The Business Review Journal

Vol. 1 * Number 2 * March 2004

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

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Offshore Outsourcing of IT Services: Consequences for IT Education

 Gerald E. Karush, Ph.D., Southern New Hampshire University, Manchester, NH

J. Stephanie Collins, Ph.D., Southern New Hampshire University, Manchester, NH



 Recent developments in the market for IT services have been heavily influenced by the increased use of outsourcing, particularly offshore outsourcing.  There are many reasons why companies might outsource IT services, but the effect on domestic IT professionals in the United States remains the same: they lose their jobs.  This paper explores some of the reasons for outsourcing offshore, which companies and IT providers are outsourcing, what particular IT services are currently being outsourced, and which offshore locations benefit as a result.  The training implications for current and future IT professionals in terms of the kinds of skills that will be needed in the future are examined.  This paper makes recommendations for schools who train IT professionals with respect to curriculum design and why curriculum changes are necessary, given emerging structural changes in the composition of the domestic demand for IT services.


Impact of the Economic Downturn on Membership Levels at Private Clubs

 Dr. Raymond R. Ferreira, Georgia State University, Atlanta, GA



 Managers at one thousand private clubs who are members of the Club Managers Association of America (CMAA) were surveyed to determine what changes clubs have experienced both in number of members and demographics during the economic downturn from 2000 to 2003.  This study investigated the changes experienced at private clubs in the number of members and demographics from January 2000 through July 2003 at private clubs. The impact of the economic downturn on a club’s membership will be measured. This information will help other managers and Boards of private clubs to determine the impact that the economic slowdown had in general with private clubs and allow them to compare their membership change with the average at other clubs (Tenberg, 2002).  A letter and e-mail was sent to 1,000 private club managers of Club Managers Association of America (CMAA) requesting their participation in an online survey.  The study was approved and funded through a research grant of CMAA. Five hundred and one managers answered the online survey for an overall response rate of 50%. This is a very high response rate, but not unusual for researchers who gain approval for research studies by the board of CMAA (Ferreira, 2003). Mangers who responded to the survey were also informed that they would receive a copy of the results of the study and breakout of the results based on their club type. This was offered as an incentive to try and achieve a high response rate.


Testing a Global Leadership Competencies (Glc) Model

 Cristina Moro Bueno, Eastern Michigan University, Ypsilanti, MI

Stewart L. Tubbs, Ph.D., Eastern Michigan University, Ypsilanti, MI



 The influence of globalization and technology requires new business paradigms and new leadership competencies. The goal of this study was to test the Global Leadership Competencies (GLC) Model developed by Chin, Gu, and Tubbs (2001). The model consists of a pyramidal hierarchy that represents developmental phases analogous to Maslow’s need hierarchy. The phases are (1) ignorance, (2) awareness, (3) understanding, (4) appreciation, (5) acceptance/internalization, and (6) transformation as leaders mature as a result of their international experiences.  For this qualitative study, 26 interviews were conducted with international leaders from several countries whose average international expatriate experience was 48 months. Results obtained demonstrated that the model was predictive.  The results presented also indicate that leaders consider (1) communication skills, (2) motivation to learn, (3) flexibility, (4) open-mindedness (5) respect for others, and (6) sensitivity, as the most frequently mentioned  competencies of an effective global leader.  For the full text see; Cristina Bueno. Global Leadership Competencies (GLC) Model. MBA Thesis, Eastern Michigan University, Ypsilanti, Michigan, 2003.


 What Do You Do When a Descriptive Theory Doesn’t Describe? Testing

Prospect Theory in the People’s Republic of China

 Alan L. Brumagim, Ph.D., University of Scranton, Scranton, PA

Wu Xianhua, Ph.D., Dongbei University of Finance and Economics (DUFE), Dalian, P. R. China



 A large stream of research, known as prospect theory (Kahneman and Tversky, 1979), has emerged over the past twenty-five years.  These studies attempt to describe how decisions are made and how decision- making processes differ from those suggested by expected utility theory and classical economics.  Experiments conducted by the first author among middle managers and undergraduate students in the USA provide strong empirical support for prospect theory.  However, repeated attempts to replicate these findings among middle managers and students in the Peoples’ Republic of China revealed a different pattern.  Chinese subjects consistently demonstrated risk-seeking preferences, both in gain and loss situations.  These results contradict prospect theory which predicts risk-avoidance to preserve gains.  Implications for research and business practices are discussed.   The first author was contacted in 1999 by the Project Management Institute (PMI) with a request to discuss project management practices with groups of managers in the Peoples’ Republic of China.  The Chinese were interested in bringing PMI’s project management professional (PMP) certification to China.  PMP certification exams are currently administered in more than 100 countries worldwide (PMI, 2001:74).  Subsequently, the first author has traveled to the Peoples’ Republic of China more than fifteen times to conduct a wide variety of discussions with middle managers, senior managers, and MBA students.  Project communications management is one of the main knowledge areas described in the Guide to the Project Management Body of Knowledge (PMI, 2000).  


Promoting Motorcoach Travel and Tourism in an Uncertain Environment:

Industry Advances in e-Commerce Practices

 Dr. Kathryn J. Ready, University of Wisconsin – Eau Claire, Eau Claire, WI

Eve Williams, University of Wisconsin – Eau Claire, Eau Claire, WI

Kathryn Dobie, North Carolina A&T State University, Greensboro, NC



 When businesses, especially small owner operated businesses, are operating in a stable, familiar environment, it is easy to slip into a routine way of doing things.  Innovation and change are somewhat frightening and there is little perceived need to make any significant changes.  Sometimes it takes an unexpected and disruptive shock to force business owners to take a new look at their business processes.  This is what happened to the tourism industry following September 11, 2001.   The motorcoach-based segment of the tourism industry provides an example of the need to reevaluate existing processes and to implement changes that are needed for companies to recover from such a catastrophic event.  The following research documents the efforts being made within the motorcoach-based tourism segment to respond to and recover the effects of September 11.  It is not uncommon for sectors of the business community to become complacent, feeling little impetus to adopt new technologies.  The general mindset appears to be that things are going along in a satisfactory manner and there is no need to adopt new practices and/or technologies.  Such was the case with the motorcoach-based tourism industry.  Word-of-mouth and customer loyalty were considered to be sufficient to promote the individual small companies.  Barring severe economic or natural disasters, individual firms had little incentive to venture into the electronic commerce arena. 


Inventory Management and Negotiation Strategies in a

Manufacturer-Retailer Supply Chain

 Dr. Zhimin Huang, Adelphi University, Garden City, NY

Dr. Susan X. Li, Adelphi University, Garden City, NY

Dr. Zhaohui Mao, Renmin University of China, China



 Substantial research papers have been developed over the years on the subject of inventory in supply chains.  The more recent literature has examined the fundamental relationships between inventory control and price theory.  A significant portion of this literature assumes the ultimate consumer demand as a constant and characterizes the relationship between a manufacturer and a retailer as a leader-follower problem.  A primary assumption in these studies is that the manufacturer, as the leader, exerts almost complete control over the behavior of the retailer.  However, in practice, the retailer does exert some control over the manufacturer.  This paper develops a framework that integrates inventory control with constant demand and the economic relationship between consumer demand and retail price.  Within this framework, the impact of order quantity, wholesale price and retail price on the behavior of both the manufacturer and the retailer is investigated.  Furthermore, this paper explores the issues and conclusions that result from coordinating the relationship between the manufacturer and the retailer.  Our analyses demonstrate that channel coordination can be achieved by utilizing well-known bargaining models.  A numerical example is provided to illustrate our theoretical findings.


Mexican Organizations in Transition

 Dr. Jose G. Vargas, Universidad de Guadalajara, Mexico



 The purpose of this paper is to analyze some of the structural, behavioral and procedural changes in Mexican organizations at the turn of the new millennium. Suddenly, after the opening of NAFTA, the accelerated pace of change in Mexican organizations are the result of implementing a more open and export oriented economic system which traditionally used to be inward looking.  To demonstrate the effects of an environment characterized by complexity and uncertainty, after contrasting variables between a traditional bureaucratic or modern type of organizations and more postmodern, competitive advanced type of organizations operating in México, a model of organizations in transition is devised.  Modern organizations have the intention to "rationalize" the work flows and processes through differentiation of specific functions and tasks, always looking for quantitative growth measured in terms of achieving results through the acquisition of money, influence, power, etc. This rationalist modernism is also expressed in separation of labor and domestic settings to avoid potential conflicts between the two environments. From an another point of view, Simon (1989) argues that the rationality of organizations in such areas as decision making is limited by the small capacities and few abilities of the human mind to formulate and solve complex problems. However, I would argue that the separation of labor and domestic spheres has not been adhered to entirely by Mexican organizations which place high cultural value on family issues.


The Requisite Holism of Information in a Virtual Business Organization's Management

 Dr. Vojko Potocan, University of Maribor, Maribor, Slovenia

Dr. Matjaz Mulej, University of Maribor, Maribor, Slovenia



 A successful business is based on (informal) systems thinking. The latter may therefore be required by several very influential international organizations, but they do not define what they actually mean by systems thinking. We are providing on overview of possible version of and our suggestion of it. In the second half we suggest that the requisite holism should be the criterion of the practical application of systems thinking. We exemplify the preconditions for the requisite holism of information in a virtual business organization's management.  A virtual business organization is complex enough to require holistic, rather than one-sided, narrowly specialized, thinking in order to be managed well enough. So does provision of information to/by its managers and their coworkers. The term holistic thinking is mostly linked quite closely with the science called systems theory as a basis for systemic thinking.  The latter is required by several important international organizations and nations such as United Nations (e.g. about nuclear weapons, world peace, sustainable development), International Standard Organization (e.g. in ISO 9000:2000 requiring business quality to be seen as a system of nine - interdependent! - groups of criteria and based on learning and innovation), European Union (e.g. requiring systems thinking in documents about promotion of innovation explicitly), US (requiring consideration of interdependence in the talk given by President Clinton in UN General Assembly in Sept., 2000), etc. (Ecimovic et al., 2002; and Potocan, 2002) But: none of these documents defines explicitly what their authors and legislators mean by systems thinking. Neither do so the authors about systems theory, virtual business organization or information management.


Human Resource Management on a Global Basis

 Dr. Sonja Treven, University of Maribor, Maribor, Slovenia



 In the paper the author first presents various approaches to the management and recruitment of employees in subsidiaries that the company has established in different countries. Then she turns her attention to the basic functions of international human resource management among them recruitment and selection of new employees, development and training of employees, assessment of work efficiency as well as remuneration of employees. As the expatriates are often given special attention by their work organizations, she concludes the paper with the description of the additional challenges occurring in the management of these employees.  In Slovenia with a population of only two million we have a lot of organizations doing business successfully not only in the domestic but also in the international environment. Lek, one of our two pharmaceutical companies; Fructal that produces juices from various kinds of fruit; SCT, the road construction company and Mura that produces mens and womens clothes, are some examples of our most prominent firms.  In those as well as in similar organizations that function in the global environment they can use different approaches to managing employees. How they find employees, pay, train, and promote them varies with culture. They usually attempt to treat their employees equitably, yet in a culturally appropriate manner. 


 The Impact of Color Inaccuracies on E-Commerce Sites

 Dr. Kevin R. Parker, Idaho State University, Pocatello, ID

Dr. Philip S. Nitse, Idaho State University, Pocatello, ID



 Although the number of purchases over the Internet increases each year, the problem of inaccurate color representation on e-commerce sites persists.  Color inaccuracy has many negative consequences, including loss of sales, increased returns and complaints, and customer defections.  This research paper reports the findings of a survey conducted as part of an initial investigation into consumer opinions about the purchase of color-critical items over the Internet.  Results indicate that consumers are aware of the color inaccuracies on e-commerce sites and that they are likely to react in ways that will negatively impact retailers.  Consumer dissatisfaction leads to greater costs in both customer service and reverse logistics.  The paper concludes with suggestions for future research.  Global B2C e-commerce sales for 2003 are estimated to range from $144 to $380 billion, according to a report by OECD.  The report is based on a variety of sources including Boston Consulting Group, Giga Information Group, Forrester Research, Dataquest, Gartner Group, Warburg Dillon Read, and Pro Active (OECD, 2001).  Global B2C e-commerce is expected to hit $562 billion by 2006 (Sharrard, 2001).  Internet sales of non-travel related products in the United States have reached $988 million a week, with apparel and home items experiencing a greater increase than other items (Puente, 2002).  According to one study, the Internet will influence $400 billion in U.S. retail sales in 2003 and as much as $1 trillion by 2006, and the study indicates that half of the online shoppers report that they first researched goods on the Internet and then purchased the items over the telephone (, 2003).  Apparel, which is often color-critical, has been one of the top eight industries involved in Internet shopping in the United States (Krantz, 1998). 


A Hop Constrained Min-Sum Arborescence Problem

 Dr. Rakesh Kawatra, Minnesota State University, Mankato, MN



 The hop constrained min-sum arborescence problem consists of selecting links in a network so as to connect a set of terminal nodes N={2,3,……n} to a central node with minimal total link cost such that (a) each terminal node j has exactly one entering link; (b) for each terminal node j, a unique path from the central node to node j exists; and (c) for each terminal node j the number of links between the central node and node j is limited to a predefined number h. We formulate this problem as an integer programming problem. We suggest a Lagrangian based heuristic to solve the integer programming formulation of this network problem. Lower bounds found as a byproduct of the solution procedure are used to estimate the quality of the solution given by the heuristic. Experimental results over a wide range of problem structures show that the Lagrangean based heuristic method yields verifiably good solutions to this hard problem.  The min-sum arborescence problem is frequently encountered in the network design, routing and scheduling problems. It consists of finding links to connect a set of geographically remote nodes to a central node such that for each remote node j there is exactly one link entering node j, and for each remote node, a unique path exists from the central node to node j. The solution is subject to hop constraints which limits the number of links between the central node and every terminal node to a predefined number h. The hop constraints are used to contain the maximum delay and to model the reliability constraints.


International Corporate Investment and the Role of Financial Constraints

 Sean Cleary, Saint Mary’s University, Halifax, Nova Scotia



 International evidence over the 1987 to 1997 period suggests that the capital expenditures of firms that are financially constrained are much less sensitive to the availability of internal funds than unconstrained firms. The evidence is particularly strong when firms are classified according to financial health, but is also prevalent for groups formed according to dividend behavior and firm size. The results provide strong support for the generality of the results of Kaplan and Zingales (1997) and Cleary (1999). A major reason for the weak investment-cash flow sensitivity displayed by unhealthy firms is that they appear to be busy building up financial slack, which has long-term value, as postulated by Myers and Majluf (1984).  Corporate investment spending is a critical factor affecting broad economic and capital market activity, yet there is no consensus regarding which factors have the greatest influence on such decisions. The February 15, 2001 announcement by Nortel Networks that it was reducing its future profit growth expectations and cutting 6,000 jobs is a classic example of why this remains the case. Nortel CEO John Roth attributed this gloomy announcement to mounting "economic uncertainties and capital constraints."(1) Since the purchase of Nortel's main product, fibre optic cable, represents capital expenditures on the part of their customers, the quote above alludes to the well-known business cycle pattern displayed by business investment outlays: they increase following periods of economic growth, and fall after periods of decline.(2) 


 A Framework for Managing Cross-Cultural Differences in International Business Networks

 Dr. Jukka Ojasalo, Turku School of Econ. and Business Administration, Pori unit, Finland



 This article aims at developing a framework for managing cross-cultural differences in international business networks. Even though the network literature includes various research topics and approaches, cross-cultural issues have not been any central theme. Still, due to the rapid globalization of the economy, management of cross-cultural aspects in business networks requires close attention. The framework developed in this article includes three stages: identifying the different cultures in the business network, identifying the most significant cross-cultural differences, and developing and applying approaches for managing the cross-cultural differences.  The research on business networks includes several approaches and perspectives. Grandori and Soda (1995) identified the following research approaches to inter firm networks: industrial economics, historical and evolutionary, organizational, negotiation analysis, resource dependence, neo-institutional, social networks, industrial marketing, entrepreneurship, economic policy and law, and population ecology. The industrial economics approaches have focused on vertical and horizontal integration, internationalizing processes, economies of specialization and experience, economies of scale, and economies of scope. The historical and evolutionary approaches have stressed the role of technology, related costs, and learning problems in the formation of inter-firm networks.


 Foreign Language Needs in the Global Economy

 Tom Moore, J.D., Ph.D., Georgia College and State University, Milledgeville. GA

Mehenna Yakhou, Ph. D., Georgia College and State University, Milledgeville. GA

Dixie Clark, Ph.D., Georgia College and State University, Milledgeville. GA



 This paper presents the arguments for incorporating foreign languages into business curricula, and provides the results of a survey which investigated the extent to which U.S universities and colleges include a foreign language among their degree requirements.  Willy Brandt, former German Chancellor, once noted:  “If I’m selling, I speak your language. If I I’m buying, dann mussen Sie Deutch sprechen (then you will speak German)” (Nurden, 1997). The importance of foreign language competency and understanding of business culture—“the attitude, values, and   norms that underpin commercial activities and help to shape the behavior of companies in a given country” (Randlesome & Meyers, 1995—has been recognized for many years.  It’s a small world” the adage goes and agreements like NAFTA, the consolidation of European Union, the breakup of the Soviet Union, and the subsequent attempts of Eastern economies to convert to a free-market system make it an even smaller one. To successfully compete in this new, highly interdependent market place requires “considerable attention not only to differences in regulations and investment climate, but also to languages and cultural understanding” (Domke-Damonte, 2001).


  Systematic Vs. Unsystematic Risk in Venture Capital Investment

 Dr. Sheikh F. Rahman, Swinburne University of Technology, Melbourne, Australia



 The Vast majority of traditional research in finance appears to be biased towards the financial control and management of established businesses. The reference to new venture creation and start-ups are conspicuously absent from the literature. This is more obvious in its treatment of risk in traditional finance literature. The identification, measurement and management of risk are based on the so-called notion of ‘systematic risk’ (or market risk) only, measured by the ‘Beta’ of investment returns. The accepted wisdom in finance is that market volatility is the main concern in making investment decisions. Company and industry specific risk is trivial because such risk could be eliminated through sufficient diversification of investment portfolio across the market. This paper argues that this paradigm of the portfolio theory is, by and large, inappropriate for research in entrepreneurial finance, where life is complex, more unpredictable and perhaps chaotic. In the world of start-ups and new venture creation, a business may not already exist, the entities may not be a player in the so called capital market, and the venture capital suppliers may not have the luxury of relying on quoted market prices to guide them. Consequently, the firm specific (and therefore neglected) ‘unsystematic’ risk becomes more critical.  Unfortunately the body of research in this area is not huge. The discipline relies heavily on intuition, gut feeling, anecdotal evidences, and admittedly, luck. This paper highlights the deficiencies of the traditional finance theories in dealing with risk in a venture Capital (VC) investment decisions. It attempts to explore the venture capital investors’ risk assessment and management techniques vis-à-vis the investors’ perception of risk. The objective is to identify key risk parameters and establish some cause and effect relationships between those variables. The paper suggests that instead of an all purpose model, a number of risk assessment tools are needed for assessing investment proposals at various stages in the life cycle of a business.


Small Scale Industry in India: A Model for Economic Development

 Dr. Geetika Goel, MN National Institute of Technology, Allahabad, India

Dr. Anup D. Sharma, Allahabad University, Allahabad, India



 India has been giving a great importance to Small Scale Industry Model as a tool for its development.  The sector has also shown a tough sustainability in the face of global and domestic recession, staunch liberalization, and also withstanding competition from indigenous and foreign large scale. The Sector in India is second largest employment provider. Its growth rate is a significant 8.09 per cent (during 2000-01) as against the growth rate of 4.9 per cent in the whole industrial sector (GOI, Economic Survey 2002-2003). In the present paper strengths and weaknesses of the SSI have been unearthed with some vividness. SSIs run well with large labor stocks, scarce capital and indigenous techniques. Its latent resource utilization is unearthing a valuable treasure. Its employment generation is meeting the needs of Indian economy. There is also a lot wanting regarding this sector because of its scarce resources status, its low risk taking capacity, its slow response to environmental change, lack of innovating capacity, which keep it in a  low profile. This all needs a fresh and enlightened attention to this sector to make it more gainful. The Small Scale Sector, if given a more keen attention and a boosting up jolt can become a better contributor to the national economy of India as also to the economies of  other developing and poor countries.


 Approaches for Measuring Productivity in Services

 Dr. Katri Ojasalo, University of Tampere, Finland



 Several researchers have criticized traditional measures of service productivity by claiming that they are not just obsolete, but clearly misleading and obstructive. These problems of measuring service productivity stem from the continued use of measures designed for manufactured goods rather than for services. The purpose of this paper is to discuss the approaches for measuring productivity in services. First, the traditional ways of measuring service productivity are reviewed and evaluated, showing that there is a clear need for a shift from physical measures to financial measures of service productivity. Next, the advantages and limitations of a financial measure of total service productivity are discussed. The main strength of this relatively simple measure is that it reflects the external utility a company produces as well as the quality level of outputs and inputs. As a comprehensive summary measure it should be useful for practitioners, especially managers of service companies.  A key challenge for any service company is to deliver satisfactory outcomes for its customers in a cost-efficient manner. At present this is even more important than earlier, because many service industries are moving towards the maturity stage of their life cycles during which competition increases (e.g. Looy et al. 1998). At such a point, increased profits come from increased productivity - producing more from less - rather than from increased sales volume (Mill 1989).


Mining Semantic Objects from Database Systems

 Dr. Qiyang Chen, Montclair State University, Upper Montclair, NJ

Dr. John Wang, Montclair State University, Upper Montclair, NJ

Dr. Rubin Xing, Montclair State University, Upper Montclair, NJ



 The paper introduces an approach of database reverse engineering processes that recover the semantic objects from existing relational database tables. This approach extracts hidden structures in order to construct a new model that benefits from object orientation and perspectives. Some major problems that occur with existing reverse engineering approaches are discussed. One problem concerns the extensive amount of information that must be gathered either automatically or from users (designers). Another problem concerns the actual state of legacy databases that may lack of original design blueprint due to various changes. The main idea is to form an intermediate schema that involves both relations and objects structures.  Database systems are essential as sources of competitive advantage for organizations. These systems play a central role since they have to incorporate fast changes resulting from the evolutions that characterize nowadays business world. Many existing database systems are referred as legacy systems that are undergoing numerous updates by generations of analysts, database administrators, users, or database developers. They generally suffer from poor documentation either on original design or subsequent updates. Furthermore, uncontrolled modifications introduce inconsistencies in structures and data.


 An Empirical Study on Corporate Governance Mechanism and Its Antecedents:

Evidence from Taiwanese Venture Capital Industry

 Dr. Ching (Arthur) Lin, National Taipei University, Taiwan

Christine Chou, National Taipei University, Taiwan



 Having faced several financial crises, including Asian financial crisis, financial crises of some public companies in Taiwan, and America’s corporate financial crises caused by the default on financial reporting, the corporate governance issue has become critical in supporting the development of a sound capital market. Besides, the principles of corporate governance provide international investors a framework for assessing their international investments.  On the other hand, as more and more venture capital firms emerge, venture capitalists start looking for foreign investment proposal.  Nevertheless, venture capital investment is not risk-free, and therefore, venture capitalists do need governance strategies to monitor their investee companies efficiently and effectively.  This paper will mainly focus on the antecedents of governance mechanism (including: I. Characteristics of Knowledge Management; II. Management Complexity; III.  Relative Bargaining Power; and IV. Ownership Structure) and governance strategies.  And this research wishes to provide some strategic implications for the venture capital practitioners.


 Using Risk to Anticipate Firm Turnaround

 Dr. William W. Lawrence, Nova Southeastern University, Ft. Lauderdale, FL



 Stockholders should be guided by systematic evidence when deciding whether or not to disinvest in a troubled company. This study explored the association between risk and turnaround at publicly traded firms. Findings from the Jamaica Stock Exchange suggest that increasing variability in earnings per share indicates a failing attempt at turnaround.   When a publicly traded firm reports a loss, stockholders react based on perceptions of risk. This issue is particularly critical for investors in a stock market, such as that of Jamaica, where portfolio diversification is restricted due to the small number of firms listed (Jamaica Stock Exchange 2003). Stockholders are disadvantaged if they abandon a troubled company that later achieves turnaround or remain loyal only to witness business failure. In a turnaround situation, stockholders need to know how their perceptions of risk relate to company destiny. The paucity of systematic evidence gives rise to an important question for research.  Does risk enable stockholders to anticipate firm turnaround?  In response, this study explored changes in the risk profiles of firms attempting turnaround. Three hypotheses, obtained from a review of the literature, were tested using data from companies listed on the Jamaica Stock Exchange. The findings suggest that variability in earnings per share signals the firm’s ability to stem declining performance. 


The Effect of Customer’s Emotional Responses to Marketing Problem:

An Information Processing View

 Yang Szu-chi, National Sun Yat-Sen University, Taiwan



 Both severe acute respiratory syndromeSARSand mad cow disease affect the operation of restaurants more or less. Former may make people afraid of go out to dinner, and latter may make people get directly negative emotion to food. Both international disasters form different kind marketing problems for business, direct and indirect problem. This study will discuss what kinds of customer emotions would be produced by these two problems. From the information processing theory, business can take two ways, retrieval strategy and storage strategy, to deal with the customer negative emotions. Which way is most effective to two kind of marketing problem respectively and how customer’s purchasing intention change after intervening one of three strategies are two main issue we discuss. We sample people in Taiwan, where restaurant business face the two marketing problems simultaneously. At the end of this paper, we demonstrate the management implications and future directions.  Consumer behavior theories should be made much impact on marketing practice. Tybout et al (1981) emphasize that perhaps inquiry focusing on demonstrating the integrity of various theories rather than on their applicability in designing marketing strategies. Wells (1993) suggest consumer researchers should be spend most of their time on high-level decisions and post-consumption territory includes life-altering decisions. Wells urged us to leave home to pay attention to consumer behavior more broadly defined.


Co-Op Advertising and Game Theory in Manufacturer-Retailer Supply Chains

 Dr. Susan X. Li, Adelphi University, Garden City, New York

Dr. Zhimin Huang, Adelphi University, Garden City, New York



 In this paper, we explore the role of cooperative (co-op) advertising efficiency of transactions between a manufacturer and a retailer.  We address the impact of brand name investments, local advertising, and sharing policy on co-op advertising programs.  Game theory concepts form the foundation for the analysis.  We begin with the classical co-op advertising model where the manufacturer, as the leader, first specifies its strategy.  The retailer, as the follower, then decides on its decision.  We then relax the assumption of retailer’s inability to influence the manufacturer’s decisions and discuss full coordination between the manufacturer and the retailer on co-op advertising.  The main reason for a manufacturer to use co-op advertising is to motivate immediate sales at the retail level.  The manufacturer’s national advertising is intended to influence potential consumers to consider its brand and to help develop brand knowledge and preference, and is also likely to yield benefits beyond sales from an individual retailer.  Retailer’s local advertising gets people into the store and, with the passage of time, brings potential consumers to the stage of desire and action and gives an immediate reason to buy (brands being offered, specific prices, store location, etc.).  Co-op advertising provides consumers the information needs when they move through the final stages of purchase and a congruence of information and information needs that would be impossible if the manufacturer uses only national advertising (Young and Greyser 1983).  In addition to the same objective of immediate sales at the retail level as the manufacturer, the retailer utilizes co-op advertising to reduce substantially its total promotional expense by sharing the cost of advertising with the manufacturer.  Most studies to date on vertical co-op advertising have focused on a relationship where the manufacturer is a leader and the retailer is a follower, which implies that the manufacturer dominates the retailer. 


 Regulation and Telecommunications:  Divergent Caribbean and African Experiences

 A. Vindelyn Smith-Hillman, University College Northampton, UK

Terrence Wendell Brathwaite, Coventry University, UK



 This paper contrasts the regulatory experience of the telecommunications industry in two regions, Africa and the Caribbean. Though both regions have some economic and cultural similarities, they remain quite distinct in terms of size and political history. The stark differences in this respect underpin divergent industry developments that raise different regulatory challenges. Notwithstanding this dichotomy, there are also similarities that provide a meaningful learning experience.  The digital divide separates developing regions from developed and provides further evidence of the skewed global power base. In spite of requisite demand, there is the marked absence of an international digital carrier of developing country origin. There is however, the proliferation of Western European and US carriers, operating within Africa and the Caribbean, e.g. Cable and Wireless (UK) and AT&T (US). The ensuing resource transfer from north to south echoes other sectoral patterns of production.  The telecommunications experience of developing represents a study of contrasts. At one extreme a single private provider dominated the Caribbean region for more than a decade. At the other, African economies largely maintained public ownership alongside varying degrees of private participation.  Communication maintains and animates life and any improvement in efficiency brings collective benefits to society. Surprisingly it was not until the late seventies and early eighties that the importance of telecommunications in the economic structures of societies in North America, Japan and Europe became obvious. Sad to say in the developing world generally, there appeared for a while to be ambivalence, in regard to action, as to the beneficial role that telecommunications could have played, both in facilitating efficiency on the local and global scene, and in the economic growth and development of these nations. 


The Role of Special Items in Managing Earnings and the Relevance of Accounting

Earnings Components: The Tunisian Stock Exchange Evidence

 Ines Belgacem, Management and Economic Science, Tunisia

Abdelwahed OMRI, Management and Economic Science, Tunisia



 Because of the flexibility accorded under most generally accepted accounting principles, accounting numbers are subject to managerial discretion. Thus, managers have so manay earnings management tools at their disposal. One such popular tool are special items which proliferation pollute the credibility of financial reports and affect investors perceptions. In this paper we examine in one hand, the role that special items play in managing earnings and on the other hand, the relevance of different components of earnings (Operating income, Special items, earnings of ordinary activities).  Based on a sample of 23 Tunisian listed firms, for the period 1997-2001, we show the incremental information content of special items. Indeed, the managers use its to mitigate the accounting earnings deviation across years.  The use of accounting numbers by investors, creditors, financial analysts and others to evaluate current and future performance incite managers to manipulate earnings in order to influence the market participants perception of the risk associated to the firm (Kothari and al 2002) and to enhance the information content of earnings (Mofitt and al, 2002). Thus, accounts numbers manipulations have been a matter of research, discussion and even controversy by international standards setters organisms (FASB, IASB) in several countries such as the United States, Canada, The United Kingdom, Australia and France. In fact, Arthur Levitt, the ex-Chairman of the Securities and Exchange Commission (SEC) brought dramatic attention to the issue of earnings management in a speech he delivered in September, 1998. which announced the “war against manipulation”.  The previous research in financial accounting literature have showed four shapes of accounting manipulation (Earnings management, Smoothing income, Big Bath Accounting and Creative Accounting) (Scott, 2000; Stolowy and Breton,2001) which have been studied  according to different methodologies.

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