt owners, the interest in a comprehensive benchmark for the value of quilt collectibles has increased. 


The Entrepreneurial Manager in Health Care Organizations

Kristina L. Guo, Ph.D., MPH, Program Director, Health Care Administration, University of Hawaii-West, Oahu, Pearl City, HI



Key internal and external environmental forces impact the viability and performance of health organizations.  Organizations rely on a strong senior management team to work collaboratively with well trained and skillful support staff in order to make major contributions and develop strategies that lead to organizational success in the current competitive health care environment. One of the most essential aspects for organizational survival, growth, and development is effective management.  Managers must be skilled at working effectively with employees across the organization to direct, support, and influence them to achieve organizational goals.  Managers are responsible for constantly adjusting to external and internal changes, resolving conflicts, and making timely and appropriate decisions.  The purpose of this paper is to address strategies needed by health care organizations to improve organizational performance, thereby enabling survival and success. To take into account the need for more flexible, innovative, and rapid decision making, this paper argues for the development and implementation of entrepreneurial strategies. Specifically, the study describes the unique and important responsibilities of health care managers in the complex health care environment.  Health care entrepreneurial strategies are discussed as essential for building and maintaining organizational success.  In particular, entrepreneurial managers determine organizational readiness for entrepreneurial strategies.  Using a set of essential entrepreneurial roles, an entrepreneurial manager can be most effective in assuring the future success of health care organizations.


Risk-Adjusted Returns on American Depositary Receipts from the U.K. and Ireland

Dr. Onur Arugaslan, Western Michigan University, Kalamazoo, Michigan

Dr. Ajay Samant, Western Michigan University, Kalamazoo, Michigan



This study evaluates the risk-adjusted performance of American Depositary Receipts (ADRs) on shares of stock of British and Irish companies. The first part of the study examines the nature of these ADRs (based on depositary bank, sponsorship status, industry classification and listing). The second part of the study evaluates the performance of these ADRs using statistical measures grounded in modern portfolio theory. Returns are adjusted for the degree of total risk and systematic risk inherent in each ADR, and the securities are then ranked on the basis of risk-adjusted performance. Two relatively new evaluation metrics, the Modigliani and Sortino measures, are used. The objective of the study is to provide documentation to global investors who are contemplating participation in British and Irish stock markets via depositary receipts. Over the past decade, there has been a significant rise in investor comfort with global financial securities, aided by the ease and convenience with which transnational corporate information can be accessed via the internet. One of the most convenient vehicles for accessing corporate securities listed outside the investor’s home country is a Global Depositary Receipt. In the United States, these securities are known as American Depositary Receipts (ADRs). As of January 2009, there were 2034 ADRs listed on the New York Stock Exchange (NYSE), American Stock Exchange (AMEX), the NASDAQ system, and on private trading networks. This study examines the nature and performance of ADRs on shares of firms incorporated in Great Britain and Ireland. Many US based investors find it inconvenient, for a variety of reasons, to invest directly in stock markets in the U.K. and Ireland, and, therefore, prefer to invest in ADRs based on their stocks. These ADRs may be created at the request of investors or corporations whose stock is held in trust as collateral for the ADR.


An Examination of Wellness Orientation and Dental Care Attitudes Among

Dental Patients: Conceptual Model and Empirical Evidences for Turkey

Dr. Talha Harcar, Pennsylvania State University at Beaver, PA

Dr. Orsay Kucukemiroglu, Pennsylvania State University at York, PA



This study investigates the impact of dental care satisfaction on the wellness and preventive health care of Turkish citizens. 250 randomly selected respondents were asked to indicate their agreement to various wellness orientation statements, preventive dental care, dental care knowledge, dental problems and customer satisfaction on a seven point Likert scale. By means of structured equation modeling the authors analyzed the data. The findings surprisingly suggest a non-significant link between dental problems and customer satisfaction of dental care provider. The finding of data analysis reveals that daily diet has a strong positive effect on dental care knowledge and negative effect on dental problems, no significant effect on preventive dental care. Further the findings show that only dental care knowledge has a positive effect on dental care customer satisfaction, whereas dental problems and preventive dental care do not.  Considerable research in the area of consumer with services has focused on health care in general (Aday et al., 1980), and dental care services particularly (Gopalakrishna and Mummalaneni, 1993). The outlook of dental services has experienced significant revolution during the last two decades. Demographic shifts, a profusion of dentists, and radically better oral hygiene have mutually initiated an extremely aggressive dental service market. Therefore, many dental care providers are challenging an "open appointment book" problem, wherein their patient load is less than they desire (Grove et. al, 1994). Previous study concerning to dental services has acknowledged significant reasons considered by patients when first choosing a dentist (e.g. Barnes and Mowatt, 1986), and factors effecting consumers satisfaction with dental care services (e.g. Gopalakrishna and Mummalaneni, 1993). McAlexander et al. (1994) have pointed out that patient satisfaction with dental care and evaluation of overall service quality contribute to intentions to select a dentist. 


A Social Marketing Approach for De-Marketing Sex Tourism

Dr. Gregory S. Black, Metropolitan State College of Denver



This study proposes a model to help determine the competitiveness of countries as a sex tourism destination, and then suggests a social marketing approach for de-marketing sex tourism.  The study conducts a literature survey on competitiveness, destination competitiveness, sex tourism, and social marketing and integrates these concepts in a model developed and named in this paper as the Sex Tourism Destination Competitiveness (STDC) Model.  The model explains that the STDC of a country is determined by demand conditions, country attributes, industry structure, and social support.  In attempting to utilize this model, problems will naturally arise in attempting to gather sensitive data from countries.  Few countries readily admit to being a popular sex tourism destination and may limit the availability of related data.  Sex tourism appears to be a severe problem throughout the world.  Marketing, in particular, social marketing, may be valuable in de-marketing sex tourism. Hall (1999) defines sex tourism as “tourism where the main purpose or motivation is to consummate commercial sexual relations” (p. 65).  Lately, the negative effects of sex tourism (human trafficking, child sex and child pornography, increased HIV/AIDS/STD healthcare costs, organized crime, etc.) have been extensively assessed in the literature.  Conversely, the economic benefits of any tourism, including sex tourism (growth, employment, inflow of foreign exchange) have also been noted.  Destination competitiveness refers to the touristic appeal or attractiveness of a country given by various historic (Egyptian and Mayan pyramids, Great Wall of China, or Machu Picchu in Peru), geographic (American Grand Canyon, African Safari, or sandy beaches of the Caribbean and Pacific islands), cultural (carnivals, religious congregations, or ethnic tours), and tourism-related (shopping, organized tours, hospitality industry, theme parks, etc.) attractions. 


Behavioral Intention to Use Forensic Accounting Services: A Critical Review of Theories and an Integrative Model

Gunasegaran Muthusamy, Curtin University of Technology, Western Australia

Mohammed Quaddus, Professor, Curtin University of Technology, Western Australia

Rob Evans, Professor, Curtin University of Technology, Western Australia



The goal of this research is the development of a conceptual model with the best utility and efficiency to predict the behavioral intention to use FAS in the detection and prevention of fraud. The Theory of Reasoned Action (TRA), Theory of Planned Behaviour (TPB), Health Belief Model (HBM) and Hierarchy of Effects Model (HOE) were first evaluated individually to clarify their strengths and weaknesses. The four models were then cross-examined to conceptualize the key variables that could be utilized towards the development of the theoretical framework for this study. The incorporation of the strong points of each model formed a unique, comprehensive, yet parsimonious combined model. The integrative approach of merging individual level variables of cognitive and threat perception factors with organizational determinants of normative, external and control factors gave a complete view of this behavioral intention. This integrative model could be utilized in future research to statistically confirm the influence of the predicted factors on organizational behavioral intention to use FAS for the detection and prevention of fraud. The imperative role of accountants in fraud detection and prevention originated from the time of ancient pharaohs (Wells 2000). Even until 1912, the author of “Auditing Theory and Practice” states that the foremost role of auditors is to prevent and detect fraud (Wells 2000). Nonetheless, this crucial and essential role has slowly eroded. Instead, reporting to provide “reasonable doubt” became the primary job of an auditor (Public Company Accounting Oversight Board 2005). Fraud detection and prevention took a back seat and it was not long before fraudsters took advantage of this melting pot of opportunity.  Nevertheless, financial report users still believed that auditors are accountable for detecting all irregularities (Lee, Ali, and Gloeck 2008).


Technical Analysis: Evidence from the Mexican Stock Market

Dr. Xavier Garza-Gomez, University of Houston – Victoria

Dr. Massoud Metghalchi, University of Houston – Victoria

Dr. Chien Chen, University of Houston – Victoria



This paper tests four technical indicators trading rules for the Mexican Stock Market. Our results indicate that moving average rules do indeed have predictive power and could discern recurring-price patterns for profitable trading. However, RSI, MACD, and PSAR are not as strong as the moving average trading rule.  For all of the indicators studied in this paper, the mean buy days are greater than the mean buy and hold strategy with highly significant t-statistics.  In this paper we will apply four technical trading rules to Mexican stock index.  If we can find some form of technical trading rules that can predict changes in the Mexico’s Stock Index (IPC), we could then question the efficiency of the Mexican equity market.  According to Shleifer . (2000) points out, the attitude of academics towards the Efficient Market hypothesis (EMH) at the end of the 1970s was indeed one of the great triumphs of twentieth-century economics.  Fama (1970) defined an efficient financial market as one in which security prices always fully reflect the available information; any new information will be quickly and instantaneously reflected in prices. Given that any news is unpredictable, (arrives randomly), price changes will follow a random walk.  After more than four decades of research and thousands of journal articles, economists, finance researchers and practitioners have not yet reached a consensus whether technical analysis could discern recurring-price patterns for profitable trading. The overwhelming majority of financial economists and academicians support the efficient market hypothesis.  Much  of earlier research supported the random walk hypothesis. To name a few, the following studies have long supported the market efficiency hypothesis: Larson (1960), Osborne (1962),  Alexander (1964), Granger and Morgenstern (1963), Mandelbrot (1963),  Fana (1965), Fama and Blume (1966), Van Horn and Parker (1967), Jensen and Benington (1970).  However since early the1990s, technical analysis has won more and more supports from both the practitioners and academicians. There have been numerous empirical studies to support the predictability and profitability of technical trading rules with a variety of indicators in stock markets globally.  


Tax Simplification and Australia’s Future Tax System: Using Benchmarks for Long Term Assessment of Tax Reform

Dr. Jeff Pope, Director, Tax Policy Research Unit, School of Economics and Finance, Curtin University, Perth, Australia



A Review of Australia’s Future Tax System (AFTS) was under consideration for over eighteen months during 2008 and 2009. The Henry Tax Review, so-called after its Chair Ken Henry, Head of the Treasury and comprising a small Panel selected by Government, includes the equally complex transfer system and its interaction with the tax system. It is the first major, comprehensive review of Australia’s tax system for over 30 years since the Asprey Committee Report. The AFTS Panel reported to the Treasurer at the end of 2009. The Government will publish its findings and recommendations early in 2010 together with an initial Government policy statement. The objective of this paper is to develop criteria and benchmarks for the objective assessment of the tax simplification aspects of the Henry Review. The rationale of this paper is that it is important and fairer to develop sound, objective criteria independently of the probable lobby and other vested interest groups commentary and media attention that will follow, assuming the Henry Review has done its job thoroughly and properly, with recommendations for innovative, challenging and possibly politically-difficult proposals for tax-transfer reform.  The Review of Australia’s Future Tax System (AFTS) was announced by the Treasurer on 13 May 2008. To the surprise of some it comprised a small review panel of five persons with Dr Ken Henry AC (Secretary to the Treasury) as Chair, and Dr Jeff Harmer (Secretary of FaHCSIA), Professor John Piggott (University of New South Wales), Mrs Heather Rideout (Australian Industry Group) and Mr Greg Smith (Adjunct Professor, Australian Catholic University and formerly at the Treasury). The Review also included a strategic review of the retirement income system (Treasury, 2009). The Henry (Tax) Review, as the AFTS review is generally referred to, delivered its final report to the Treasurer in December 2009, who has announced that its public release will follow in ‘early 2010’ after the Government has fully considered it.


Adolf Berle and Revolution in the Modern Corporation

Dr. Donald Margotta, Northeastern University, Boston, MA



Adolf Berle is best known as co-author of "The Modern Corporation and Private Property," one of the most cited works in the corporate governance literature.  This paper discusses the significance of “The Modern Corporation” in shaping current corporate governance debates and also examines other Berle works for their insight into broader changes in the widely held corporation in society today, changes Berle characterized as a revolution.  Berle was a prolific writer who began publishing in the mid 1920’s and continued until shortly before his death on February 17, 1971. While he is most often cited for his observations on the separation of ownership and control in the widely held corporation the following discussion looks also at other observations on the corporation which he developed though more than 50 journal publications and 11 books. After reviewing Berle’s well known comments on the separation of ownership and control, and suggesting that even this well known facet of his work has been misunderstood or misinterpreted by researchers, the paper looks at why Berle called the changes in the public corporation a revolution. Why he thought these changes constituted a revolution is illustrated by looking at his views on how “finance capital” had changed, and on how the responsibility of shareholders had changed,  and on how increased share ownership by institutional shareholders might affect the corporation. Berle used the phrase “separation of ownership from control,” the phrase for which he is best known, to describe the changes he saw occurring in the stock ownership of major U.S. corporations around the early 1900’s as corporate magnates such as Rockefeller and Carnegie distributed the stock of companies they once owned and managed to heirs and foundations who in turn sold stock to the general public. The upshot was that such companies no longer had controlling stockholders managing them. Instead, they had numerous outside small shareholders with essentially no power to influence the company, while professional managers with relatively little stock ownership, controlled the companies. 


Brand Ecosystem Strategy for Olive Oil

Dr. Musa Pınar, Valparaiso University, Valparaiso, Indiana

Dr. Paul Trapp, Valparaiso University, Valparaiso, Indiana



Effective branding has become critically important as organizations struggle to differentiate themselves in increasingly competitive markets. The global olive oil industry is no exception. Developing an effective brand ecosystem that delivers compelling brand experiences to a carefully understood target market may offer organizations sustainable brand success. A brand ecosystem is simply all of the activities that provide the brand with its identity and meanings. Driving a brand ecosystem, and giving it focus and direction are the intended experiences that an organization wishes to provide its customers. This exploratory paper applies the brand ecosystem concept to the olive oil industry. In today’s global marketplace, brand development and management have taken on a new level of importance. In fact, according to Kotler and Armstrong (2010), these may be the most distinctive skills of marketing executives, as brands are the major enduring assets of a company, outlasting a company’s specific products, facilities, and even people. A brand is more than just a name or symbol; it represents consumers’ perceptions and attitudes about a product, its meanings, and its performance (Keller, 2008; 1993; Kotler and Keller, 2006). Thus, the real value of a brand is its ability to inspire customer preference and loyalty. A brand is an organization’s promise to consistently deliver a specific value proposition to its customers time after time. The brand promise must be simple and honest, and differentiated from competing promises in the marketplace (Keller, 2008; 1993). The real power of a successful brand is that the promised experience not only meets, but exceeds the expectations of customers in a way that competitors are unable to. At its best, a brand represents promises kept, which builds loyalty through trust, which in turn results in continued demand and profitability (Reichheld, 2001, 2006).


Utilization & Implementation of the Predictive Index ® (PI) for Global Leadership Development

Erika L. Koski, R. L. Polk & Company, Detroit, Michigan

Dr. Stewart L. Tubbs, Eastern Michigan University, Michigan



One of the most vexing problems for any organization is the ability to accurately and efficiently assess the leadership potential of both new hires and existing talent within the organization. (Atwater, and Stevens, 2008; Berns, 2008; Charan, 2001; Gladwell, 2008; Kouzes, and Posner, 2007;  McCauley, Moxley and Van Velsor, 1998;  Tubbs, 2010; and Whetton, and Cameron, 2005). One useful alternative is the Predictive Index ® (PI) created in 1955.  The founder, developed the prototype of this assessment instrument based on his experience as former US Air Corps bombardier.  He also formulated a training process for making the survey's results understandable and useable by business managers. In 2005 the firm marked the 50th anniversary of the Predictive Index, and the PI is now being used by thousands of companies in over 125 countries and in 58 languages and a version in Braille.  PI has offices in the United States, Canada, Europe, South America, Africa, Dubai, Asia, Australia, and India. ( Since 1955, thousands of businesses have depended on the Predictive Index for a variety of uses, including employee selection. To this day, PI Worldwide remains dedicated to conducting research that ensures that the PI is work-related, free of bias, valid and reliable. Clients around the world have confidence in the Predictive Index not only because of its repeatable accuracy, but also for its scientific and research-based foundation: The Predictive Index was developed and validated in compliance with Equal Employment Opportunity Commission (EEOC) Guidelines, as well as the professional standards established by the American Psychological Association (APA) and the Society of Industrial & Organizational Psychology (SIOP).  PI has amassed an extensive library of over 400 criterion-related job validity studies covering multiple jobs, industries and countries which document the instrument's validity and usefulness in the business world.  The PI is used as a practical, reliable indicator of workplace behavior, which helps organizations make sound, people-smart decisions with the best results for the company and for the people themselves.


Econometrically Analyzing the Leadership Effectiveness of Public High School

Administrators Towards Native Hawaiian Completers

Dr. Larson Ng, University of Hawaii at Manoa, Honolulu, Hawaii



 The following study attempted to ascertain the leadership effectiveness of public high school administrators towards Native Hawaiian completers through an econometric analysis. Essentially, public high school leadership expenditures and completer data were collected and bivariate interaction analyzed through a correlation and linear regression analysis. Based on the collective results, a statistically insignificant negative relationship was noted statewide and a relatively statistical positive relationship noted for the densely populated Native Hawaiian Leeward District. Hence, public high school administrators in the Leeward District were seen as having a relatively more positive influence towards Native Hawaiian completers in contrast to statewide results from 2000 to 2007.  According to the 2005 Native Hawaiian Educational Assessment conducted by the Policy Analysis & System Evaluation at Kamehameha Schools, Native Hawaiians are the least likely ethnic minority to graduate from high school (Kanaiaupuni, Malone, & Ishibashi, 2005). As suggested by the 2005 Assessment, the monitoring of high school completers and the factors that contribute to them can be one way in improving the overall educational well-being of Native Hawaiians (Kanaiaupuni, Malone, & Ishibashi, 2005).  Educational leadership, other than instruction, is a critically important factor that contributes to high school completers, where it is school administrators that set the goals and strategic direction for all teachers (Riley & Mulford, 2007). Although there are many ways to decipher educational leadership effectiveness, assessing educational leadership through a financial perspective remains one practical way to accomplish this task (Beard, 2009), especially given the historical lack of educational funding for Native Hawaiian students in the public school system in Hawaii (Kanaiaupuni, Malone, & Ishibashi, 2005).


Financial Systems Regulation in the Global Context:  The Australian Experience

Carlo Soliman, Solicitor, New South Wales

Wayne Guild, Charles Sturt University, Wagga Wagga



 This research paper examines the effectiveness of the various protective measures of the Australian financial system in the context of the Financial System Inquiry (‘FSI’). The FSI was the product of three inquiries into the banking and finance industry which culminated in the Wallis Report in 1997. The objective of the FSI was to facilitate and promote economic efficiency, accountability, transparency and assist business to adapt to change in the financial climate. These aims were achieved by a series of reforms to the regulatory environment which would stimulate economic activity and place the Australian financial system in a strong position to meet the challenges of a globalised world economy.  Future reform should be directed at the creation of greater interagency cooperation and clarity amongst the regulators to keep costs down for business and to encourage a culture of compliance. It is also suggested that the utility of legislation be measured through a performance-based appraisal system which involves the regulated entity as a key stakeholder.  Financial services represent a major contribution to Australia’s Gross Domestic Product and account for a significant proportion of the accumulated wealth of many Australians. (1) Therefore, an efficient and well functioning financial sector is essential for the effective operation of the economy. In order to promote such goals the Australian Financial System has been subjected to several detailed reviews during the twentieth century. (2) The most comprehensive review culminated in the Financial System Inquiry (‘FSI’).


Retasking Professional-Level Labor

Dr. Robert Runte, University of Lethbridge, Alberta, Canada

Dr. Mary Runte, University of Lethbridge, Alberta, Canada



 The upskilling/deskilling debate generally overlooks the possibilities of other strategies in job design. Retasking, in which formerly delegated tasks are reabsorbed into professional-level labor, is one such strategy. Retasking lowers the total labor bill by expanding the work carried out by professional and managerial labor without a corresponding increase in compensation. Professional and managerial labor may not recognize and resist retasking as speed-ups because emergent technologies may obscure the line between work/family time; because the speed-ups may present as a reintegration of a more holistic work process; or because the elimination of supports is interpreted as the unavoidable consequence of forces external to the organization. Thus, retasking may be one factor in the expansion of long-hours culture within a bifurcated labor market.  In the face of announced cutbacks to the provincial education budget, our university's administration laid off a number of support staff. The affected faculty members complained vociferously that it would be impossible to get any work done without their administrative assistants; but the rest of us had a slightly more incredulous reaction: Your Faculty still had secretaries?


Knowledge Sharing, Social Networks and Organizational Transformation

Dr. Chaiporn Vithessonthi, Mahasarakham University, Thailand



 This paper has contributed by integrating the social network, knowledge management, and organizational transformation literature to understand (1) how environmental dynamism plays a key role in the relationship between the strength of social network and knowledge acquisition and recombination of a multinational firm and (2) how organizational transformation is influenced by the strength of social ties. I have argued that environmental dynamism, which represents uncertainty, moderates the relationship between social ties and knowledge acquisition and recombination of a multinational firm and that the strength of social ties can influence a range of strategic changes undertaken in a multinational firm.  The internationalization literature suggests that when firms enter foreign markets, it is important that they align themselves with local market conditions as quickly as possible so as to compete effectively with competitors (e.g., Bartlett and Ghoshal, 1989; Prahalad and Lieberthal, 1998). On the other hand, multinational firms can leverage their knowledge in order to develop competitive advantage in foreign markets by reusing their (probably superior) organizational practices in multiple foreign operations (Jensen and Szulanski, 2004; Kogut and Zander, 1993). Empirical research provides evidence to suggest that the extent to which knowledge is proprietary affects foreign subsidiary performance (Delios and Beamish, 2001).  The ability to align with local markets may be limited due to the liability of foreignness and the limited access to a source of information about local markets (Mezias, 2002; Zaheer, 1995). Empirical studies suggest that there exist some liabilities of foreignness (Johanson and Vahlne, 2009). For instance, Mezias (2002) has found that foreign firms operating in the United States tend to face more labor lawsuit judgments than do US firms and has suggested that these labor lawsuit judgments is viewed as a liability of foreignness for foreign subsidiaries operating in the United States.


The Influence of Vietnam’s Administrative Reform on Entrepreneurial Orientation in Micro-Enterprises

Dr. Mai Thi Thanh Thai, HEC Montreal, Canada



 Basing on the results of a face-to-face survey and secondary data from General Statistics Office of Vietnam, we found that the administration reform of Vietnam has had a positive impact on entrepreneurial orientation (EO) on all of its three dimensions, namely managerial perception, firm behavior, and resource allocation in Vietnamese micro-enterprises.  The firms have shown to take higher risks and be more proactive but they have not put an emphasis on innovation yet. In this paper, we present the reform’s milestones and the evolution of EO in Vietnamese microenterprises along these three dimensions.  Under an ambitious administrative reform scheme since 1986, Vietnam has been transforming itself from a centralized economy to a socialist-oriented market economy. From 1986 to 1990, Vietnam employed a multi-sector commodity economic system and exercised trade liberalization, privatization of state-owned enterprises, and the renovation of the financial system. Between 1990 and 2000, Vietnam eliminated state monopoly in distributing goods and services, authorized enterprises of various economic sectors to engage in trade, and cancelled all restrictions on the circulation of goods. In 2000, the Communist Party started to implement strategies to make Vietnam a socialist-oriented market economy. Since then, the country has been following this direction.


High-performance Human Resource Practices, Entrepreneurship and Entrepreneurial

Performance:  A Study in Taiwanese SMEs

Dr. Ming-Chu Yu, National University of Tainan, Taiwan



 This study examines the effects of high-performance human resource practices (HPHRPs) and entrepreneurship on the entrepreneurial performance of small- and medium-sized enterprisesSMEs. We build and test a causal model using data obtained from Taiwanese entrepreneurs and find support for our hypotheses. The results indicate that HPHRPs in SMEs can encourage the entrepreneurship among employees, which could positively enhance entrepreneurial performance. In addition, the entrepreneurship of SMEs positively affects entrepreneurial performance, and it partially mediates the relationship between HPHRPs and entrepreneurial performance. The implications and future research directions are discussed. With the changes in the industrial environment and with intensified industrial competition, the traditional HR model has been unable to cope with current challenges and changes. Therefore, this strategic HRM study proposes the design of HPHRPs in order to boost the function, encouragement, and performance of employees (Liao et al. 2009). These closely related practices will improve work skills, be involved in strategic design, and create output (Appelbaum et al. 2000), resulting in excellent performance and long-term competitiveness (Way 2002).


An Empirical Study on How Characteristics of General Purpose Technology Factoring in

Both Internal and External Properties of Business Impact on Intention of

General Purpose Technology Development

Dr. Kilsun Kim, Sogang University, Seoul, Korea

Dr. Sunghong Kim, Chungbuk University, Seoul, Korea

Sanghyun Lee, Sogang University, Seoul, Korea



 Bresnahan and Trajtenberg (1995) considered technology like dynamo to be gerenal purpose technology, or GPT.  According to them, a GPT is a fundamental invention that may appear of little value in and of itself but that is shared both within and across industries, and enables valuable inventions and innovations within a wide variety of application areas.  In existing literature, it is conceptually suggested that GPTs possess three distinctive characteristics (Bresnahan and Treajtenberg, 1995; Cummins and Violante, 2002; Hall and Trajtenberg, 2004; Petsas, 2003; Jovanovic and Rousseau, 2005; Youtie, Lacopetta, and Graham, 2008).  The current study aims to specify three characteristics based on the precedent.  In addition, unlike previous studies that measured GPTs with respect to macroeconomic indice, we are to assess GPTs at the firm level.  To evaluate how firms conceive GPTs, we took both internal and external factors into account. When it comes to internal factors, we examined which psychological factors affected users‘ behavior.  In terms of external factors, we made use of network externality effects that was already pointed out in the Bresnahan and Trajtenberg(1995) research in order to evaluate developing practice and intention of GPTs in firms.  This study will be the first case that explores GPTs on an individual firm level.  Whenever a new class of technologies emerges, conjectures are advanced on how likely it is that they will change firm`s productivity, household production, consumption patterns, and socio-economic relationships.  If a core technology has a substantial and pervasive effect across the whole of society, it is often termed a “General Purpose Technology” (GPT).  The dissemination of electricity at the turn of the 19th century is often said to have the character of a GPT, with reference made to the long wave of downstream innovations spawned by the electric dynamo that reshaped the functioning of the economy. 


An Empirical Test of the Mediating Effect of IT Utilization on Entrepreneurial Intensity and New Product Development Success

Dr. Olimpia C. Racela, Assumption University, Thailand



 This research examined the relationships among entrepreneurial intensity, information technology (IT) utilization, new product development (NPD) success, and performance. The research model postulates the mediating role of IT utilization in the relationship between entrepreneurial intensity and two aspects of new product development success (i.e. NPD product performance and NPD process effectiveness) and it examines their indirect relationships with business performance. Results based on a sample of 98 manufacturing firms from over 12 different industries indicated a positive relationship between entrepreneurial intensity and IT utilization and a positive relationship between IT utilization and NPD product performance. However, IT utilization did not have a significant relationship with NPD process performance. In addition, business performance had a positive relationship with NPD product performance, but had no relationship with NPD process effectiveness. A discussion and future research implications are also provided.  New product development (NPD) remains at the heart of business survival and extant research reveals the necessity to scrutinize the antecedents to and outcomes of new product development. Review of literature on NPD and management (i.e., Brown and Eisenhardt 1995; Henard and Szymanski 2001; Troy, Hirunyawipada and Paswan 2008) shows that this field focuses on both internal and external contexts of NPD as antecedents to new product success, which also can be viewed as intrinsic and extrinsic to an organization.


The Effects of Entrepreneurial and Customer Orientations on Performance:

The Mediating Role of Radical Product Innovation

Dr. Amonrat Thoumrungroje, Assumption University, Bangkok, Thailand



 This paper synthesizes the literature on marketing and entrepreneurship and investigates the relationships among entrepreneurial orientation, customer orientation, radical product innovation, and performance.  It postulates the combination of the driving nature of entrepreneurial orientation and the driven characteristic of customer orientation to be total market orientation and it explores their indirect relationships with business performance.  The author also presents a conceptual model together with the proposed relationships among the aforementioned constructs.  Discussion and directions for future research are provided at the end.  For every business, continuous product innovation is key to staying competitive (Sivadas and Dwyer 2000; Sorescu and Spanjol 2008; Tellis, Prabhu and Chandy 2009) and to achieve profitability (Urban, Weinberg, and Hauser 1996). However, mere innovation without understanding the market can turn out to be a disaster. This idea is well supported by marketing literature, such as that by Day (1994), who states that business performance is the result of superior skills in understanding and satisfying customers’ (p. 49).  Therefore, being customer oriented is important in product innovations.  Product innovation can be considered a market driving activity if the products are radically new (Kumar, Scheer, and Kotler 2000).  Market driving refers to a business orientation that emphasizes directing, or shaping the market in a way that enables a firm to achieve competitive advantage (Carpenter, Glazer, and Nakamoto 2000; Jaworski, Kohli, and Sahay 2000; Kumar et al. 2000). 


Intrapreneurship in a Fast Growing Economy: A Study of the Emirates of Dubai

Dr. Gwendolyn Rodrigues, University of Wollongong in Dubai, United Arab Emirates



 Intrapreneurship plays an important role in the expansion of corporate business. However, an ‘intrapreneur’ just like an entrepreneur must have the ability to successfully execute his own ideas.  The study is an attempt to measure the intrapreneurial intensity index based on certain constructs via a model developed and validated by Moerdyk and Hill.  Data is collected from executives of 260 service and manufacturing industries in Dubai., United Arab Emirates.  The Intrapreneurial Intensity indicated the overall position of strength and weakness and also provides an insight into the direction of improvement.  Findings of the research show that the overall level of Intrapreneurial intensity in the UAE and also Service Sector ‘moderately high’ based on various enablers.  Intrapreneurship in Manufacturing Sector is comparatively lower. The study is unique in that it identifies factors that could enhance intrapreneurial ability.  The rate of growth in Dubai has increased at a phenomenal rate during the last decade.  Sustainable competitive advantage can be gained and the economy can stay ahead in the competition, if it evolves a strategy in which entrepreneurial ability is nurtured and innovation is encouraged. In every economy ‘Intrapreneurship’ or ‘corporate entrepreneurship’ plays a pivotal role in the expansion and diversification of business.  This is necessary if the economy wishes to enjoy an accelerated economic growth.  It is therefore, vital to establish and cultivate an ‘intrapreneurial’ climate in SME as well as large scale industry within the country. Intrapreneurship is basically about bringing entrepreneurship behaviour into an organization.  An intrapreneur concentrates on improving an organisation’s financial and market performance by improving the competitiveness of the enterprise through innovation.


The Influence of Quality Management Culture, Quality Consciousness, and

Service Behavior for Operating Efficiency

Dr. Wei-jaw Deng and  Ming-lu Sung, Chung Hua University, Hsinchu, Taiwan, R.O.C.

Hsiu-li Huang, Yuan Ze University, Chungli, Taiwan, R.O.C.



 This research discusses the influence of quality management culture, quality consciousness, and service behavior for relative operating efficiency. The research method includes descriptive statistics, reliability analysis, factor analysis, paired-t Test, data envelopment analysis (DEA).  The respondents of questionnaire survey are the front-line employees of international tourist hotel in Taiwan. Total numbers of valid questionnaires are 261. The research result shows quality management culture, quality consciousness, and service behavior three factors have significant positive influence for relative operating efficiency.  Within globalization and higher consumer conscious market, the excellent quality and higher customer satisfaction are important factors for achieving firms’ competitive advantage in today higher competitive industry. Because the indivisible character of production and consumption and the unfeasibility of final quality control before delivering service product in service industry, the competitive advantages of excellence quality and higher customer satisfaction are more important to service industry than other industries. Hence, the manager of service organization needs to manage organization culture and front-line employees for pursuing excellent service quality and higher customer satisfaction and furthermore constructing firm’s competitive advantage.


Managers’ Perceptions of Customer Service for an Ageing Population

Alf Kuilboer, James Cook University, Queensland, Australia



 This paper explores small business managers’ perspectives on customer service for an ageing population.   Australia, like most developed countries, has an ageing population, with one of the longest life expectancies in the world.  The shift from a younger to an older population will affect the economy, health priorities, urban planning, housing, recreation, transportation and customer service.   This study is based on a sample of 59 service providers from seven regional towns in North Queensland, Australia.  Using semi-structured interviews, data were collected on site with the owner-managers identifying their perspectives on population ageing and its impact on business, the effectiveness of information flow from all levels of government, and their understanding of good customer service.   Results suggest managers lack both a detailed understanding of population ageing and an awareness of government policies/strategies concerning this issue.   Managers did recognize that a shift in population ageing could have both positive and negative implications for their business.  Awareness of providing good customer service to the general population was largely supported; however the majority of respondents would not change their approach to customer service delivery as a result of a population shift. 


Supply Chain Coordination between Supplier and Retailer in a VMI (Vendor-Managed Inventory) Relationship

Professor Bowon Kim,  KAIST Graduate School of Management, Seoul, Korea

Chulsoon Park, KAIST Graduate School of Management, Seoul, Korea



 We look into linked decision makings in a supply chain arrangement. Consider a VMI (vendor-managed inventory) relationship, where the retailer decides the retail price while the vendor determines its capacity commitment. Assuming it’s a supply chain arrangement, the retailer and the vendor need to coordinate their decisions in order to maximize a total profit, combining the two participants’ profits together. Suppose the demand follows a Bass diffusion model. Then, the vendor should take into account the demand pattern throughout the product life cycle (PLC) when it decides its capacity commitment, which will affect its inventory management cost during the PLC. Similarly, the retailer should change the retail price over the PLC so as to maximize the revenues and at the same time to minimize the inventory cost. In this paper, we focus on the dynamic coordination of key decision variables by the supply chain partners.  Coordination is important to effective supply chain management (Kim 2000). In this paper, we explore what specific decision variables the supply chain participants coordinate, and how these variables are dynamically interacting with each other. We consider a specific form of SCM arrangement, i.e., VMI (vendor-managed inventory) relationship. VMI is a supply chain arrangement, where coordination between vendor and retailer is an essential part (Cachon and Fisher 1997, Dong and Xu 2002, Mishra and Raghunathan 2004). More specifically, in a VMI relationship, the vendor or supplier is in charge of managing the inventory on its customer’s (e.g., retailer’s) premise (Cetinkaya and Lee 2000, Kaipia, et al. 2002, Lee and Chu 2005).


Value Co-creation in Business Models: Evidence from Three Cases Analysis in Taiwan

Dr. Yung-Ching Ho, National Chung Cheng University, Taiwan, R.O.C.

Dr. Hui-Chen Fang, National Chung Cheng University, Taiwan, R.O.C.

Jing-Fu Lin, National Chung Cheng University, Taiwan, R.O.C.



 Business models have received great attention from, and have been widely applied by, both academic and practical fields. Utilizing a longitudinal dataset of 3 Taiwanese firms in different industries from 2000 to 2008; this study finds that, first, taking business model as the unit of analysis can effectively explain the process by which an organization and its partners can co-create value; second, business model design is a source of corporate innovation, and can create a competitive advantage; third, a business model is a dynamic, evolutionary process allowing a firm to respond to change in the external environment, and make appropriate adjustments that enable it to seize opportunities and create even greater value. Overall, results of this study shed significant light on the issues concerning dynamics of business model evolution.  Globalization, an intensely competitive environment, and the emergence of information and communications technology have blurred corporate boundaries, and have expanded the roles of market participants (buyers, suppliers, competitors, complementary products), and reached across the industry (Eisenhardt and Martin, 2000; Moller et al., 2008). As a result, scholars and managers have noticed that boundary-spanning business models best demonstrate that an organization must be connected with the external environment so that it can effectively sense and seize market opportunities (Brink and Holmen, 2009; Dyer and Singh, 1998; Kale, et al., 2002; Kodama, 2009; Teece, 2007; Zott and Amit, 2007; 2008).


Business Ethics and Anti-Competitive Behavior

Dr. Alina Mihaela Dima, Academy of Economic Studies Bucharest

Dr. Radu Musetescu, Academy of Economic Studies Bucharest



The relationship between ethics and anti-competitive behaviour is a very sensitive and still un-documented issue in the literature. Business ethics is questionned when companies searching for competitive advantges in a highly concentrated markets, engage in business relationships with their suppliers/distributors. Aggreements to fix the retail prices or to impose certain conditions are not ethical vis-a-vis the others competitors, partners or consumers; moreover, they can be considered anti-competitive practices and might be considered an infrigement of the competition law. In the present paper, we tested the relevance of the ethical concepts for those respondents engaged in vertical anti-competitive practices on the Romanian market. The research is based on the answers provided by 425 companies included in the survey. The relationship between ethics and law, especially from a business perspective, is still a highly controversial issue. There is an empirical perception that, more too often, the business succes was not only independent from ethics but even a result of unethical business practices. Individuals who adopted immoral practices have succeeded in gaining competitive advantages that allowed them to win over competitors and get market power in their industry and, consequently, abuse their consumers. This perspective is increasingly criticized by the analists from business disciplines who have reached the conclusion that immoral business practices are not only unsustainable but worsens the position of the company vis-a-vis different categories of stakeholders.


A New Dyadic Level Approach to Analyze Country-Risk Stemming From International Interdependencies

Jean-Samuel Cloutier, Laval University, Quebec, Canada

James William Campbell, Laval University, Quebec, Canada

Dr. Zhan Su, Laval University, Quebec, Canada



 This paper proposes a new dyadic level approach to analyze the effect of international interdependencies on country risk. The paper develops and tests a new methodology derived from social network theory. Based on data gathered for 4800 OECD countries trade dyad, the findings of this study show that such an approach has highlighted country risk differences that were not acknowledged by previous scholars using country aggregated level approaches. These simple descriptive findings suggest that country risk research would benefit from the adoption of such an approach in combination with more traditional country level factor analysis.  Since trade policy reforms in the postwar period, the collapse of open trade in the late nineteenth century following two world wars and the great depression, postwar liberalization has restored an open trading system and therefore promoting a global economic integration (Sachs, Warner & Fischer, 1995). For example, according to OECD stats 2008 data, OECD countries imports and exports of commodities have more than doubled over the last decade. Undoubtedly, global economic integration has created a stronghold of interdependencies among countries. Indeed, studies at the dyadic level have shown that trade integration is even higher than what traditional openness indicators suggest (Arribas, Pérez & Tortosa-Ausina, 2009).


Consumer Arbitrage and Product Characteristics: A Theoretical Analysis

Dr. Ya-Chin Wang, Kun Shan University, Taiwan, R.O.C.



 To come up with personal arbitrage, we designed a consumer participation game in a horizontal product differentiated model. Consumer participation is divided into two categories: consumerization (ex-ante participation) and customerization (ex-post participation). Consequently, when a firm posits production characteristic by consumer participation, the payoff and economic welfare will change. Capturing the spirit of consumer participation allows for personalized interaction between consumers and a monopoly firm in different stages of production and retailing. The main findings are: the consumer uses ex-post participation to reduce preference deviations, increase welfare for both producer surplus and the consumer surplus. In addition, when the consumer uses ex-ante participation, consumer surplus will rise and welfare will rise if and only if the set-up costs are not too high. The firm can also utilize price incentive to induce consumer’s arbitrage behavior. The concept of consumer participation has been discussed in marketing literature due to its importance in enhancing customer satisfaction and business success. Consumer participation is about fitting the customer’s preferences by building a meaningful one-to-one relationship. From the firm’s point of view, ‘unique’ characteristics are attractive to consumers and will enhance the value of goods.


Firm-Specific Attributes, Dispersion of Opinions, and Contrarian Profits: Evidence from the Taiwan Stock Exchange

Chu-Chun Cheng and Dr. Day-Yang Liu, National Taiwan University of Science and Technology, Taiwan

Dr. Yen-Sheng Huang, Ming Chi University of Technology, Taishan, Taiwan, R.O.C.



 This paper examines the performance of contrarian strategies and investigates whether such contrarian profits are related to firm-specific attributes and dispersion of opinions. Using data from all listed stocks on the Taiwan Stock Exchange over the period 1990-2008, this paper finds a significant abnormal return of 19.39% earned by the contrarian strategy of buying prior losers and selling prior winners ranked by the cumulative abnormal returns over the three-year performance period. Moreover, both firm-specific attributes and dispersion of opinions can be utilized to enhance the performance of the contrarian strategy. The contrarian strategy of buying the losers in the bottom market-to-book quartile and selling the winners in the top market-to-book quartile earns a significant abnormal return of 41.18%. Similarly, the contrarian strategy of buying the losers and selling the winners in the top quartile ranked by standard deviation of returns earns a significant abnormal return of 41.57%.  DeBondt and Thaler (1985, 1987) proposes that investors tend to overreact to unexpected and dramatic news events. They suggest that extreme movements in stock prices will be followed by subsequent price movements in the opposite direction. Moreover, the more extreme the initial price movement, the greater will be the subsequent price adjustment. As a result, investors may overvalue firms with unexpected good news and undervalue firms with unexpected bad news. Subsequent to the overreaction, price reversals will occur to correct for the mispricing.


Cash Flow Ratios vs. Accrual Ratios: Empirical Research on Incremental Information Content

Dr. Zeljana Aljinovic Barac, University of Split, Croatia



 The aim of this paper is to provide empirical evidence concerning the incremental information content of cash flow ratios and accrual ratios as company’s performance measure. The research hypothesis implies that cash flow ratios, based on the information from cash flow statement are less likely to be affected by possibilities of accounting manipulations than accrual ratios calculated from a balance sheet and income statement data. Therefore, the assessment of business performance based on cash flow ratios will provide more accurate and reliable information than the one based on accrual ratios. Verification of empirical evidence will be provided through the sample of Croatian listed companies, more precisely, their annual financial statements in succession from 2000 to 2006. All variables were based on relevant researches on a similar topic and chosen according to the possibility of their implementation in capital markets. The results of our study showed greater relevance of cash flow information and cash flow ratios in comparison with the balance sheet, income statement information and accrual ratios when judging company's financial performance. For more than half of a century, economists, both academicians and practitioners have been trying to generate optimal models that could help them in decision-making processes by predicting company’s performance, financial distress or stock price movements. The types of data used in models are different, i.e. some are qualitative and others are quantitative. However, one of the main sources of data are financial statements because they are formalized, comparable, publicly available and free.


Market-Oriented Corporate Governance and its Impact on the European and International Economic Landscape

Dr. Niculae Feleaga, The Academy of Economic Studies of Bucharest, Romania

Dr. Voicu D. Dragomir, The Academy of Economic Studies of Bucharest, Romania

Dr. Liliana Feleaga, The Academy of Economic Studies of Bucharest, Romania



 The interest towards good governance practice is very present in the company laws of many countries. Moreover, the dedicated theories are themselves highly influenced by cultural and local factors. National differences may lead to specific attributes derived from the meaning that is given to the role of competition and market dispersion of capital. The study of corporate governance requires not only the knowledge of economic, financial, managerial and sociological mechanisms and norms, but it must also incorporate an ethical dimension, while remaining aware of the demands of various stakeholders. Based on a research consisting of a critical and comparative perspective, the present contribution is dominated by qualitative and mixed methodological methods. In conclusion, it can be said that a market-oriented corporate governance model, though not part of the European Union’s convergence process, may very well respond to the increasing importance of investors’ rights and to the gradual evolution of corporate responsibilities, beyond the national context, with the aim of ensuring market liberalization. No matter how complex the concept of corporate governance is, it can be eventually reduced to a simple formula by which to optimize its primary objective, the creation and distribution of wealth. Company law and the authorities regulating the financial markets are trying to formulate this optimization equation, thereby helping to design the rules by which to achieve a balance between various interests of corporate stakeholders. The different legal systems of the European Union are engaged in a convergence process: in each Member State, companies are properly functioning due to the harmonization of capital, personnel structures, sales and production opportunities. Conceptual differences relate to several aspects: the shareholders’ involvement is connected to the postulate that managers are primarily appreciated for pursuing the investors’ interests rather than those of other stakeholders, i.e. the degree of protection for employees and creditors.


Financial Crisis Influence on Developed Stock Markets

Dr. Snjezana Pivac, University of Split, Croatia

Dr. Zdravka Aljinovic, University of Split, Croatia

Dr. Branka Marasovic, University of Split, Croatia



 The paper investigates financial crisis influence on developed stock markets including the pre-crisis conditions.  This paper examines are there differences or/and similarities between these markets in pre-crisis period (from January 2006 to August 2008) as well as their ‘response’ on actual global financial crisis (the time period from Lehman Shock in September 2008). Developed stock markets are presented by Japanese, American and German stock markets.  Firstly, the paper gives the statistical analysis of relevant stock market indices by correlation coefficients, one-way analysis of variance and nonparametric Mann-Whitney U-test and Kruskal-Wallis test, for both observed periods. In order to investigate the relation and trends of returns and risks in these markets, in the rest of the paper, using modern portfolio theory, the efficient frontiers are estimated for each market followed by comparative analysis.  The statistical mathematical analysis is applied on capital market indices and their constituents of developed stock markets in order to investigate pre-crisis and actual conditions and trends. The representatives of developed stock markets are Japanese stock market in Asia, American stock market and German stock market in Europe.  Firstly, the paper gives the statistical analysis of relevant stock market indices. The analysis shows similar trends of indices especially in actual crisis period. Appropriate non-parametric tests show significant difference between movement directions of indices rate changes between pre-crisis and crisis period.


Theoretical Reflection of Psychological Contracts in the Context of Global Financial Crisis

Mario Pepur, University of Split, Croatia

Sandra Pepur, University of Split, Croatia

Dr. Ljiljana Viducic, University of Split, Croatia



 Psychological contract has been in the focus of academic community for several decades because of its importance in the employment relationship and consequently its impact on global economy. This paper presents theoretical proposition for psychological contract. Former research results and theoretical constructs, referring to the definition and dimensions of psychological contract and also its formation and content, are systematically presented. Also, a cause-and-effect relationship between psychological contract and its influence on trust and commitment in employment relationship have long been analyzed throughout former research. A systematic review of former research may be significant for employers in order to compare, improve and adjust their business to employee’s needs in global recession.  Financial crisis imported from the US has shaken the foundations of the global economy. We are bombarded daily by bad news of bankruptcy of large financial institutions, different cases of embezzlement, closing of many production centres and temporary reduction of production which consequently leads to enormous increase of the unemployed worldwide. If we consider major technological changes and ever more global competition, it is obvious that conditions on the labour market have changed significantly. Relationship between the employees and their employers is often described as the relationship of exchange which is known as the concept of psychological contracts. As such it should be based on trust and mutuality.


Human Capital Practices in Different Industries in Croatia

Ivana Tadic, University of Split, Split, Croatia



 A crucial element of intellectual capital is human capital with its specificities such as knowledge, special experience, skills, abilities, emotional intelligence which make it a resource which is very hard to copy. With these characteristics, human capital provides basis for the creation of company’s sustainable competitive advantage. On the other hand, human capital contributes to the company’s overall value, especially with its positive correlation to company’s performance. The aim of this paper is to provide empirical evidence in human capital practices in different industries in Croatia. Two hypotheses will be provided. The first hypothesis implies that companies that invest in human capital will obtain better financial results than companies with insufficient investments in human capital. The other research hypothesis tests whether human capital investments are greater in human capital intensive industry or in labour intensive industry. A verification of the empirical evidence will be provided through the sample of Croatian large companies within construction and information technology industries. Financial indicators that will be used in this empirical research are based on previous researches on a similar topic. Contemporary business policies and procedures which include changes that happen in every day surroundings, especially to the instability and discontinuity of the business world and different requirements for business assets have changed the economy from a traditional one into  knowledge economy. A crucial business element long ago in the agrarian epoch was land, in the industrial epoch it was financial and manual labour, while the present key factor in knowledge economy is intellectual capital. In order to survive in such a volatile environment companies have to create sustainable competitive advantage which is possible solely through human capital.


Diffusions of Innovation, Perceived Security and Experience: The Case of Online Banking Service Adoption in Taiwan

Dr. Wen-Hung Wang, National Taiwan Ocean University, Keelung, Taiwan



 This paper demonstrates a diffusion of innovation framework for measuring both positive driving forces and important inhibiter (i.e., the perceived security) that jointly affect an individual retail bank consumer’s decision to use online banking services. Drawing upon the innovation diffusion literature, we present a conceptual model and then evaluate this model using the structural equation modeling (SEM) technique based on 1050 online banking customers in Taiwan. Findings reveal positive impact of relative advantage, compatibility, trialbility, perceived security, and experience using OBS on the attitude toward online banking services; also a positive impact of attitude and experience using OBS on behavior intention, and finally, behavior intention and experience using OBS on the adoption of online banking services. Theoretical and practical implications are discussed in the paper. The Internet is an innovative and increasingly popular medium with unique characteristics and features not to be observed in the traditional off-line channels. Evidence shows that the use of the internet is gaining importance in many parts of the world. For example, the market for electronic information services in the U.S. is predicted to grow by 55.6% from 2004 to 2009, to reach a value of U.S. $105.2 billion (Euromonitor, 2008).


The Fiscal Implications of the Clean Development Mechanism

Dr. Maria Luisa Fernandez de Soto Blass, University CEU San Pablo, Madrid, Spain



 The Clean Development Mechanism (CDM) allows emission-reduction (or emission removal) projects in developing countries to earn certified emission reduction (CER) credits, each equivalent to one tonne of CO2. These CERs can be traded and sold, and used by industrialized countries to a meet a part of their emission reduction targets under the Kyoto Protocol.  Regarding the economic criteria allocative and cost efficiency, flexibility and cost-effectiveness, market-based instruments perform best. For regulation of the CDM, some sort of taxation is adequate given the potential presence of rents or external costs. Permit trade is no option as its design does not suit the problem. Subsidies could work in principle, but would be expensive for society and even increase the potential profits from the CDM.  Any type of taxation of the CDM will extract part of the rent. Rent extraction can take place in basically four different forms. These are the ex-ante extraction by an auction or ex-post extraction by a profit tax, revenue tax or fixed fees. Theoretically, rent extraction by a profit tax then does not alter investment decisions. No projects would become unprofitable as it might be the case under a fixed fee or revenue taxation. Set as a percentage of profit, the profit tax is most flexible regarding costs and revenues. It takes price changes of CERs into account and does not drive projects out of the market that become marginal with falling prices In practice, however, also rent taxation will likely have negative effects on investment, by changing the rate of return relative to other investment options and thus making CDM projects relatively less attractive.


Banking Sector Features as an Indicator of Required Level of Interventions

Vita Jagric, University of Maribor, Slovenia

Tanja Markovic-Hribernik, University of Maribor, Slovenia

Prof. Timotej Jagric, University of Maribor, Slovenia



 In this paper we study the features of the banking sectors across Europe in order to set connection between the properties of the banking sector prior the crisis and the level of state interventions. We use fourteen structural indicators of Eurostat’s and ECB’s data to create clusters by applying k-means method. Identified clusters of the banking sectors before the crisis differ by the magnitude of needed state interventions in the banking sector. Together with other bank bailout lessons, our findings might help to prevent taxpayers from future massive support schemes.   When the current global financial crisis swept the world, European countries and their financial systems faced severe financial challenges and feared unintended and complex spill-over effects. Since the crisis has brought about several different detrimental effects, our analysis aims at establishing whether banking sector features of a country played an essential role in the magnitude of the needed help injected into the banking sector.  As stated by Keynes (Greer 1962) many of greatest economic evils of his time are the fruits of risk, uncertainty, and ignorance and we see it applies for our time as well.


Audit Market Structure: The Case of Croatian Listed Companies

Tina Vuko, University of Split



 The purpose of this study is to describe and analyze audit market structure for companies listed on Croatian capital market. The research question of interest is if whether mergers and dissolutions in the audit markets have raised the level of concentration, thereby leading to reduced competition. The research is conducted on the sample of 205 non-financial companies for the year 2008. The level of concentration is measured by the concentration ratios and the Hirschman-Herfindahl index, while audit market shares are calculated using the number of clients, total assets and revenues being audited. The overall results indicate that the audit market in Croatia is still moderately concentrated.  Research on audit market concentration has attracted a great deal of attention in recent years and especially after demise of a big international audit firm - Arthur Andersen. The primary regulatory concern is that the increased concentration in the audit markets globally has resulted in significant decrease in the choice of audit firms for public companies leading to higher audit fees. Namely, there is a possibility that highly concentrated market could lead to more market power and thus to a larger deviation from competitive pricing and collusive behavior. The risk of another big audit firm failing (i.e. Deloitte, PricewaterhouseCoopers, Ernst&Young and KPMG) raises additional worries that already tight oligopolistic structure of the audit markets will further consolidate.


The Value of Aesthetics in the Process of Hiring New Employees in the Service Industry and its Impact on Service Quality

Gregor Pfajfar, University of Ljubljana, Ljubljana, Slovenia

Maja Knehtl, University of Ljubljana, Ljubljana, Slovenia

Maciej Mitręga, Ph.D., Manchester Business School, Manchester, UK



 Empirical evidence drawn from the research of Warhust and Nickson (2009) suggest that visual appearance and aesthetics are important factors to assert employees, although being under-researched in the scientific literature. This research aims to evaluate the existence and legitimacy of hiring employees based on visual appearance, its impact on perceived service quality and to define under what conditions the use of such employee selection is economically sound. Previous literature review identified four factors, influencing perceived service quality, created by service performer (professional service performance, emotional intelligence, social skills, and visual appearance and aesthetics), while our research identified additional two factors (personality and match between the consumer and service performer). A synthesized model of hiring employees based on appearance and aesthetics was proposed.  The appearance of a service performer is in marketing most commonly discussed as an element of physical environment of a service organization that emits signals, which influence future buying decisions, and provides evidence, used as an indirect evaluation of service quality by the consumer (Lovelock and Wirtz, 2007, Mattila and Wirtz, 2006). Just recently some authors, including Warhurst and Nickson (2009), began to evaluate also the direct influence of the appearance of a service performer on consumer’s perceived service quality as one of the possible foundations for positioning and establishing firm’s competitive advantages (Warhurst, 2000a, Warhurst, 2000b).


Tax Exemptions to Support Education in Turkey: The Applicability of A Registered Education Savings Plans (Resp)

Ceyda Kukrer, Anadolu University, Eskisehir, Turkey



 In this study, we examine the tax exemptions on private schools in Turkey with the Law 5281 and the other regulations ralated to the education and also we try to understand Canada’s RESP, which offers tax incentives to encourage education with subsidizing student loans and providing special tax treatment of savings through Registered Education Savings Plans (RESPs) and the accompanying Canada Education Savings Grants (CESGs). As a result, when the Education Saving Plan (RESP), which is used in Canada and the Tax Encouraging Policy are applied in Turkey, it will support the tax encouragement policies related to education expenses and private schools.  The information age that depends upon economic and technological developments has increased the demand for education. To meet this rising demand in the face of limited financial resources, it has become necessary for many countries to support education through tax incentives. These tax incentives usually take the form of rewarding support education organizations with tax exemptions. Such tax treatment increases the number of educational organizations.   The Turkish regulation that provides tax relief for educational expenditures reduces their taxable income by an amount not to exceed 5% of each taxpayer’s declared income as provided by Law 4842, which went into effect on April 24,2003. The limit was increased to %10 by Law 5281, which went into effect on October 1, 2005. The regulation also provides tax incentives for educational encourages families to save their income by tax incentives that are applied to educational organizations.  Canada’s tax incentive approach with regard to education differs from that of other countries. Through its Registered Education Savings Plan (RESPs), Canada encourages families to save their income by tax incentives.


The Use of the Hilbert Transform in Market Cycle Analysis

Abdalla Kablan, Center for Computational Finance and Economic Agents, University of Essex, UK

Dr. Wing Lon Ng, Center for Computational Finance and Economic Agents, University of Essex, UK



 With the growth of computing power and database capacity, increasing interest is being placed upon the analysis and synthesis of financial data that can lead to the development of successful financial market trading strategies. In particular, techniques are sought that can exploit the data from a digital signal processing perspective. One such technique that can be used in this role is the Hilbert transform, which has been an important tool in mathematics and signal processing. Its application within the financial literature, however, has not yet been fully explored, and a deeper exposition of the Hilbert transform within this context is therefore needed. This study examines how the Hilbert transform may be used for the measurement of financial market cycles. The main aim of this paper is to prove that the Hilbert transform is a suitable technique for the measurement of market cycles, which can lead to several unique market indicators that can identify market trends. It exhibits several advantages over more traditional trading methods, attributed to its consideration of complex variables. The practical use of the Hilbert transform appears to require severe truncation in order to produce an acceptable lag for trading and this necessitates several corrections to compensate. It is also found that the Hilbert transform has use in combination with other more exotic mathematical formulations that enables its applicability under more general market action conditions when market cycle measurements are no longer appropriate.


Asset Price Boom/Bust, Credit Cycles and Financial Stability

Ana Rimac Smiljanic, University of Split, Croatia



 Boom and bust in asset prices accompanied with large increase of private sector ineptness often lead to periods of financial instability. Moreover, current global financial crisis can be accounted among crisis largely connected to the asset markets. There is a large number of empirical researches that explain the connection between asset price movements, credit cycles and financial stability in developed countries but those concentrating on transitional countries are rare. Nevertheless, we can document a large increase of asset prices in a number of transitional countries undergoing financial liberalization. The scope of this paper is to find empirical evidence of the importance of asset prices for achieving financial stability in Croatia. Starting from theoretical assumptions, an analysis of Croatian stock and real estate markets will be conducted. The results of empirical research into the link between changes in asset markets and credit cycles and the importance and usefulness of asset prices for achieving financial stability will be discussed. As a result of this research, recommendations will be made for policy makers to use in their future actions.


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