The Business Review, Cambridge

Vol. 20 * Number 1 * Summer. 2012

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

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Attitudes of U.S. Managers Towards Outsourcing: Survey Results and Managerial Implications

Dr. Helen LaVan, DePaul University, Chicago, IL

Dr. Gloria Fragoso-Diaz, Tarleton State University, Stephenville, TX

 

ABSTRACT

Perceptions of U.S. manufacturing managers are analyzed to generate insights into how U.S. managers perceive the ease of doing business in Mexico, Singapore and China. The information is the used to determine if their perceptions are in line with the measurements of the World Bank and if not the implications of it. U.S. manufacturing managers and executives were surveyed. Their opinions were sought on factors such as cost, employment, protecting investors, paying taxes and trading across borders.  Comparisons were made between their attitudes and World Bank data about Ease of Doing Business in the three countries. There were variations with respect to whether managers had outsourcing experience with manufacturing and assembly or with business processes and IT, the former being viewed as more challenging. Unexpected findings included that any cultural similarity between the host and home countries was not an important factor, and that the U.S. managers underrated the challenges associated with employment issues especially in Mexico. Given World Bank data factors, Singapore may be an undervalued host country.  Of interest to practically all U.S. manufacturing managers is how to structure the outsourcing of any or all aspects of the manufacturing and related processes to achieve effective and efficient outsourcing.Consider these statistics regarding its prevalence: The estimate is that globally outsourced work totaled $525 billion industry in 2010 (Plunkett Research, 2005).  Another way to indicate the magnitude of outsourcing is to express it in terms of the worth of jobs that have been outsourced.  One estimate is that by 2015 more than 3.3 million U.S. jobs and $136 billion worth of wages will be outsourced (McKinsey Global Institute ,2003).   There is, however, also the estimate that the cost advantages of outsourcing business processes has been diminishing, as wages and operating costs have been increasing in prominent host countries such as India and China. Further, while many companies continue to consider outsourcing manufacturing, assembly, business processes and IT, other companies have begun to bring offshored processes back to the U.S. (Gefen, Ragowsky, Licker, & Stern 2011). While the number of offshored jobs returning is considered a “trickle,” they represent prominent companies: GE, Carbonite, and NCR were recently reported.  “Additionally foreign-based international companies, such as Wipro, are opening offices in both the U.S. and Europe (Isidore, 2011). This “trend of return” is likely to continue, according to Harold Sirkin, a senior partner at the Boston Consulting Group.  The driving forces behind this trend include customer satisfaction and performance, rather than outsourcing just because of low labor costs.  Concerns over customer satisfaction and performance might be combined with other factors, such as increasing offshore labor costs, which in China is estimated to increase at the rate of 20% per year (Isidore, 2011).  Other concerns over shipping costs, intellectual property theft and counterfeiting, the rising cost of raw materials overseas and lack of responsiveness to customers’  needs have all contributed to a growing “back shoring” trend (Ensinger, 2010).

 

A New Process Model for Curriculum Development in Business Education

Dr. Shelley A. Chapman, The Idea Center, Inc.

Dr. Linda Randall, University of Hawai‘i-West O‘ahu, HI

 

ABSTRACT

Business education’s challenge is to prepare students to be adroit professionals in the increasingly complex business environment. Revisions to curriculum have been proposed; however, many redesign efforts have not fully targeted the needed learning outcomes for today’s professional. We contend that the curriculum development process is a critical factor in a successful redesign of business curriculum. The proposed process model is based on the integration of Mezirow’s transformative learning theory and Heifetz’s adaptive leadership model. Through this new process, faculty will be encouraged to rethink their assumptions, resulting in a redesigned curriculum more reflective of the current needs of businesses.  Graduate business education is at a critical crossroad because it is confronted by pressure from businesses demanding professionals who can lead and manage organizations in increasingly uncertain environments.  Today’s graduate business students need to be more than competent in the specific theories and skills of strictly functional areas, they must be able to think flexibly and creatively (Palmer, 2007); that is, they need to be able to lead in the midst of ill-defined problems, tremendous uncertainties, and increasing complexities.  We propose a new approach to developing the adroit managers called for by the 21st Century business environment.  We look more deeply into the process by which business education curricula are developed, as we believe that changing this process will perforce change the curricula and ultimately the education of future business leaders. As Sullivan (2005) notes, while early models of professional curriculum design served the educational community well and established the need for a strong theoretical foundation in professional education, it is possible these models led to an assumption among curriculum planners that theoretical knowledge could be formulated in general, context-free and value-neutral terms which could possibly deny context, narrative, and the ethical implications of knowledge. In the 21st Century we face business scandals, unprecedented global downturn, the depletion of energy sources, and many other challenges that cannot be met successfully unless those who address them know how to deal with uncertainty and ill-defined problems (Null, 2006). The external business environment is increasingly being impacted by these political and economic conflicts (Barnett, 2005). Many scholars contend that traditional graduate business education is not achieving these learning outcomes and suggest that what is taught has only a minimal relationship to business success (Godfrey, Illes and Berry, 2005; Mintzberg and Gosling, 2002; Vaill, 1996).  In response to these challenges, curricular solutions have been proposed, such as incorporating the use of critical biography (Jacobs, 2007), enhancing experiential learning activities with case studies (McCarthy and McCarthy, 2006), and strengthening management as a profession (Pfeffer and Fong, 2002; Pfeffer and Fong, 2004).  However, none of these proposals question the process in which curriculum is designed or the type of learning process students need to be able to meet the new demands of the current era. Although a number of these new proposals profess to educate students to become the future managers for 21st century organizations; we believe that for students to gain, as Pfeffer and Fong (2002) contend, the “wisdom” to navigate their business environment, students need to learn how to handle the uncertainties that managers now face through their learning experiences in the business program. It seems logical; therefore, that faculty should experience a similarly indeterminate situation as part of the design process. In this way, the faculty will be sensitized to the same learning process that students will experience. This will strengthen the curriculum because faculty will be able to apply their own experience from the design process that we propose to the learning experiences they develop.

 

Moneyless Economy

Dr. Subhendu Das, CCSI, California

 

ABSTRACT

Moneyless economy (MLE) does not have any money in the economy. All products and services are free for all people. This means everybody must work, work for free, and get everything they want for free also. Any work that a society needs is considered legitimate. MLE is not socialism. MLE has the ability to provide a lifestyle that anyone wants. We show that it is possible to run the exact same economy that we have now, in the exact same way, and without money. Any government of any country can make smooth transition to MLE if it so desires and is not afraid of money power that exists today in our society. MLE will eliminate poverty, crime, corruption, and wars from the world. MLE will protect environment, human values, and bring true democracy to all countries. In a sense MLE will bring heaven on earth. We should understand that the money is free, like air, for the central bank, thus in one sense we have MLE now. Similarly the earth as given to us is also free. Thus all we need to implement MLE is to change our mindset. We need MLE for the evolution of the society to the next higher level.  The laws of nature and the characteristics of nature are the fundamental truth of the universe. If any manmade system or principle does not match with this universal truth then we must make all efforts to change the system to protect the earth and the humanity. The present system of capitalism, headed by the privately owned central bank (CB) as king, has evolved along with the internet technology and financial system, created the global money, and has made the system ready to match with this universal truth of nature. The 99% Occupy movement of 2011 throughout the world is a testimony of the aspirations of the people. The statement - the king, who cannot satisfy its people, should not stay in the throne – was repeatedly reverberated by all the western governments for the kings of the Arab countries and forced them to step down in view of the Arab Spring movement of 2011. The CB should be now ready to sacrifice everything for the people and implement the ideal system of the MLE. The CB has nothing to lose but to gain everything to be remembered for eons to come. Even losing is better if it is for the greater good for all the seven billion people of the world.   During the last hundred years many forms of moneyless economy (MLE) have been proposed. No government has ever tried to implement any such systems. However, some small communities all over the world have implemented and still practicing such systems in some form [Shiwa, 2007]. In 1919 two influential socialists, Otto Neurath and Otto Bauer, had each published books advocating a moneyless economy [Steele, 2002]. In the early years of Soviet power there was serious discussion amongst the party elite about instituting a moneyless economy [Nelson, 2001]. Nobel Laureate (1974) in economics, Friedrich Hayek, discussed about possibility of moneyless economy while searching for alternative to mainstream modern economics [Horwitz, 2004]. A moneyless world with neither a common medium of exchange nor a common unit of account is discussed in the book by Cowen and Kroszner [Malte, 2008]. Nobel Laureate Milton Friedman has suggested replacing the central bank [Friedman, 2006].

 

Globalization: Payoffs, Multinational Corporations and Public Policy Makers-A New Paradigm

Dr. Thomas G. Costello and Dr. Ayse Olcay Costello, Eastern Illinois University, Charleston, IL

 

ABSTRACT

The unstoppable pace of globalization; the rise and fall of fortunes of both countries and companies; and structural changes taking place in the developed regions of the world are creating numerous puzzling questions for researchers, public policy makers, high level executives of corporations and citizens all over the globe. Despite the seriousness of these questions, such as how to create more jobs in developed countries while continuing to build an industrial base in developing countries; and the urgency of needing to find answers; existing literature has focused its sights on answering a more limited set of questions (e.g., the antecedents of entry mode decisions made by multinational corporations.) In this paper, we address the limited focus of the existing literature by offering a new framework that builds upon and extends the existing international business, strategic management, and economics (i.e., property right economics, and game theory) literatures; and starts to answer some of these critical questions.  The world's top 100 non-financial multinational corporations, alone, enjoyed total sales of $ 8.4 trillion, and employed more than 15 million people around the world in the year 2008 (UNCTAD, 2010). Compared with the 2009 gross world product estimate of $58.07 trillion (CIA, 2010), it can easily be seen that globalization’s relentless push to deepen economic ties between countries and continents continues unabated. As a result of the pervasiveness of globalization and its seemingly unstoppable persistence, public policy makers who run countries, top level executives who run globe spanning multinational corporations and citizens who face rising unemployment rates in their counties are faced with a multitude of seemingly intractable questions (Gruenwald, 2008; Stiglitz, 2007.)  One of the most interesting examples of such questions, and one that has wide ranging implications for all economic actors across the globe, is how public policy makers should interact with truly global corporations that have global interests (e.g., Wal-Mart, GE, and Toyota), whereas public policy makers are responsible for maintaining the well being of their constituencies with more limited local interests. Another question of a similar nature that public policy makers face is whether or not to protect local industries, with the knowledge that protectionism on average may reduce the size of the pie available globally thus hurting global entities with global interests, while nevertheless possibly protecting some local interests. Finding answers to such questions are complicated by not only the lobbying efforts of different stakeholders (e.g., unions and corporations), but also the realization that there is a component of competition between different regional and national players (e.g., the wishes of a multinational corporation may hurt public policy makers in one region while helping those in another region); and the decisions made today can have impact regarding competitiveness of players for years to come (Bonaglia, Goldstein & Mathews, 2007; Selko, 2008).  The questions that face high level executives of multinational corporations are also complex. For example, is it a legitimate strategy to seek to exploit the lowest costs of production and the highest revenue streams (Holland, 2009), by producing in lesser developed countries and selling in more developed countries, despite the fact that over the long run these strategies may not be sustainable due to high current account deficits (in developed countries) and surpluses (in developing countries) that these policies create? Another pressing question is whether multinational corporations should be responsible to only their shareholders, or to a wider set of stakeholders. Also, with the power (e.g., financial) of some multinational corporations far exceeding those of many small nations, corporate executives wonder how deeply they should get involved in national governance questions such as labor standards, or environmental standards to be upheld in developing countries, even when some of these countries are too underdeveloped to enforce their own standards; after all, not enforcing high standards can increase corporate profitability substantially.

 

Managing Customer Satisfaction: A Conceptual Framework

Dr. Andrzej Kobylanski, Penn State Greater Allegheny, PA

Dr. Bozena Pawlowska, University of Warmia and Mazury in Olsztyn, Poland

 

ABSTRACT

 Contemporary work on customer satisfaction is more focused on investigating the relationship of customer satisfaction and various aspects of business performance. However, there is a gap in literature to address the complexity of organizational issues in the process of customer satisfaction management. Therefore, the main objective of the paper is to redirect satisfaction research toward a strategic approach that encompassess an understanding that customer satisfaction can be managed in a systematic way through the process of continuous improvement. This paper proposes a conceptual framework that reflects a systematic approach of effective management of a complex subject of customer satisfaction.  It is widely acknowledged that many businesses around the globe try to build their competitiveness based on quality. Researchers are recognizing paradigmatic shift from a focus on delivering high quality of the final product, toward assuring high quality in every step of the manufacturing process. This orientation shift resulted in the development of certificates (ISO), management systems (Total Quality Management) and pro-quality programs (Malcolme Baldridge Quality Award). All of these approaches have been designed to increase effectiveness and profitability through delivering products and services with quality level that meets customer expectations and thus provide satisfied customers. However, many of these attempts failed because implementation of these systems has not translated into increased customer satisfaction and therefore failed in terms of an increased level of sales.  This paper aim is to provide a systematic view of the problem of customer satisfaction management and to redirect satisfaction research toward a strategic approach that encompasses understanding benefits of customer orientation (represented by the need to strive for higher customer satisfaction) and the existing approaches to quality management. Our goal is to propose a model that can illustrate that customer satisfaction can be managed in a systematic way through the process of continuous improvement. We propose a conceptual framework of the Customer Satisfaction Management System (CSMS).  The presented framework should eliminate the gaps that exist in the literature of the subject. Most of existing research is taking a one-sided view of benefits of customer satisfaction, while other works are focused on problems of quality management. However, there is a limited research that would compile both areas.  Current research is more focused on the effects of customer satisfaction – securing future revenue through customer recommendations (Zairii, 2000; Anderson, Fornell and Mazvancheryl 2004); enhancing the company’s reputation (Fornell 1992, Anderson and Sullivan 1993, Ueltschy and  Krampf 2001, Wangnheim and Bayon 2004); improving brand image (Lawson and Glowa 2000); increasing acceptance of new product (Robertson and Gatignon 1986); investigating the existence of a relationship with shareholder return (Anderson, et al., 2004), and stock prices (Fornell, Mithas, Morgeson and Krishnan 2006).  These studies investigate impact of CS only in one-dimensional level. Studying the importance of CS in theories of quality management systems, researchers are focused on the aspects of implementation of management systems, like TQM (Gotzamani and Tsiotras 2002; Chan et al.2002; Kartha 2004) and norms ISO (Chase et al. 2006, Hughes and Karapetrovic 2006; Calisir, 2007; Han and Chen, 2007) with the only requirement that the organization needs to measure and monitor customer satisfaction.  Some (Halstead, 1999) state that many firms are using customer satisfaction data to diagnose product quality, identify problematic areas, improve customer retention rates or document the effectiveness of quality systems (like TQM). None of these studies include an overall strategic approach to the implementation of customer satisfaction within the organization. Therefore we see that there is a gap in the literature and research to identify management of customer satisfaction as an issue of strategic importance. We hope that this paper will encourage the development of a stream of research on customer satisfaction management.

 

Overcoming Organizational Impediments to Strong Sustainability Management

Dr. Dave Robinson and Mark Boulle, Central Queensland University, Australia

 

ABSTRACT

 With frequent corporate collapses and global market failures, the financial and economic systems of the Western world are coming under ever increasing scrutiny. These events, and a deeper introspection, call into question the roles played by firms in embracing sustainability practices. A firm's resources are combined to apply its unique capabilities to the challenges of the external environment, industry forces and its competitors. In so doing firms must meet the twin strategic objectives of maximizing shareholder returns to create a sustainable future (for the firm) AND maintaining a responsible approach to sustainable development in areas impacted by the firm. Whereas resources may be classified as tangible or intangible, it is the intangible resources, including the firm's reputation, organizational effectiveness, and innovation propensity that comprise the foundation for sustainable competitive advantage. The development of business-level culture has been portrayed as a six-step journey (Robinson, 2007). Systemic constraints may inhibit the development of organizational culture just as personality disorders may afflict individuals. It is asserted that the so-called big five individual personality traits (McCrae and Costa, 2003) can be related to three categories of organizational pathology (Robinson, 2010), which in turn impede effective sustainability management practices.  Additionally, it is proposed that sustainability practices in firms may take one of three forms, namely non-sustainability, weak sustainability, and strong sustainability. Whilst it is clear that all firms ultimately need to embrace a culture that supports and encourages strong sustainability, to date very few have managed to do so, being either unwilling or unable to go beyond the non-sustainable or weak sustainability levels.  This paper relates the importance of organizational wellness as a prerequisite for strong sustainability. In so doing it forms a bridge across the fields of organizational psychology and business sustainability by relating the problems encountered in firms as they face the challenges of consistently having to align day-to-day managerial practices in such a way as to form business cultures that are congruent with strong sustainability. Inconsistency or mal-alignment of practices, over-emphasis on the negative aspects of management style, and/or an unwillingness to adapt are impediments to the adoption of an effective sustainability strategy.  Sustainable development has been defined broadly by the UN World Commission on Environment and Development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (WCED, 1987). While it may be difficult for the firm to embrace such a vague definition (Fraser 2011), and one can certainly appreciate that it might engender a certain creative ambiguity or malleability (Kates, Parris & Leiserowitz, 2005), it remains none-the-less imperative that firms give attention to sustainability issues.

 

Evaluating Teacher Professional Development Programs in Fostering Native Hawaiian High School Completion

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

 

ABSTRACT

The following study attempted to analyze professional development activities and its relationship towards Native Hawaiian public high school completion in the Leeward District on Hawaii’s Island of Oahu. Using a correlation and bivariate regression procedure, the revealed econometric relationship between professional development expenditures and high school completion from 2000 to 2007 was disturbing. Although professional development expenditures had predominately increased for all high schools, increases in high school completion were not observed for all schools. Moreover, with the exception of Kapolei High School, there was no conclusive econometric evidence to indicate that the professional development undertaken contributed to higher levels of Native Hawaiian high school completion during 2000 to 2007. Instructional support is another critically important factor that contributes to high school completion. In many cases, the amount of instructional support provided to teachers is detrimental in their efforts of assisting students to graduate from high school (Domitrovich, Gest, Gill, Bierman, Welsh, & Jones, 2009). Although there are many techniques to measure the productivity of the many elements that comprise instructional support, assessing its effectiveness through a financial perspective remains one practical way to accomplish this task (Beard, 2009). Consequently, this study attempted to test whether funds spent on professional development activities (i.e., student support personnel, costs to support teachers, and other program support expenditures) in Oahu’s Leeward District has had a positive impact on public high school completion from 2000 to 2007 (Hawaii Department of Education, n.d.). With this research, it is hoped that the results will provide one snapshot on the effectiveness of the broad range of professional development programs and initiatives that were undertaken in Hawaii’s Department of Education’s (DOE) Leeward District towards enhancing Native Hawaiian public high school completion.  Based on Figure 1 and Table 1, professional development expenditures have been consistently increasing on an average of 18.7% with a standard deviation of $1,411,796 per year, respectively. Graduating classes has seen steady of growth during this period and had an overall average growth rate of 1.8% with a standard deviation of 39 students per year, respectively. High school completers also experienced a similar trend during this time frame with an average growth rate of 3.3% and a standard deviation of 41 students per year, respectively (See Figure 2).  Based on Figure 1 and Table 2, professional development expenditures have been consistently increasing on an average of 54.8% with a standard deviation of $1,967,522 per year, respectively. Graduating classes has seen much growth during this period and had an average growth rate of 8.4% with a standard deviation of 219 students per year, respectively. High school completers also experienced similar growth during this time frame with an average growth rate of 8.0% and a standard deviation of 51 students per year, respectively (See Figure 2).

 

A Correlational Analysis of Online Learning and the Transformational Leadership Style

Dr. Terri Washburn, Walsh College of Accountancy and Business Administration, Troy, MI

 

ABSTRACT

 Unchecked growth in online learning brings forth questions about the significance of virtual classrooms upon higher education.  The growth in online learning has been swift and unprecedented, and shows little signs of waning (Lei and Govra, 2010).  This study builds upon research conducted in 2011 that explored a relationship between the model of learning employed during pursuit of a Master of Business Administration (MBA) and the transformational leadership style of the learner (Washburn, 2011).  The 2011 study surveyed two semesters of MBA students in their capstone course, and found no relationship. This current research sought to increase sample size and seek further understanding, and so surveyed an additional semester of MBA students at the same institution.  Participants completed the Bass and Avolio’s MLQ-5X Multifactor Leadership Questionnaire (2004).  After collecting the survey responses, the researcher divided respondents into categories depending upon whether they took none, some, or most of their coursework online, and a statistically significant correlation between learning modality and the resultant transformational leadership style of the learner was sought. A notable difference in the earlier (2011) study was that non-parametric statistical tests had to be used due to data that was not normally distributed. In this current study, data was normally distributed or approached normal distribution, and a one-way ANOVA used. The results supported the earlier findings, and retained the null hypothesis that no significant relationship between learning modality and leadership style was present.  The past two decades have seen a paradigmatic shift in the method by which higher education is delivered. Centuries of collocated learning have been supplemented and in many cases supplanted by a dispersed learning model, largely driven by the students themselves (Allen and Seaman, 2007).  Studies have proven the effectiveness of online learning (e.g., Fillion, Limayem, Laferriere and Mantha, 2009).  Conversely, researchers have also proposed there may be a compromise in the quality of learning for the online learner versus the traditional face-to-face learner (Astani and Ready, 2010; Carr-Chellman, 2006; Robinson and Hullinger, 2008). The majority of academic leaders at public institutions of higher education reported in a 2010 Sloan Consortium study that online outcomes are comparable or better than those achieved via face-to-face instruction (Allen and Seaman, 2010).  Tellingly, consensus has yet to be reached on the impact of online learning, while online enrollment continues to expand.  The efficacy of online learning as a means of imparting information is but one consideration of its affect upon higher education and the resultant workplace.  Higher education prepares its graduates for a number of positions, each of which is dependent upon information gained by the learner as well as the skills-related behaviors demonstrated by the graduate. This study focused upon the relationship of online learning to the behavioral skill of leadership, and in particular, the transformational leadership style.  Historically, leadership skills have been sought in the traditional buildings of universities or other institutions of higher education.

 

Peer Evaluation in the Online Classroom:  Evidence from Virtual Teams

Dr. Maureen Hannay, Troy University Global Campus, Honolulu HI

 

ABSTRACT

Businesses increasingly rely on teamwork as one of the major organizational structures used to direct the flow of work towards corporate goals (Brooks & Ammons, 2003; Brutus & Donia, 2010).  Therefore organizing students into teams to complete projects, analyze cases or develop presentations seems more relevant in business degree programs (Brutus & Donia, 2010).  The use of teams has made the evaluation of student performance more complex (Malone, 2011) and as a result more and more college professors have also instituted peer feedback tools to more effectively assess both the work of student teams as a whole, and the contributions of individual team members (Falchikov & Goldfinch, 2000).  This research examines peer feedback scores collected from133 students in seven sections of a capstone course in a graduate-level business program.  Results indicate that the scores students assign to their teammates are closely correlated with the overall course grades assigned by the instructor, which provides support for the validity of peer review.  Further, the data indicate the while there were no differences in the peer evaluation ratings that men and women received, there were differences in the peer evaluation ratings that men and women assigned as men award significantly higher ratings than women.  In order to better equip students for organizational life, team projects have become a larger component in the curricula of many post-secondary programs (Falchikov & Goldfinch, 2000; Friedman, Cox, & Maher, 2008).   Teamwork enhances the development of skills and knowledge particularly relevant to the real world, provides an excellent forum for experiential learning, promotes collaborative learning and helps to more efficiently instruct large student numbers (Fellenz, 2006, p. 570).  Businesses increasingly rely on teamwork as a major organizational structure directing the flow of work (Brooks & Ammons, 2003; Brutus & Donia, 2010).  Therefore organizing students into teams to complete projects, analyze cases or develop presentations seems more relevant in business degree programs (Brutus & Donia, 2010).  With an increased emphasis on team collaboration, more managers who are not co-located with their employees, and renewed interest in garnering employee reactions to managers’ skills and abilities, organizations have embraced the 360 degree evaluation. Multisource feedback systems in the workplace have been increasingly in popularity in recent years (Atkins & Wood, 2002; Conway & Huffcutt, 1997; Paswan & Gollakota, 2004).  Conway, Lombardo and Sanders (2001) report that almost all Fortune 500 firms use multisource feedback for both personal development and administrative purposes. The use of teams has made the evaluation of student performance more complex (Malone, 2011).  As a result, more and more college professors have also instituted peer feedback tools to more effectively assess both the work of student teams as a whole, and the contributions of individual team members (Falchikov & Goldfinch, 2000).  Even though the benefits of collaborative learning are widely recognized in the academic literature, many students continue to report a negative perception of group projects (Brooks & Ammons, 2003).  One common complaint from students concerns the free-rider or social loafing problem (Brooks & Ammons, 2003; Fellenz, 2006; Friedman et al., 2008). When teams are evaluated using traditional methods (an overall evaluation of the team effort by the professor) social loafing is more likely as individual contributions are not identified (Fellenz, 2006; Ghorpade & Lackritz, 2001)).  However when peer evaluations are introduced this instills individual accountability and helps to ensure that team members contribute their fair share of the work (Brooks & Ammons, 2003; Friedman et al., 2008).  Peer assessment has been found to be both valid and reliable and has a positive impact on student achievement and attitudes (Topping, 1998).  However Topping (1998) also stressed that students must accept responsibility for evaluating their peers and be accountable for the feedback that they provide. 

 

Father-Daughter Succession in China: the Conceptual Framework and a Case Study

Dr. Zhong Qin, Professor and Qiao Wang, Shantou University, China

 

ABSTRACT

 This paper investigates succession between father and daughter using a case study in a family firm in China. This is the first empirical research on this issue in China. The study is based on an in-depth interview to a female CEO who has taken over family business established by her father. This study provides the conceptual framework and investigates four issues in father-daughter succession: the impact of Confucian ideology, gender conflicts, role of other family members and planning and training. Drawing on the information of this case, the authors also discuss managerial implications in terms of cultural influence, succession planning and training on both generations, and comments on how to deal with second generation’s reluctance of taking over and gender conflicts during succession.  For Chinese family firms, as far as succession is concerned, family members will always be the first preference  or even the only option  (Weidenbaum, 1996). This has posed an interesting research topic as how to manage succession in family businesses in China as founders of many family firms are approaching their retirement age. Previous research suggests that only 30% family businesses are expected to survive the second generation, around 15% are expected to survive to the third generation, and less than 3% are expected to survive to the fourth generation (Beckhard & Gibb Dyer, 1983; Kets de Vries, 1993; Ward, 1997). Successful succession is therefore vital for the survival of the family businesses. While it is possible to draw from existing experience and research based on developed economy, it is worth noting that “the Chinese business enterprise family differs in fundamental ways from the usual Western business firm” (Weidenbaum, 1996, p. 141). However, research on family businesses in mainland China remains scarce, and succession has not yet captured much research interest.  The lack of research in this area is largely related to the newness of family firms in China. Despite its long history, family business is a relatively new phenomenon in China, and its fate has been closely associated with private firms. Private firms ceased to exist after the nationalization campaign launched by the Communist Party in the 1950s. At the beginning of reform period since the late 1970s, private firms were only permitted to operate at the fringe to the economy. The institutional changes in the late 1990s have led to a booming private sector. In 1997, the 15th National Congress of the Communist Party recognized the non-public sector as an important part of the socialist market economy, which prompted a dramatic growth in the private sector. The number of registered private enterprises jumped from less than one million in 1997 to 8.18 million in 2010, and the private sector is estimated to contribute to about 70 per cent of GDP in recent years. Indeed, the rise of the private sector in China has fuelled rapid economic growth during the last three decades, and private firms are the most dynamic component of the Chinese economy.  Accompanying with the expansion of private sector is the rise of family firms. It is estimated that more than 90% of private firms in China are family businesses (Gan, 2002). While family is important in any society, Chinese society specially put more focus on family. People from the same or related family are considered as insiders and are more trustworthy as compared with outsiders who have little personal connections with the owner’s family. Human-centeredness and family-centeredness have been cited as distinctive features of Chinese firms  (Lee, 1996).  Therefore, this study investigates father-daughter succession using a case study in a family firm in China. To our knowledge, this is the first empirical research on this issue in China, which is one of critical issues in the study of family business succession as indicated by Brockhaus (2004). Moreover, the study takes into account the impact of cultural influence-family-centered value in Confucianism, among other important factors, providing a Chinese way to the successful succession of family business.

 

An Evaluation of Examination Results between Students in Management Courses Being Video Monitored Verses Those in a Traditionally Monitored Environment

Dr. Marian C. Schultz, The University of West Florida

Dr. James T. Schultz, Embry-Riddle Aeronautical University

Joshua J. Schultz, Spring Hill College

 

ABSTRACT

 Computer technology has changed the world, and with it the educational delivery systems. An increasing number of students are taking advantage of the ability to take college courses through online distance learning programs. This number continues to increase on a yearly basis. As the number of online students continues to increase, so does the body of research on how students’ performance varies between online and traditional courses. Some studies have found that students perform much better in one mode of delivery than another.  One area of research has concentrated on how students perform in online verses traditional examinations. With the advent of modern online learning, examinations were either open book, or required a student to be present at a location to have an examination proctored. Having to go to a location to have an examination proctored was seen as a deterrent to many students, while allowing students to have a text book, notes and perhaps other assistance available when taking an examination, is not viewed as academic rigor or quality by some institutions of higher learning. The objective of this study was to ascertain if a significant difference exists between evaluations being proctored through an online video camera, as opposed to one being conducted in a typical classroom setting where a proctor is present. While the study found while there was a statistical difference in examination scores between students taking video, verses traditionally proctored examinations, additional research is necessary using a larger sample size to validate these findings.  The growth of online education has raised new challenges for educational institutions when it comes to achieving testing integrity.  According to studies by the National Center for Education Statics (NCES), the number of students enrolled in at least one online class has increased by 11.1 million from 2001 to 2006, and the NCES predicts that by 2014 students fully enrolled in online courses will reach 3.55 million (Online Education, 2011).  Online test proctor programs, with the advent of new computer and video technologies, are creating effective tools which aid educational institutions in providing online courses with strong testing integrity. The new technology offered by online test proctor programs is aimed at detecting, resolving, and preventing security breaches in online testing.  To understand the difference between testing modes it is necessary to define examinations being proctored by an online webcam. While there are different services that provide online video monitoring, for the purpose of this study all the examinations were proctored utilizing the ProctorU system.  ProctorU was a service initially developed by Andrew Jackson University to address the issue of having to require their online students travel to a location to take an examination or to pay a proctor's fee (Schaffhauser, 2010).  Due to the interest generated by other institutions to utilize their system, Andrew Jackson launched ProctorU as a commercial venture in January of 2009. By 2011 there were 45 institutions in the United States utilizing the system (ProctorU, n.d.). To use the ProctorU system a contract must first be in place between the ProctorU and the institution.  An instructor can then make the ProctorU available for the students to use in a course.

 

Collectivism & Ethnocentrism:  An Inter-and-Intra National Analysis Among the Thais, Chinese, and India

Dr. Kritika Kongsompong and Rochelle Powtong, Chulalongkorn University, Thailand

 

ABSTRACT

This paper presents empirical results of ethnocentrism in relation to the collectivist strength among subjects in three countries:  Thailand, China, and India.  The inter-national analysis on the subjects attempts to diagnose and contrast the cultural diversity between the people of the three countries.  As for the intra-national analysis, the men and women within the countries are separately examined to analyze the cultural differences.  Results show that Thais, Chinese, and Indians are significantly diverse on the realm of collectivist and ethnocentric strengths.  Regardless of the nationalities those who are more collectivist show the tendency to be more ethnocentric in their consumption behavior.  In contrary to the prediction from the literature review, however, the intra-national results for subjects of the three countries show that men are generally more collectivist than women.  Therefore, the Thai, Chinese, and Indian men are likely to be more ethnocentric with their purchase endeavors than their counterparts.  Understanding international diversity in consumption behavior has become a task that seems to be impossible to accomplish.  Nonetheless, the globalization of today’s world has forced many academics and practitioners alike realize the importance of establishing some understanding on the patterns of consumer behavior around the globe.  To date, most cross-cultural consumer behavior studies have been cross-national in their orientation; i.e., they have contrasted consumers across different countries.  This cross-national orientation is understandable since there often exist major cultural differences between the peoples of different nations.  There is a growing reason to believe, however, that marketers should also be aware of, and concerned about, intra-national differences in consumer behavior; i.e., differences that are cultural based, and which can be used to differentiate consumers within given national boundaries.  Moreover, researchers have begun to consider the manner in which intra-national behavioral differences exist across different ethnic groups that reside within a culture (i.e., Lenartowicz and Roth 2001; Nicholis et al. 1997).  Their work is adding further depth to knowledge of the impact which culture has on behavior.  This study explores consumer behavior differences both inter-nationally and intra-nationally.  It focuses on the manner in which inter-cultural and intra-cultural differences affect the strength of collectivism among the subjects. The study goes beyond the current inter- and intra-cultural literature in that it examines the impact of fundamental cultural constructs on consumer behavior.  The constructs selected for examination are individualism/collectivism and ethnocentrism.  Past research has studied these constructs, and their behavioral manifestations, across national cultures, although very few have done so in a marketing-related context.  The present study, therefore, examines the relationship between ethnocentrism and collectivism in three Asian countries:  Thailand, China, and India. The main hypotheses developed relate to:  (1) differences that exist in the level of collectivism among the people across the three countries which lead to the diverse behavior on ethnocentrism; and (2) gender differences in level of collectivism and the behavior on subsequent constructs within and across the three countries.  Individualism and collectivism relate to basic beliefs that people hold with respect to their interaction with others and the world around them.  Classic studies by Hofstede (1980, 1991) provided insights on fundamental cultural differences that serve to differentiate the national cultures of the world.   In his work, individualist is the polar opposite of collectivist, and thus has the opposite characteristics from those of collectivist continuum.  Since series of studies by Hofstede, there appeared to be a considerable literature on collectivism/individualism that delved deeply into the construct.  Thus, the robustness of the collectivism/individualism construct has been repeatedly demonstrated by linking with various other constructs related to consumer behavior.  Individualists and collectivists consistently behave differently on purchasing decision.  In particular, collectivists are more susceptible to social influence, pay greater attention to the group acceptance, and more likely to avoid conflicts with the group members than most individualists (Kongsompong 2006; Redding 1982; McCracken 1987). 

 

Efficiency Analysis of US Banks

Amir Moradi-Motlagh, Dr. Amir Abdekhodaee, Dr. Ali Saleh, and Dr. Mehran Ektesabi

Swinburne University, Australia, Melbourne

 

ABSTRACT

This paper examines the technical efficiency of the US banks in 2010. The results based on the bootstrap data envelopment analysis (DEA) reveal that a high level of inefficiency exists in a sample of 100 large US banks. Moreover, return to scale properties of individual banks is investigated. This is done by applying a proposed hypothesis testing procedure on bootstrap results. Our findings also show that larger banks are more likely to operate under decreasing returns to scale. At the same time, however, smaller banks tend to operate under increasing return to scale. Finally, for comparison purposes, we also present the efficiency scores derived from the naïve DEA. From the results, it is clear that there is a considerable difference between these methods.  The banking industry is the key to the economical prosperity of all countries as a whole as this industry is the engine of economic growth by providing financial services for other sectors. This significant role and tough competitive environment in the US banking industry along with this threat that inefficient banks may not long survive attract plenty of interest in banking efficiency studies. Financial ratio analysis traditionally has been used to measure the efficiency of banks and other organisations, however, they have been criticised due to the inability of being applied in multi-input/output environment in company with the failure of providing an overall measure. For example, a bank can be strong in one ratio and poor in the other. Given these drawbacks, it is imperative to find and employ alternative methods capable of providing more meaningful and accurate results.  Data envelopment analysis (DEA) as a nonparametric method in operations research and econometrics, used for estimation of production frontiers, has overcome the above difficulties. The DEA method uses linear programming to construct non-parametric piecewise linear frontiers of the production process for a group of firms or other decision-making units (DMUs) using multiple inputs and producing multiple outputs(Neal, 2004). DMUs located on the frontier are assigned a score of one, while the rest of observations are deemed inefficient with scores less than one. Recently, the use of data envelopment analysis (DEA) to measure the efficiency of organisations has rapidly increased. The outweighing of advantages of this nonparametric method in comparison with parametric methods has made this method, one of the most popular techniques among researchers.  Fethi and Pasiouras (2010)  presents a comprehensive review of studies which employ DEA and some other techniques in operational research and artificial intelligence to assess banks performance. Nevertheless, the naïve DEA technique has been criticised due to lack of providing any information of uncertainty of estimated measures. This drawback turned to an advantage since, Simar and Wilson (1998) have found that bootstrapping techniques in association with DEA is a useful method which makes statistical interferences possible in efficiency estimates.  Even though, bank efficiency issues have numerously been investigated in many countries, this literature is suffering from neglecting to apply recent advanced techniques and many papers still employ the naive DEA method. For example: Portela and Thanassoulis (2007), Paul and Kourouche (2008), Figueira et al (2009)., Lin et al. (2009), Das et al. (2009) ,Siriopoulos and Tziogkidis (2010), Staub et al. (2010), Paradi et al. (2011)  The aim of this paper is to extend the literature by applying bootstrap techniques associated with DEA methods to examine the efficiency of the US banks. To the best of our knowledge, there are no previous studies that have used the bootstrap DEA methods to construct confidence intervals for efficiency estimates of individual banks in the US. Hence, this is one of our contributions to the US bank efficiency literature. Second, it is the first study in the international literature of the banking industry that estimates the scale efficiency using bootstrapping techniques. Third, this paper examines the efficiency of the US banking industry using the recent data of 2010 while previous studies rely on earlier data and fail to present the current state of this industry. Finally, the selection of inputs and outputs is unique and derived from the profit approach which examines how well a bank uses its expenses to produce its incomes.

 

 An Exploration of the Applicability of the FACT-Vortex Leadership Model in SMEs

Brad Nikolic and Prof. David Robinson, Central Queensland University, Australia

 

ABSTRACT

 

New challenges in modern day business demand new ways of approaching subordinates as a leader. Subordinates have different levels of maturity and value systems. This paper assumes that effective leadership has to adjust to the different levels of maturity of subordinates. Although the need has been previously documented (Hersey & Blanchard, 1993; Vecchio, 1987) we fear that it has been perhaps over-simplified, certainly worthy of further research, therefore a new paradigm for leadership is needed to meet the challenges of modern day business. Whereas business education may provide tools for real world challenges it is ultimately up to the leader to apply the tools. What we propose is a fusion of four different leadership styles, namely ethical, authentic, charismatic, and transformational leadership, akin to phases of development in individuals. A framework is introduced which illustrates how an energy flow, which we liken to a vortex, can be created, based upon an acute understanding of organizational wellness and individual values. The proposed framework, known as the FACT-Vortex Leadership Model, is subjected to an applicability test through an in-depth phenomenological interview with a prominent local business leader. Significant similarities were found between that leader’s lived experiences and accepted leadership theory, which is the subject of discussion at the end of this paper.  Firms compete on a global level, technology is evolving and cultures are transforming. Modern-day advances in business, such as Internet, Smart phones, multiple operational headquarters in different countries, environmental impacts or unpredictable events, have created a new set of challenges that organizations and their leaders have to adapt to (Martin & Ernst, 2005). In addition environmental impacts are forcing employers to consider about long-term business sustainability issues. Unpredictable events require leaders to act intuitively and urgently. These factors have a profound influence on business leadership effectiveness (Euwema, Wendt, & van Emmerik, 2007). Furthermore, the challenges of globalization and cultural transformation have an impact on a leader’s identification with the role they find themselves in, and the associated responsibilities that come with that role (Robinson & Harvey, 2008).  There is an increasing amount of interest directed towards the issues of leadership, a field that has emerged into an interdisciplinary function incorporating research from social sciences and humanities (Avolio, Walumbwa, & Weber, 2009; Rosenbach & Taylor, 2006). Leaders in the modern-day business environment are still expected to ensure profitability, but the need for long-term organizational success also incorporates the need to inspire and influence followers to commit to the journey towards the fulfillment of organizational goals. There is no doubt that an organization’s driving force is its employees who are individuals working together to achieve organizational goals (Wagner, 2010), yet individuals differ as to their respective level of maturity and hence their ability and motivation to be led (Graves, 1974).  Whilst task orientation remains as important as ever, we believe the involvement, empowerment and validation of team members has become significantly more essential, where contemporary leadership is concerned. Hence leaders need to understand the levels of maturity of followers to effectively create momentum towards business sustainability. In this paper we seek to illustrate that the new leadership paradigm is a fusion of ethical, authentic, charismatic and transformational leadership. A combination of these four leadership theories is needed, as each is necessary, yet none are sufficient in isolation.

 

A Study on the Impact of the Employment of Industrial Foreign Workers on Taiwanese Electronics Industry’s Competitiveness

Mei-Luan Huang, Nan-Jeon Institute of Technology

Dr. Yaw-Yih Wang, Central Taiwan University of Science and Technology

 

ABSTRACT

 The current study first defines industry competitiveness, and subsequently cites literature to clarify major indicators that influence industry competitiveness and uses the questionnaire survey method to quantify the influence of every construct indicator on the industry competitiveness of Taiwanese electronics companies that have employed foreign workers.  21st century is an era moving towards globalization, with national competitiveness, global labor division and economic development put atop on the agenda of every industrial country. These days, industries in Taiwan, whether it is traditional manufacturer or the most competitive high-tech industries, manpower is ubiquitously in high demand. Therefore, labor supply of the job market has been the pivotal force behind Taiwan’s economy and one of the major resources that gives life to Taiwan’s economic growth. Over the past decade, though, due to the obvious decline of the population growth rate in Taiwan, added with the rapidly increasing number of highly-educated citizens, there has been an obviously increasing shortage of grassroots labor.  To reinforce the “14 National Constructions” and “6-Year National Construction Project”, the government started to loosen the regulations regarding employing migrant workers in 1989; in the years that followed the introduction of foreign workers, due to the needs of social development and domestic industry labor force, foreign workers have been introduced into Taiwan’s job market, with the number of migrant workers amounting to 379,653 as of the end of 2010, a number occupying 3.6 % of the domestic labor force, 11.5 of the domestic grassroots labor in Taiwan. The introduction of foreign workers can not only mitigate the fierce thirst of grassroots labor in many local  industries, pushing the development of local industries and assisting in major constructions, but can also be a great help in many households by sharing domestic chores and taking care of the long-term home care patients. Owing to the fact that foreign workers have come from countries that differ from Taiwan in economic, social and cultural conditions, employers shall provide detailed employment requirements and conditions for the labor management in the future. As for the enterprises involved, once the requirement of industry production has been met, the most critical challenge lies in how to handle effective human resource management while managing the industrial foreign labor after the headquarters of Taiwan’s industries go overseas.   The current study selects Taiwan’s electronic firms that have applied for employing industrial foreign workers as research subjects, as the access to research sampling can be easier and research results can be more credible. The selection of sampling all in all considers three factors: the trend of domestic traditional industries going overseas, the speedy development of high-tech and bio-tech industries, both of which would sharpen national competitiveness in near future, and thirdly, the number of foreign workers in electronic components manufacturing amounting to 36,450 (as Table 1), which qualified as number one among the top 5 foreign-labor intense manufacturers according to the statistics shown in 2010.

 

Analysis of the Green Job: A Challenge for the European Union

Dr. María Teresa García-Alvarez and Dr. Laura Varela-Candamio, University of Coruna, Spain

 

ABSTRACT

 In the last decades, the renewable energies in the European Union are acquiring a great importance due to the positive economic-social implications that entail its development. So, among other factors, we can emphasize the obtaining of environmental benefits, of a greater energetic dependency or the employment creation.  The objective of this paper is to analyze the effects of the development of renewable energies, on employment in the European Union, and to establish the professional qualifications more suitable in this industry in expansion.  A source of renewable energy is that which is produced in a continuum way and it is characterized by being inexhaustible in the time and by meaning a lower environmental impact. It is the case, among others, of the wind, photovoltaic and thermal solar, biomass or mini-hydraulic.  The development of an energetic industry based on this type of production technologies can entail various positive economic-social implications. So, this energy allows: a) a great energetic independency, b) the obtaining of environmental benefits due to the reduced emissions of carbon dioxide that such production technologies suppose and c) the driving for a positive economic increase by means of the continuous innovation and d) the creation of new jobs (Wei et al., 2010).  However, the renewable energies also imply some limitations, such as the necessity of establishing a governmental support that allows its development and its protection from the direct competition that conventional technologies suppose.  In this context, the European Union establishes an objective of renewable energy consumption of 20% in 2020. With this aim, it establishes the necessity of developing an institutional support mechanism, by part of the member states, although it gives freedom for its selection and development. There are different support mechanisms but mainly three types are used: the feed-in tariffs, the competitive auctions and the quotas of negotiable green certificates (Hass et al., 2011)  By means of the feed-inn tariffs, renewable energy generators have right to sell all their production in the electricity network and to obtain, for it, retribution based on a fixed price or in the wholesale electricity price plus an incentive that compensates the environmental value of the renewable production.  This system establishes legally the prices or incentives of each renewable production technology (wind, photovoltaic and thermal solar, biomass, mini-hydraulic,...). This reward is established for a specific period time that generates oscillates between ten and twenty years from the beginning of the installation. So, the objective of this support mechanism is to eliminate the uncertainty and the associated risk to the project development of renewable generation plants.  In the case of the competitive auction systems, regulator reserves a proportion of market for the production of renewable energy and develops the competition between generators that use these resources. Distributors have the obligation of acquiring the total of produced quantity in such reserved market, Therefore, by means of this support mechanism, competition is centred on the price since the production offers are sorted in increasing prices order until the required electricity amount was reached.  Another way of promoting the renewable energies is given by fiscal factors by means of: a) the development of environmental taxes that penalize the use of fossil combustibles and, therefore, favour the use of renewable energy or b) fiscal incentives that entail exemptions or reduction in taxes or lower Value Added Tax (Anwar and Surya, 2011; Uyterlinde et al., 2003).

 

Dual Long Memory Property in Returns and Volatility: Evidence from Turkish Stock Market

Dr. Gokce Tunc, Izmir University of Economics, Izmir, Turkey

 

ABSTRACT

 The objective of this paper is to investigate the dual long-memory property in the returns and volatility of an emerging stock market namely the Turkish stock market. ARFIMA-FIGARCH and ARFIMA-HYGARCH models are used to estimate the degree of persistence in both returns and volatility in the daily data simultaneously. Furthermore, this research broadens the models by using more sophisticated distributions than normal distribution, such as student-t and skewed student-t distribution to capture excess kurtosis and skewness in the returns. The empirical results indicate the presence of dual long memory property in the returns and volatility of Turkish stock market. The volatility estimation results also indicate that the Student-t and skewed Student-t distributions outperform the normal distribution. Growth in financial markets and the continual development of new and more complex financial instruments has led to a growing need for theoretical and empirical knowledge of the volatility in financial time series. Recent empirical studies found that many financial return series may exhibit long memory or long-term dependence on market volatility (Ding et al. 1993; So, 2000). The presence of long memory in returns and volatility implies that there exist dependencies between distant observations. Such long term dependence was found to have significant impact on the pricing of financial derivatives as well as forecasting market volatility.  The prior research on long memory in the conditional mean and variance was undertaken independently (Xiu and Jin, 2007; Dionisio et al. 2007). However, dependencies between distant observations are often observed in both returns and volatility simultaneously. Granger and Joyeux (1980), Hosking (1981) and Geweke and Porter-Hudak (1983) were the early contributors who proposed the use of autoregressive fractionally integrated moving average (ARFIMA thereafter) processes to test the long memory property in the asset returns. ARFIMA models generalize the ARIMA models by allowing differencing parameter to take on real value, rather than restricting it to be an integer. They allow for series to exhibit stationary ARMA behavior after being fractionally differenced (Koop et al. 1997).  The results of the empirical studies that used ARFIMA models have produced mixed results in developed markets. For example; Lo (1991) tested long-run memory in U.S. stock market returns and found no support for long-term dependence in stock returns.  In a similar study, Cheung and Lai (1995) and Crato (1994) explored stochastic long memory behavior in stock markets of several countries and the empirical results showed little evidence of long memory. Barkoulas et al. (2000) found evidence in favor of long memory in the Greek stock market using spectral regression method, which contradicts evidence of absence of long memory in other stock markets.  Besides the GARCH model and its variants which can only capture short-run dependencies, several long memory GARCH models such as FIGARCH and HYGARCH were proposed to incorporate the long memory volatility property in financial time series (Baillie et al., 1996; Baillie et al., 2000; Bollerslev and Mikkelsen, 1996). The flexibility in the structure of these models allows capturing slow decaying autocorrelation reasonably well.  Papers that have tested long memory behavior and analyzed volatility of return in developed financial markets include among others: Li (2002), Andersen et al. (2001), Martens et al. (2004). Despite the vast literature examining long memory behavior of developed stock markets’ prices, relatively few academic studies have addressed the time series properties of emerging markets. One exception is the study of Kasman et al. (2009) which investigated long memory property in both conditional mean and variance for Central and Eastern European countries’ stock markets. The long memory parameters were statistically significant, indicating that dual long memory property is prevalent in the returns and volatility of the sampled stock markets. Besides this study, Kang and Yoon (2009) found that FIGARCH model was found to provide a good volatility representation for Hungary, Poland, Russia and Slovakia and this model provided more accurate performance in one-day-ahead volatility forecasts than other volatility models. Also, Assaf (2006) examined long memory behavior of the stock markets in MENA region and found that all markets displayed strong persistence in their volatility measures.

 

Developing Credit Scoring Models When Small Sample Sizes Are Available

Vesarach Aumeboonsuke and Dr. Arthur L. Dryver

National Institute of Development Administration, Thailand

 

ABSTRACT

 Making lending decision is an important process for financial institutions because it has a direct impact on the profits and losses of financial institutions. Therefore, financial Institutions try to develop good credit scoring models to make lending decisions. The purpose of this research is to compare the performance of the credit scoring models between multiple linear regression and logistic regression. The comparison of the credit scoring models is done through using three sets of population data generated through simulation. The odds ratio is adopted in this research as an evaluation tool. The findings of this research are useful for financial institutions especially commercial banks because they present the evidence of how well each credit scoring model can predict the credit score of the loan applicants.  Credit scoring is the set of decision models and their underlying techniques that aid lenders in the granting of consumer credit (Thomas et al., 2002). When the loan applicants approach the bank to request for loans, they are required to submit their information such as employment, salary, nationality, residential status, , etc. to the bank. Consequently, the bank will use the credit scoring model to process the information and compute the credit score of each loan applicant. The credit score is the continuous interval scale that varies, depending on the users’ predetermined range. The bank will set the critical credit score as the benchmark such that, the bank will accept any loan applicant whose score lies above the critical score. On the contrary, the bank will reject any loan applicant whose score falls below the critical score.  Evaluating credit worthiness of credit seekers is a crucial process for financial institutions because their existence largely depends on how such a process is being conducted. Financial institutions use a variety of credit scoring methods and a variety of criteria to select the best credit scoring methods. This research compares the performance of credit scoring methods between multiple linear regression and logistic regression. The odds ratio is used for comparing the performances of these methods. The odds ratio is the ratio of the number of times a given method identifies correctly the credit worthy customers and the number of times it accepts the non-credit worthy customers.  Many research papers in the past compare the credit scoring methods through using a set of real-world data (Hand & Henley, 1996, 1997, Myers & Forgy, 1963, Orgler, 1970, Abdou et al., 2008, Desai et al., 1996, Eisenbeis, 1987, Kolesar & Showers, 1985, Press & Wilson, 1978, Reichert et al., 1983, Ripley, 1994, Rosenberg & Gleit, 1994, Srinivasan & Kim, 1987, West, 2000, Wiginton, 1980, Galindo & Tamayo, 2000, Baesens et al., 2003, Hsieh, 2005, Ripley, 1994, Emel et al., 2003). In this paper, however, the comparison of the credit scoring methods has been done through using a set of data generated through simulation. The reasons for using this set of simulated data are as follows, first; it is illegal in some countries for banks to provide the personal information of their clients to outsiders. The second reason for generating data is to acquire extensively representative and sufficiently effective samples because the purpose of this research is to compare and validate the performance of the classifications models so the population data is needed in order to validate the models run on the samples and then test the models on the population. Finally, the real-world data creates a biased comparison because it does not contain information on those rejected by the banks and how they would have performed. For these reasons, it is more appropriate to use synthetic data. 

 

Product Tactics in a Complex and Turbulent Environment Viewed Through a Complexity Lens

Dr. Roger B. Mason, Durban University of Technology, South Africa

 

ABSTRACT

 This paper is based on the proposition that the choice of different product tactics is influenced by the nature of the firm’s external environment. It illustrates the type of product activities suggested for a complex and turbulent environment, when viewing the environment through a chaos and complexity theory lens. A qualitative, case method, using depth interviews, investigated the product activities in two companies to identify the product activities adopted in a more successful, versus a less successful, firm in a complex/turbulent environment. The results showed that the more successful company uses some destabilizing product activities but also partially uses stabilizing product activities. These findings are of benefit to marketers as they emphasize a new way to consider future product activities in their firms. Since businesses and markets are complex adaptive systems, using complexity theory to understand how to cope in complex, turbulent environments is necessary, but has not been widely researched, with even less emphasis on individual components of the marketing mix.  Increasing product complexity, rate of change in most markets, increasing speed of technological development and obsolescence, and unstable and rapidly changing customer needs is making product management a risky business. Since product life cycles (PLC) are getting shorter, and obtaining information for forecasting in these circumstances is nearly impossible, new product development is even more risky and requires a new approach. It needs to be quick and continuous. Since launching new products is becoming more uncertain and difficult, it must not be done at the expense of product improvement or enhancements. In many markets such old product development is more profitable and less risky, as trial is immediate and repeat purchases are more likely when based on an existing product or brand  In business environments, change occurs in two major dimensions; complexity and turbulence. As complexity increases, the ability to understand, plan and predict becomes more difficult. The increasing complexity leads to more change and making sense of, and predicting it, becomes more difficult (Black and Farias, 2000).  Turbulence involves rapid, unexpected change in the environmental sub-dimensions and is caused by changes in, and interaction between, environmental factors. This turbulence results in less orderly competition, quicker development cycles and more difficulty in predicting customer, product and service requirements (Chakravarthy, 1997). The net result is an environment where the future is essentially unknowable (Wilkinson and Young, 2005). Many authors see such complex, turbulent environments as complex adaptive systems (CASs) (Holbrook, 2003; Meade et al., 2006), including such constructs as eco-systems (Ritter et al., 2004; Gundlach, 2006), self-organization and emergence (Wilkinson, 2006), sensitive dependence on initial conditions (Tedesco Analytics, 2001) and non-linearity (Black and Farias, 2000; Tedesco Analytics, 2001). In such environments actions taken to reduce uncertainty can lead to non-linearity and unpredictability, causing the marketplace to be in a continuous state of disequilibrium (Black and Farias, 2000). Since environments appear to be CASs, a complexity or chaos perspective should be used to understand their dynamics and behavior and to guide strategy development (Tedesco Analytics, 2001; Mason, 2007).  The underlying idea of complexity "is that all things tend to self organise into systems" when simple rules are applied (Kelly and Allison, 1999: 5). These systems can produce unexpected patterns or behaviours (Goldberg and Markoczy, 1998) because of non-linear feedback networks (Stacey, 1996), the interconnection and interdependence of complex systems (Bar-Yam, 2000), and because the system’s parts interact and adapt to each other (Meade and Rabelo, 2004). Complex behaviour is orderly, yet full of surprise; apparently uncontrollable, yet not totally chaotic. The rules that generate this behaviour are not enforced by a ‘manager’, and cannot be predicted from any single part of the system.  Several complexity concepts have relevance to business. The central concept is self-organization, the process of order emerging from simple rules in a system, which is not controlled by a ‘manager’ (Holbrook, 2003), and which results in creative and innovative responses emerging (Dolan et al., 2003). This emergence, the second important concept, happens when the system changes, leading to disorder and preventing the system from ossifying. Emergence happens at the edge-of-chaos, enabling new actions to emerge. New product development behaviour emerges from the operational level (McCarthy et al. (2006).

 

Networking as a Strategy for Firms in a Developing Country to Enter Developed Country Markets

Dr. Mohamed Zain and Dr. Siew Imm Ng, Universiti Putra Malaysia, Serdang, Malaysia

Norizan Kassim, Universiti Teknologi Malaysia, Kuala Lumpur, Malaysia

 

ABSTRACT

 Today, more and more firms are striving to enter foreign markets due to the business potentials in those markets as a result of the breaking down of trade barriers arising from globalization. Based on a multi-site case study method this paper examines how indigenous small and medium enterprises (SMEs) from a developing country of Malaysia used their network relationships to facilitate their entry into developed foreign markets particularly those in developed countries. The evidences from the cases of three software and one control SMEs in this study provide some indications that their networking relationships with foreign parties not only facilitated and motivated their entry into those markets, influenced their market selection and their mode of entry decisions, but they also helped them gained initial credibility to enter developed country markets.  All businesspeople must be aware of the effects of today’s globalization on their business. As trade barriers are broken down due to globalization, more opportunities as well as challenges are opened to or faced by businesses to explore foreign markets, particularly when the their domestic market is small. With globalization, indigenous firms that have been focusing in domestic market are forced to be internationally competitive and to participate in international business.  The global economy now reaches every corner of the world and internationalization now involves not just the large corporations but also many small and medium-sized enterprises (SMEs), many of which are located in developing countries. The international market entry process of SMEs from a network perspective has been intensively explored in the past (see Johanson & Mattson, 1988; Axelsson & Johanson, 1992; Johanson & Vahlne, 1992; Coviello & Munro, 1997; Andersen, 1996; Ellis, 2000). Chetty and Patterson (2002) pointed out that the concept of business networks (Anderson et al., 1994) came from the social exchange perspective on social network (e.g. Cook & Emerson, 1978). The internationalization process of SMEs from this perspective seems to be a more useful concept for foreign market entry since it is possible to overcome the problems of limited resources, experiences and credibility (Lu and Beamish, 2001). Within the last decade or so the theoretical debate on internationalization has concentrated on specific features of small companies in an effort to establish a general theory [Julien (1994) in De Chiara & Minguzzi, 2002]. For example, a research done on Australian SMEs found that exports typically were initiated on the basis of the decision maker’s existing social network (Ellis & Pecotich, 2001). Hendry and Brown (2000) found that national and international relationships involving technology-based firms are much stronger than those involving local ones. Therefore, this paper basically uses the network theory approach to examine the entry of SMEs from Malaysia into foreign markets, particularly developed country markets since their size are big and the business potentials and prospects in these markets are good. For the purpose of this research, a network is defined as the relationship between a firm’s management team and employees with customers, suppliers, competitors, government, distributors, bankers, families, friends, or any other party that enables it to internationalize its business activities (Sharma & Johanson, 1987; Axelsson & Johanson, 1992).

 

Innovation of Low and Medium-Low Processing Industry: A Reference Innovation Model

Dr. Borut Likar, Marko Ropret, and Peter Fatur, University of Primorska, Slovenia

Prof. Dr. Janez Kopac, University of Ljubljana, Slovenia

Maja Skafar, Independent Researcher, Slovenia

 

ABSTRACT

The aim of our research was to design a “Reference Innovation Model”, presenting the most important set of innovation factors, and their concrete values related to innovation and business performance. The Model is based on the analysis of the most innovative companies and provides concrete guidelines as to how the existing state may be improved. The focus was made on the largest economy sector in Slovenia, i.e. low and medium-low processing companies (henceforth referred to as the NTP). The analysis was performed in three phases. In Phase 1, companies were classified into the groups pursuant to their innovation performance (Non-Innovators, Innovation Followers and Innovation Leaders). The Phase 2 confirmed that the Innovation Leaders are also the most successful group as regards business performance. Finally, (Phase 3) the Reference Innovation Model was drawn up. The Model indicates that both appropriate innovation inputs (investments) and effective innovation process are related with the company’s innovation and business performance. In terms of innovation inputs it seems that the attaining of the Leader position does not presuppose the need for increasing the overall innovation expenditures above the Followers level. The move to Innovation Leaders, however, requires a more effectively managed innovation process. So as to achieve a place among the Leaders, both Followers and Non-Innovators should restructure the innovation expenditures from being machinery-oriented (majority of innovation expenditures) into being balanced between machinery/equipment (1.6 % of total turnover) and intramural/extramural R&D expenditure (1 % of total turnover). While Non-Innovators are particularly lacking a clear Innovation policy (I_F1), considerate lag in managing innovation process was also shown in negligible attention to new products (I_F2) and not performing well at satisfying user’s needs (I_F3) - both for Non-Innovators and Followers.  Pursuant to the results achieved, it was shown that companies in the low- and medium-low processing sector are able to record better innovation and business performance by way of adjusting innovation input and the innovation process in accordance with the Model. Moreover, the Model may be used in other industrial branches, thus presenting a valuable tool for possible improvements in a wider part of the economy.  Development of new products (goods and services) facilitates the company’s competitiveness on the market (Sivadas and Dwyer, 2000). Innovations result in the development of new products, new features in products, new ways of producing or selling them or a different approach to other processes adopted by companies (Gellatly and Peters, 1999; Likar, 2007; Tsaggaris and Fatur, 2007). Notwithstanding the strategic importance of innovation, the European Union (EU) is still losing ground in business exploitation of knowledge and creativity to the United States and Japan (UNU-MERIT, 2011). Besides, China, India and Brazil are becoming more and more important players in R&D (Chakrabarti, 2008). So as to improve the current situation, further research with a focus on the study of systemic and systematic approaches is required (Drejer, 2008; Mulej and Zenko, 2002).  Regardless of the extensive research, gaps in our knowledge on innovation are emerging (Arundel, 2006). Most research studies examine fragmental aspects of innovative capability rather than providing the whole picture of the mosaic (de Jong and Vermeulen, 2003; Wang and Ahmed, 2004). Moreover, a fragmental approach is making it difficult to compare findings across studies and transfer them into practice (Subramanian and Nilakanta, 1996; Utterback, 1994; Wang and Ahmed, 2004). Another reason may be seen in a science-push or linear model of innovation largely accepted by the policy community (Arundel, 2006). The hypothesis in the linear model is that prioritising R&D is closely related to extensive innovation degree (Johanessen, 2009). The weakness of R&D and patents statistics has to do with their inability to represent more “downstream” forms of innovation, for example the incremental improvements of products and processes (Evangelista et al., 2000).  

 

Business Valuation Process Review

Professor Wael Al-Rashed and Dr. Mohamad H. Atyeh, Kuwait University

 

ABSTRACT

The objective of this paper is to provide an overview of the business valuation process theoretically and practically. This paper focuses on the general use of the business valuation process and a sample case study is provided on a listed telecommunication company based in Kuwait. The well-recognized valuation models among many existing, the discounted cash flow and the relative valuation methods are presented. The results show that, there is no unique framework for the business valuation process that exists in practice. Other than using the theory in valuation, when it comes to a real case, knowledge and experience are major parts.  Since the 1950’s, theories and practices of corporate finance have grown to explain and clarify how the investment managers react with or deal with any investment whether it is a new or current investment. On the other side, how the investors react to companies’ financial announcements and investment decisions.  A lot of research and studies have been conducted regarding this subject, no dout, business valuation is considered as a science. Many literatures and theories were developed within the area of business valuation which contribute and facilitate the valuation process and minimize the risk related to this kind of assignments. However, no unified framework determines how the valuation process to be conducted and the procedures to be taken. Hence, taking into consideration the formal financial and accounting standards and procedures, there is no right or wrong way to perform a valuation.  Therefore, the previous makes it interesting to review the business valuation process theoretically and analyze it practically to see the process and procedures of its application on a real company.  This research project covers the most important and used business valuation methods which are income based and relative valuation approaches. In addition to a practical case study of a telecommunication company based in Kuwait will be called (Tel). The research results could be useful for at least the following three main groups of users, namely; investors, financial analysts and evaluators, portfolio and investment managers.  The business valuation process was discussed by Aswath Damodaran in 2002 when he asserted that there are many factors affect the final value of the company and there is no specific way to project the company financials and therefore its value. Lunden in 2007 confirmed the previous and stated that the business valuation is not a precise science and the value of a company determines subjectively, i.e. value depends on what purpose the valuation is done for and who does it.  Therefore, counting and calculating numbers are not the only factors to consider when projecting the company final fair value. Valuation of a company is related to a lot of data, market news and subjective estimations. To facilitate the business valuation process there are a number of helpful models presented in the literature.  According to theory, evaluating a business should consist of several steps and procedures to end up with a reliable value of the business. These phases are business analysis, accounting and financial analysis, forecasting and valuation itself (Soffer and Soffer, 2003). Estimating the company future financial statements is the most uncertain part of the valuation process since it is based on assumptions and judgment of the future economic performance of the business.

 

The Stock Market Reaction to the U.S. Quantitative Easing Announcement: Evidence in Emerging Stock Market

Dr. Yaowaluk Techarongrojwong, Assumption University, Thailand

 

ABSTRACT

Although many studies have examined the impact of U.S. conventional monetary policy announcement on stock return in other countries (Ehrmann & Fratzscher, 2006; Hausmann & Wongswan, 2006; Wongswan, 2009), the impact of the U.S. unconventional monetary policy announcement on the stock return in the developing country especially in the firm level analysis is unexplored. This paper investigates the effect of quantitative easing announcement in the U.S. on the stock return in Thailand by using the event study approach. The announcements on November 25, 2008 and November 3, 2010 were examined with 653 firm-announcement observations. Several findings are noted. First, the quantitative easing announcements in the U.S. give the negative impact on the stock return in Thailand. Second, the negative abnormal return is also visible on the day prior to the announcement day, which disappears in a few days and becomes statistically significant and positive within a week. Third, the capital intensive industries respond to the quantitative easing announcement in the U.S. with the largest magnitude among 8 industry sectors.   The subprime crisis in late 2007 made the U.S. economy sluggish (Dodd, 2007). The U.S. economic recovery has been fully unachievable until present. In the normal time, the Central Bank influences the economy by using the conventional monetary policy which includes the open market operation, the direct borrowing through the discount window and the reserve requirements (Meulendyke, 1998; Nakornthab, 2009). The conventional monetary policy seems ineffective since the Federal Reserve maintained the low policy rate (0% - 0.25%) on December 16, 2008. The unconventional monetary policy is the new solution that the Federal Reserve implements. One of the chosen monetary policy tools is the Quantitative Easing (Q.E.). The Q.E. is an increment in size of the Central Bank’s balance sheet by using the new created money to purchase the securities from the commercial bank and the private sectors. The purchased securities include the long-term government securities and the mortgage back securities. The objective of the Q.E. is similar to the open market operation in the sense that it increases the liquidity into the economic system (Bernanke & Reinhart, 2004). However, the Q.E. pulls down the long-end yield rather than the short-end yield. The Federal Reserve implemented the first Q.E. in November 2008 and the second Q.E. in November 2010. The monetary policy affects the economy not only through the interest rate channel (Keynes, 1936) and the credit channel (Bernanke & Blinder, 1988). It also affects the economy through the financial market channel (Mishkin, 1996). Bernanke, Reinhart, and Sack (2004) and Joyce, Lasaosa, Stevens, Tong (2011) find the evidence supporting the impact of quantitative easing on the financial asset price. When the world becomes more integrated, the impact of U.S. monetary policy announcement does not affect only the U.S. financial market. It also affects the financial market in other countries, especially in the developing countries, which cannot control their capital fund flows. Thailand is an interesting case to examine since many capital control restrictions are placed and lifted over time. Before the 1997 Asian Crisis, Thailand tried to stimulate the financial market liberalization by implementing many financial liberalization policies (e.g. setting up the Bangkok International Banking Facility). After Thai Baht currency appreciated in the second half of 2001 (Tongurai, 2008), the Bank of Thailand became more concern on the free capital flow policy. It imposed the 30% unremunerated capital control restriction to withhold 30 % of all foreign currency exchange against Thai baht for transactions less than one year (Bank of Thailand, 2006). The announcement shocked the financial market in Thailand, especially the stock market in Thailand. The stock market panic induced the Bank of Thailand to revise its policy. In the beginning of 2007, the Bank of Thailand started to issue many programs to restore the investors’ confidence (Bank of Thailand, 2007). With the confusing policy direction, the stock market in Thailand may respond differently to the international monetary policy announcement.

 

The Lure of Online Shopping Sites: An Analysis of Rakuten and Amazon in Japan

Dr. Shoichi Morimoto and Kaori Nagahata, Senshu University, Kanagawa, Japan

 

ABSTRACT

Electronic commerce (e-commerce) has become a popular method of transacting all over the world. In particular, business-to-consumer (B2C) online shopping, a form of e-commerce, has grown remarkably . Online shopping is a convenient part of modern daily lives. However, at the same time, the growth of the B2C market has encouraged intense competition among sellers, prompting them to invest more effort in attracting customers by differentiating themselves from the competition. Countless shopping websites have sprouted up around the world, and thus, various features on shopping websites have been developed for this purpose. Japan is no exception in this market; the two strongest consumer sites in Japan, Rakuten and Amazon, account for nearly 50% of the share in the country’s online shopping market. This paper examines the factors that have contributed to their success. To this end, we surveyed various aspects of online shopping sites in Japan and contrasted the consumer tools on these websites using the theories of consumer behavior and behavioral economics. Finally, we systematically present the essential components of these online shopping sites to help other competitors strengthen their positions in the market.  Electronic commerce (e-commerce) is a booming market worldwide and is expected to grow by 19.4% by the end of 2013, according to the latest report by Goldman Sachs. In particular, the business to consumer (B2C) market (i.e., online shopping) has grown remarkably. For instance, as of March 2011, there were 172.3 million online shoppers in the U.S., 87.1% of whom were Internet users.  Meanwhile, consumers in the Asia Pacific region make the most online purchases. Figure 1 shows the percentage of online shoppers in each region, based on a 2010 Nielsen survey of more than 27,000 Internet users.  Among the Asia Pacific countries boasting the top percentages, the Japanese market is a notable one with two dominating shopping sites. Rakuten and Amazon monopolize half of the market share. However, such a duopoly weakens the competitive position of other shopping sites in the Japanese market, essentially removing the only potential source of market growth in Japan following the recent global financial crisis. Therefore, this paper probes into the success factors of Rakuten and Amazon, especially websites features, and then systematizes them from a customer behavior and behavioral economics viewpoint. Our results have practical implications for how other shopping sites can strengthen their positions relative to these two strongest companies and, consequently, vitalize the overall market.  There has been a great deal of research on online consumer behavior, some of which has summarized and systematized key insights (Zhou et al., 2007; Li and Zhang, 2002; Cheung et al., 2003). These studies have categorized factors and aspects related to online shopping attitudes and behavior from a mass of references and regarded online shopping website features as only one of the factors driving online consumer behavior. However, they are closely related to two or more factors. For example, Li and Zhang identified a total of ten interrelated factors, including website quality, external environment, demographics, personal characteristics, vender/service/product characteristics, attitude towards online shopping, intention to shop online, online shopping decision making, online purchasing, and consumer satisfaction (Li and Zhang, 2002). Figure 2 shows these ten factors and a model of the expected relationships among them. Website quality (e.g., design features) can be regarded as a factor that contributes to user satisfaction within a shopping site. Website quality directly determines attitude towards online shopping and has a direct impact on consumer satisfaction (see Figure 2). Meanwhile, Cheung and colleagues noted that web-specific features (medium characteristics in Figure 3) influence the process of online consumer purchase as a whole. Evidently, the literature on online consumer behavior is rather fragmented, making it difficult to classify the properties of online customer behavior clearly (Cheung et al., 2003).

 

Funding of Research and Development in the Function of Improving the Competitiveness in the Global Environment

(EU Member States Experience)

Professor Radovan Tomic, Ph.D. and Professor Dragica Tomic, Ph.D.

Higher School of Professional Business Studies, Novi Sad, Serbia

Gordana Tomic, Belgrade Business School, Belgrade, Serbia

Denis Bugar, Higher School of Professional Business Studies, Novi Sad, Serbia

 

ABSTRACT

In this paper the authors highlight the importance of Global Competitiveness Index, which measures and compares the competitiveness of national economies. By its analysis of the economies we follow the macroeconomic environment, the state of government and public institutions, and their level of technological readiness. In order to reach certain conclusions, we will use primarily statistical analysis: the regression and correlation, but also the descriptive analysis so we can present data and results as practically as possible.  We will evaluate the contribution of innovation in boosting the competitiveness of an economy. The analysis starts with examining a link between increasing share of GDP for research and development activities and growth of the index values of innovation which affects the global competitiveness index. Improvement of products, production processes, increase of efficiency, greater market power and influence and potential for development represent the processes by which companies and economies still strive to survive in intense competitive struggle and increase their competitive advantage. Precisely for these purposes they invest in research and development so that previously mentioned processes could be adequately utilized. Such activities can affect the growth of competitiveness and recognition which can have effect in conquering new markets and growth of revenues from sales, which further leads to greater funding for research and development activities in order to keep pace with other market actors and the environment in which they operate. In the creation of competitive advantage, strategy of the national economy through which a country mobilizes and develops its production capacity to achieve economic development and international competitiveness is very relevant. It is essential that country creates an environment that stimulates companies to gain competitive advantage. Exactly, for this reason, the purpose of this study is to indicate the importance of having a positive relationship between innovation and the creation of global competitiveness on the example of the European Union. The aim of research is an attempt to point out to the importance of innovation for increasing competitiveness of the nation as measured by the global competitiveness index (GCI). For the successful connection of these notions and obtaining good quality data, analysis will be based on data from 27 EU countries. It is clear that the determinants that describe competitiveness are very complex. Some of the greatest economic minds in the last 200 years have attempted to answer the question of what actually makes the wealth of nations. Adam Smith said that specialization and division of labor contributes to dramatically improved productivity.  Competitiveness is a preoccupation of all national economies. Understanding competition means understanding the roots of prosperity. The high national income, strong currencies and above-average return on investment result in high standards of the population and continuity of investment. Competitiveness together with investment in the future forms the basis for assessing the national economic prosperity. Competitiveness has become the dominant economic issue. For almost three decades, the World Economic Forum (World Economic Forum, WEF) studies competitiveness. World Economic Forum in 2004 introduced the Global competitiveness index (1). Global Competitiveness Report represents the annual report, which each year (starting from 1979) examines a number of factors which enable countries to achieve and maintain stable economic growth and sustained prosperity.  As a comprehensive index, GCI focuses on measuring national competitiveness while taking into account the microeconomic and macroeconomic foundations of national competitiveness which are separately evaluated on a scale of 1 to 7. Global competitiveness index measures and compares the competitiveness of national economies. The Global Competitiveness Index is based on the assumption that in today's globalized economy, there are many factors that explain the competitiveness of national economies.

 

Internet Banking for Midwest Community Banks: Consumer Adoption Determinants

Dr. Nasim Z. Hosein, Northwood University, Midland, MI

 

ABSTRACT

This is the final part to a wider study that reports on the critical success factors of Internet Banking (IB) among customers in the South Dakota banking industry, and how to identify potential users. The data was collected through a survey questionnaire from banks in the region who offer IB services. The data indicates that there are several key factors in the success of IB within current users. These include: internal system /organizational, convenience, security and service marketing factors. An important lesson learned from this study is that these factors, although ongoing, need to be constantly revised by banks through the life cycle of IB. These are areas that are important to current users of IB and thus, contribute in the retention of current IB customers.  Since the mid-1990s, there has been a fundamental shift in banking delivery channels toward using self-service channels such as online banking. During the past several years, online banking acceptance has been rapid and current worldwide. Approximately 74 percent of the private banking customers in Finland are regular users of internet banking services (The Finnish Banker's Association, 2004). In general, Europe has been and still is the leader in online banking technology and usage.  As the internet becomes more important for commerce, internet websites are playing a more central role in most companies' business plans. An especially elegant case has been made for the "Internet-only" business model in the banking industry such as eliminating the need for physical branch offices. This results in the reduction of overhead expenses.  Banks can then use the resulting savings to reduce their loan interest rates or increase their deposit interest rates, attracting new customers without sacrificing earnings. The web-based distribution focus allows banks to enter new geographic markets without the costs of acquiring existing banks or starting up new branches, further increasing growth potential.  By comparison, from 1995 to 2005 the percentage of internet users in the USA had risen from 13% to 42 and 43% respectively (Fox and Beier, 2006). Although in recent years this number has grown rapidly, there is some evidence supporting the opposite, that online banking acceptance is faced with problems. Robinson (2000) for instance found that half of the people that have tried online banking services will not become active users.  Online banking in this study is defined as an internet portal, through which customers can use different kinds of banking services ranging from bill payment to making investments. Therefore banks' websites that offer only information on their pages without the option to do any transactions are not qualified as online banking services.  The success of internet banking is determined not only by banks or government support, but also by customers' acceptance of it. The customer has a great influence on the adoption of internet banking (Pikkarainen, Pikkarainen, Karijaluoto, and Pahnila, 2004), as they ultimately decide on whether they will use internet banking based on their individual needs. If the service can clearly show the benefits and how they address customers’ needs, then customers are more likely to use internet banking. Previous research into internet banking has mainly focused on innovation adoption in the context of North America and Europe (Pikkarainen et al., 2004) and to some degree, other areas such as Turkey (Polatoglu and Ekin, 2001).  A study on potential factors influencing internet banking adoption in different regions of the USA however, may provide useful insights as to what factors are critical to the customers by specific regions, as different regions throughout the USA may have different needs that determine success. The goal of this article is to increase our current understanding of the critical factors that influence online banking acceptance and usage for small banks in the Midwest regions.

 

The links between Material Well-Being, Intergroup Contact, and Post-Conflict Reconciliation: The Case of Rwanda’s Coffee Farmers

Dr. Jutta Tobias, Cranfield University School of Management, Cranfield, UK

 

ABSTRACT

Against the theoretical underpinnings of intergroup contact theory and the liberal peace hypothesis, this paper presents correlations between material well-being, intergroup contact, and post-conflict reconciliation attitudes. A sample of specialty coffee farmers (N=239) in Rwanda’s recently liberalized coffee sector provided the basis for our analysis. An innovative technique was invented to measure participants’ ethnic affiliation and comfort level with questions about interethnic relations in a political context that strongly discourages open discussion of ethnicity and intergroup relations. Results from correlational analyses suggest that frequent, deep, and pleasant contact with members from the other ethnic group in Rwanda is strongly linked to an attitude of reconciliation between ethnic groups. Moreover, poverty reduction and higher life satisfaction are also linked to reduced intergroup prejudice. These observations were discernible independent of participants’ ethnicity, or of the specific ethnic mix of community members in a given survey location, suggesting that policy interventions that target economic development may also trigger positive social change. The original contribution of this work consists in a quantitative examination of an observed positive deviance in behavior in a region where people have been locked in cycles of poverty and conflict for decades. The so-called ‘poverty-conflict trap’ (Collier et al., 2003), i.e. repeated cycles of violence and poverty, prevents many such regions from engaging in sustainable economic and social development. Our research is noteworthy for at least two reasons. First, institutional change embracing entrepreneurship in regions marked by intractable conflict has a potentially larger impact on social wealth creation because of its dynamic quality, i.e. the potential to break up particularly destructive norms and practices, and replace these with more productive modi operandi. And second, policy-makers, practitioners, and scholars should not shy away from examining novel and innovative ways to achieving sustainable economic and social development, especially if a focus on generating more commercial opportunities may indirectly foster more productive social relations, which in turn may lead to a virtuous cycle of generating more trust and collaboration (Fukuyama, 1997), as well as desperately needed economic wealth creation.  Poverty and conflict are inextricably linked. Conflict, especially civil strife, is associated with adverse economic performance and lack of productivity (Collier, 1999). It follows from this that reversing the poverty-conflict trap is of utmost importance for both economic and social development. Entrepreneurship in conflict zones is characterized by higher risk in a variety of forms, e.g. property rights uncertainty, contract enforcement risk, and societal instability (Brück et al., 2011). The potential for violent conflict is a risk to business, and to economic development. Rwanda is not only a country in need of economic development. It is also a country with a particularly violent recent past. Its people have experienced extreme levels of violence during the 1990s, culminating in a genocide in 1994 that left Rwanda’s infrastructure and institutions ruined.  Worse still, reconciliation between previously antagonistic groups is badly needed in this country where almost three quarters of all citizens have lost a close family member in the genocide 18 years ago (Pham et al., 2004), and where 90% of inhabitants depend on agriculture for a living.  If you had to decide where to allocate public spending in a low-income post-conflict nation most effectively, would you invest it in tanks and body armor, or rather in policies that may help break the poverty-conflict trap? In this study, we explore the effect of policy changes promoting income-generating entrepreneurship on social relations among community members in a poverty-stricken post-conflict setting. In so doing, we attempt to answer the two-fold question of how individual economic actors in a former war zone experience these policy changes, and to what extent increased income generation opportunities may be linked to changes in social arrangements.  Contemporary Rwanda is a nation with highly entrepreneurial policies. During the reconstruction after the 1994 genocide, the Rwandan government in Kigali started a large-scale institutional reform effort.

 

Quality as aFactor of Corporate Competitiveness

Dr. Petr Suchanek and Dr. Alena Klapalova, Masaryk University, Brno, Czech Republic

 

ABSTRACT

This paper deals with the relationship between quality, performance and competitiveness and is based on qualitative and quantitative data collected over a three-year period of empirical research into Czech companies. The aim of the paper is to present the analysis of certain aspects of quality management and compare them with financial performance measures showing the competitiveness of the companies examined by the study.  There are many studies dealing with mutual relationships between quality, performance and competitive ability of a company, pointing at the connection between quality management and corporate outcomes measured by indicators of performance and competitiveness. In the Czech Republic, however, there are no specialized studies of a similar kind which would examine the relationship between quality, performance and competitiveness. The aim of the research, of which some of the results are presented in this paper, is to contribute to filling in the blank space.  Previous research has illustrated that most companies in the Czech Republic consider the quality of their products or services as superior. At the same time these companies are aware of the positive impact of the superior quality of their products on the competitiveness of their company. (for more see Blažek et al., 2009). However, these conclusions do not provide evidence about other aspects of performance and competitiveness of companies which could also reflect quality management. The paper’s goal is to fill in the knowledge gap to some extent.  The paper summarises a three-year period (2009-2011) of research activities of the authors in this area. Thanks to the research, it is possible not only to monitor the level of quality, its perception by companies and its relation to performance and competitiveness in individual years, but it is also possible to monitor the development and transformation of the quantities under scrutiny in time (and in the context of the economic crisis, which was underway during the research). We are aware of the difficulty of comparing the results obtained from the three research samples in individual years directly as the samples of companies are not identical (even though a part of the companies in the samples overlap). Nevertheless, we believe that it is possible to compare at least the general conclusions obtained during the research in individual years.  It is difficult to directly compare the results obtained for the three research samples in individual years as the samples of companies are not identical (even though a part of the companies in the samples overlap). Nevertheless, we believe that it is possible to compare at least the general conclusions obtained during the research in individual years.  The concept of quality is understood as the ability of a product or service to satisfy needs, requirements and expectations of a customer. This means that needs of customers, quality as perceived by customers and customer satisfaction have become the basis for quality measurement. Many authors consider product quality, quality of service and customer satisfaction as synonymous (Howat, Absher, Crilley, Milne, 1996). When defining the term of quality, it must be noted that there is not a single correct definition of what quality actually is. For instance Garvin (Garvin, 1984, Garvin 1987) defines five basic building blocks of quality along with its eight dimensions, the achievement of which is critical for us to even think of quality as such, be it the quality of production or even of a company itself. When empirically verifying relationships between quality management application and corporate performance, it is necessary to bear in mind that while searching for causality we need to work with perception of quality, not its objective operationalisation, since customers evaluate quality subjectively and it is their opinion which ultimately leads to the decision about making a purchase, which is the basic building block of financial indicators.

 

Human Resource Management and Organizational Innovation

Wannapa Wichitchanya and Dr. Supol Durongwatana, Chulalongkorn University, Bangkok, Thailand

 

ABSTRACT

At this time, many organizations point to building a competitive advantage; for this reason innovation policy is initiated to stimulate the people to create the ideas for the enterprise. The factors that affect the feasibility of innovation depend on several factors, such as corporate finance, networking, marketing strategies, and human resource management. This study aimed to explore the human resource management activities that affect innovation based solely on a review and analysis of research and data from the literature. The findings found that the human resource management activities that affect high innovation in long term are: high potential pool, competency fit, employee empowerment, incentive system, career management, and coaching and mentoring system.  In the new Thai economic era, innovation is the key success factor that makes competitive advantage and profits, including changes market positioning, in short term and long term (Hsueh and Tu, 2004; Santos-Rodrigues, Dorrego, and Jardon, 2010). Thus, many organizations have initiated policy, corporate culture, and an environment that promotes and encourages employees’ innovative behavior and creativity (Hewitt-Dundas, 2006; Dobni, 2008; Rodrigues, Dorrego and Jardon, 2010) that affect overall corporate performance, profits, and sales growth (Hsueh and Tu, 2004).  Nowadays, human resource management (HRM) has changed its role, from general administration to HR strategic partner (Noe, Hollenback, Gerhart and Wright, 2006). HR has been concerned with the value-added aspect of work rather than with working better, and should develop a human resource management mechanism, innovative structure, and corporate culture to enhance the highest profitability and innovative capabilities (Tidd and Bessant, 2009: 100).  Based on Hansen and Birkinshaw’s innovation value chain process (2007), idea generation stage, conversion stage, and diffusion stage, HRM takes the major role in supporting employees to work as a team and in changing their behavior. Especially regarding the idea generation stage, HRM stimulates the worker to think and create new solutions to develop the organizational process and to discuss how to implement good ideas in actuality. Thus, this study aimed to explore the human resource management activities that affect innovation. At this time, many organizations point to building a competitive advantage; therefore, innovation policy is initiated to stimulate people to create new ideas in the enterprise. The factors that affect innovation feasibility depend on several factors, such as corporate finance, networking, marketing strategies, and human resource management. According to the literature review, we found a relationship between human resource management and innovation, both directly and indirectly, that influences the success and failure of innovation.  Scholars have provided many definitions of innovation, for example, noting that innovation is the introduction of new ideas or practices (Roger, 1995: 11); innovation is comprised of the new products or process first launched in the market (Freeman and Soete, 1997: 1); or meaning the successful idea of implementation (DTI, 2004:5). Burton and White (2007) summarized the innovation concept from the macro perspective, saying that innovation is a new product or service development process or an improvement in the existing market and diffused to markets at the appropriate time. Moreover, Drucker (1994), an expert in business management, stated that innovation is a tool for entrepreneurs in creating wealth and profits that represent a new potential for the organization.  From the foregoing, it can be seen that the definition of innovation has different meanings. It sometimes means a new idea and sometimes means a new thing, but organization should realize the exploitation, implementation and commercialization of theses. There is the reason why innovation differs from invention (Smith, 2006).  Innovation can be classified according to several categories depending on the definition and criteria used. For example, by producing results are; product innovation, process innovation, and service innovation, and by level of changes, such as the radical innovation and incremental innovation.

 

Employee Support Programs and Building Affective Commitment

Nigar Cagla Mutlucan, Bogazici University, Istanbul, Turkey

 

ABSTRACT

Employee support programs help organizations cultivate affective commitment by appealing to employees’ self-interested motives to receive or by fulfilling employees’ other-interested motives to give. This paper reviews the underlying relationships between employee support programs and affective commitment. Additionally, intrinsic and extrinsic work value orientations of employees are proposed to affect the relationship between employee support programs and employees’ affective commitments to their organizations.  Characteristics of employee support programs that are pertinent to different types of Turkish organizations are also proposed. Finally, conclusions and suggestions for future research are presented.  In recent decades, employment conditions have changed drastically. That is, employees do not work for a sole company until retirement. As such, the balance of power has shifted in favor of employees; they are more mobile and autonomous. Human resources are now the most valuable assets of a company and employees can be thought of as the engine of an automobile; without the engine, no matter how fancy the car is, it can go nowhere. Therefore, organizations have developed ways to enhance employees’ affective commitment to prevent a loss of talent.  Affective commitment refers to a positive emotional attachment between an employee and an employer (Mowday, Steers, & Porter, 1979). Meyer and Allen (1991) defined affective commitment as “the employee’s emotional attachment to, identification with, and involvement in the organization” (p. 67). Affective commitment is also related to fewer intentions to quit the organization (Allen & Meyer, 1996; Vandenberghe & Tremblay, 2008), lower turnover (Meyer, Stanley, Herscovitch, & Topolnytsky, 2002), reduced absenteeism (Eby, Freeman, Rush, & Lance, 1999; Meyer et al., 2002), more customer-oriented behaviors (Chang & Lin, 2008), and improved in-role and extra-role performance (Luchak & Gellatly, 2007; Meyer et al., 2002).  One way that organizations strengthen employees’ affective commitment is through employee support programs (Hartwell et al., 1996). Employee support programs are “formalized practices designed to improve employees’ experiences at work by providing emotional, financial, and instrumental assistance beyond the scope of standard HR pay, benefit recognition, and training and development programs” (Grant, Dutton, & Russo, 2008, p. 898).  Many scholars have proposed an underlying mechanism for affective commitment by drawing on social exchange theory (Blau, 1964). Specifically, when employees feel the support of the organization, they believe that the organization is concerned about their welfare and, thus, reciprocate by developing affective commitment.  This is why employee support programs cultivate affective organizational commitment, which, in turn, results in lower turnover intentions. Additionally, these programs fulfill employees’ self-interested motives to receive.  Another explanation for the underlying mechanism of affective commitment that is developed by employee support programs was offered by Grant, Dutton, and Rosso (2008). Using multimethod data from a Fortune 500 retail company, they posited that employee support programs may elicit affective organizational commitment by fulfilling employees’ other-interested motives to give.  For example, employees have prosocial identities; they define themselves as giving, caring individuals and often stress the importance of these prosocial identities in their lives. Therefore, employee support programs that allow giving and receiving increase affective organizational commitment through a “prosocial sensemaking” process by which employees interpret personal and company actions and identities as caring. This is a new point of view that deserves exploration to draw practical implications by specifying and enlarging the content of these programs.

 

How Mentoring Affects to Companies and Employees?

Dr. Pedro Nunez-Cacho Utrilla and Dr. Felix A. Grande, University of Jaen, Spain

 

ABSTRACT

Mentoring practices are tools that help foster both staff and company development. Accordingly, this paper focuses on the impacts of such practices in a sample of 603 Spanish companies which, thanks to mentoring, have improved their competitive position and the performance of their human capital. Furthermore, guidelines are given on how to carry out mentoring processes effectively in a business context. The results reveal a causal relationship between the use of mentoring programmes, business and enhanced staff performance.  The importance of Human Resources (HR) to company management and to an organisation's success has been highlighted by many researchers (Gurav et al., 2011) and appears to be one of the main challenges of businesses  This explains the rising importance being accorded to HR departments in company organisation charts (Wright et al., 2001), because professional development is one of the functions in human resource management that can make the difference between success and failure because it contributes to making a company more adaptable to changing and competitive environments (Becker, Hyland and Acutt, 2006; Palmer and Johnson, 2005).  Mentoring processes are featured among other HR practices. Mentoring is a strategic activity to develop professionals in the company and stress their importance to the business (Allen, Eby and Lentz, 2006). This practice have been designed from organisational theories and are included in ‘new career practices’ and have emerged as alternatives to traditional career development techniques (Hezlett and Gibson, 2007). Research in the area of human resources suggests that we can consider mentoring as key strategic activity for the professional development of executives and crucial for firm development (Allen and Poteet, 1999; Wanberg, Welsh and Hezlett, 2003).  Despite this, few studies have analysed mentoring's effects on individuals and on mentors and have touched on the subject or provided deeper analysis of mentoring's influence and efficacy (Baugh and Fagenson-Eland, 2007) and there aren´t have discussed the importance of mentoring for the performance of businesses (Duh, Belak and Milfelner, 2010; Van der Merwe, Venter and Ellis, 2009). Thus, we highlight the dearth of studies on the subject in the literature and (despite the growing use and importance of mentoring in companies) the gaps hindering understanding of the practice and its practical application (Sherman and Freas, 2004). It is necessary to pursue further empirical research on the effects of mentoring on individuals and firms. Therefore, we highlight the innovative nature of this work as it covers a gap in the research that is an obstacle to a better understanding and wider application of these practices (Kampa-Kolesch and Anderson, 2001; Kilburg, 2001; Orenstein, 2002; and Sherman and Freas, 2004).

 

Reverse Triangular Mergers:  Regulator’s Response, Work Done By Other Independent Auditors and Potential Illegal Acts by Audit Clients

Dr. Michael Ulinski and Dr. Roy J. Girasa, Pace University, Pleasantville, NY

 

ABSTRACT

Chinese reverse triangular mergers are sometimes used to circumvent the regulatory oversight in order to gain access to U.S. capital markets.  Instances of fraud, illegal acts of audit clients and lack of auditors’ compliance with audit standards for the use of other independent auditors work by the principal auditor are discussed.  The researchers describe legitimate uses of reverse triangular mergers and problems that led to the Public Company Oversight Board’s Research Note and Practice Alert concerning these types of mergers.  Issues of fraud and potential illegal acts of Chinese domestic companies are framed within a discussion of auditing standards that guide audit conclusions and proper treatment of the discovery of fraud and illegal acts in financial statements.  Examples of violations of legitimate use of reverse triangular mergers are given.  Conclusions are drawn and recommendations are made for improvement in the reporting process that enables transparency of financial information useful for investor and other decision makers.  Much attention has been placed on the activities of Chinese companies seeking listing on U.S. or other capital markets throughout the world.  While many legitimate companies have navigated through the process of initial public offerings, many other Chinese based companies have opted to gain access to capital markets through the use of reverse triangular mergers.  Although a legal process and efficient way to gain entry into capital markets, abuses have been noted especially with the intent to avoid U.S. regulatory and auditing standard guidelines.  In addition fraud and potential illegal acts may have been intentionally perpetrated on the investing community with little or no recourse by U.S. or other regulators of capital markets.  Cultural and language barriers complicate the access to financial data regulators need to determine if auditing quality standards have been compromised.  Principal auditors have used other independent auditors in the China region that may not have the training or been properly supervised by the principal auditors. The Securities and Exchange Commission (SEC) has obtained censure of CPA firms not in conformity with their regulations or quality control measures and some highly publicized resignations by auditors of Chinese companies listed on national stock exchanges have occurred.  Fines have been levied by regulators but in many cases have not been collected.  Cooperation is being sought by U.S. regulators with their Chinese counterparts and progress is slowly being made to allow inspections of underlying financial data.  Auditors are more carefully scrutinizing the work of other independent auditors, but still need due professional care in their work with foreign auditors even those associated with their firms. A corporate merger generally consists of the absorption of a corporate entity, including its assets, rights, and liabilities, by another corporation with the latter retaining its corporate status while the absorbed entity ceases to exist. (1) Thus, the acquiring corporation remains while the target corporation no longer continues its existence. For a variety of reasons, another form of corporate merger, particularly in so-called “friendly” mergers, is the reverse triangular merger. It differs from the more common merger in that the target corporate entity continues to exist after the acquisition by the acquiror. Typically, the acquiror sets up a shell corporation that mergers into the target corporation with the target entity continuing to exist and do business as a subsidiary of the acquiror. The target company assumes the assets, rights, and liabilities of the subsidiary with which it merged. The target entity’s shareholders receive cash, notes, or other taxable consideration. (2) Alternatively, the target company that merged into the subsidiary loses its identity in favor the acquiring subsidiary entity known as a “forward triangular merger”. There are a number of reasons for using the reverse triangular merger. For federal income tax purposes, the merger is treated as a sale of stock by the shareholders of the target corporation to the shareholders of the acquiring corporation. The target’s shareholders recognize gain or loss on the sale of stock measured by the difference between the basis in the stock and the purchase price (usually on a capital gains basis). The target corporation recognizes no gain or loss and its basis in its assets remain the same. The acquiror entity takes on a new tax basis in the target’s corporation’s stock that was purchased from the target’s shareholders equal to the purchase price paid by the acquiror. A liquidation or merger of the target corporation into the acquiror corporation will ordinarily be tax free following a purchase of 80% or more of the target corporation. (3) IRS Revenue Rulings have held that reverse triangular mergers may be tax free even if the 20% limitation on cash or other non-stock consideration is not met. In IRS Revenue Ruling 2001-46, known as the “Double Merger Ruling”, the said 20% limitation in a tax-free reverse triangular merger appears to have been eliminated as well as that the said merger be that of “substantially all” of the assets of the target corporation, and further called into question whether a forward merger is taxable. (4)

 

How Does Culture Affect the Effectiveness of Brand Extension: A Comparative Study of Taiwan and Vietnam

Dr. Yi Hsu and Ngoc Thanh Tran, National Formosa University, Taiwan

Dr. Li-Wei Hsu, National Kaohsiung University of Hospitality and Tourism, Taiwan

 

ABSTRACT

This study attempted to investigate the effectiveness of brand extension from Hofstede’s five cultural dimensions (power distance, individualism/collectivism, masculinity/femininity, uncertainty avoidance, long/short term orientation). Four hundred and seven (N=407) respondents from Taiwan and Vietnam were selected and invited to participate in this study. Simple regression analysis was utilized to examine the five propose research hypotheses through a questionnaire designed on the Likert five-point scale. The results indicated that four of five hypotheses are supported and all five cultural dimensions of Hofstede have shown positively significant influence on brand extension effectiveness. Finally, this study was wrapped up with a conclusion and the suggestions for the practitioners.  Launching a new product can be an attractive strategy for expansion but with risks. This is because around 30% of all new products fail (Montayo-Weiss & Calantone, 1994), while others are even more pessimistic, citing that only two out of ten new launches succeed (Crawford, 1977). Due to factors such as high advertising cost and the increasing competition for shelf space, it has become more difficult to succeed with new products (Aaker 1990, 1996).  Bearing in mind the costs and risks associated with extension of new product, firm managers nowadays prefer extending brand that have been already existed than introducing new product. Brand extension option has become an increasingly popular way to enhance the equity associated with well-known and well-respected brands (Kapferer, 2000). Therefore, it is not surprising that Simms (2005) indicated 82% of the strategies of launching new product are extending the existed brands.  After Aaker’s research (1990) on brand extension in U.S. market, a lot of scholars have researched this interesting field in many countries with various cultural heritages (Tu, 2010; Omotayo, 2010; Olavarrieta et al, 2009; Dhananjay and Panwar, 2009). However, pertinent research on the impact of the different cultural characteristics towards the success of brand extension is still in paucity. As Fu et al (2009) found, “most prior research ignores the fact that consumers are heterogeneous and as such may evaluate brand extensions differently”.  In the past years, the bilateral relationship between Vietnam and Taiwan in economic cooperation and cultural exchanges has grown rapidly, which have attained many brilliant achievements. As of December of 2010, Taiwan is the most direct investment country into Vietnam with 2,146 projects, and total investment capital was nearly 23 billion USD. In the first five months of 2011, Taiwan had 19 projects with total capital was nearly 171.7 million USD. Up to July 2011, the total import turnover of Vietnam from Taiwan was 5.1 billion USD with increased 34% over the same period of 2009. The total export turnover of Vietnam from Taiwan in the first seven months of 2011 was 960 million and this figure had grown 22% over the same period last year. The detailed information is presented in the following Table 1.

 

The Adequacy of Programs Used by the Auditors on Jordanian Companies Operating in Electronic Commerce and its Impact on Accounting Disclosure

(From the Viewpoint of the External Auditor)

Dr. Majed Alsharayri, Balqaa' Applied University, Jordan

Dr. Jamal Al-sharayri, A'Al Al-Bait University, Jordan

 

ABSTRACT

This study aimed at identifying the extent of programs sufficiency that auditors use on the companies operating in e-commerce. A questionnaire was designed and distributed to a random sample from the population that consists of external auditors. (30) Questionnaires were distributed, while (25) were retrieved. (SPSS)  was used to analyze the data and extract the values of duplicates, standard deviations, means and test hypotheses of the study. The study concluded that the e-commerce is the challenge facing auditors and that the ready-made software used in auditing is essential and important in the process of auditing the operations of e-commerce. The researchers found a set of recommendations; the most important was that audit offices must provide these software and work to raise the skills of auditors in dealing with this software, they also advised companies to disclose about the operations of e-commerce in their statements which facilitates the process of financial audit of their accounts.  The spread of e-commerce and its practical exercise by entities and business organizations in their various forms to impose a set of external and internal challenges, especially when taking into account the business risk arising from its exercise, as well as to enhance methods of confidence in the systems and electronic sites, especially since the conviction of the idea of the security of websites that devoted to the exchange of information related to electronic commerce is still surrounded by uncertainty and fear of inadequate security precautions designed to protect data over the web, as it often may not be convoyed with a commercial internal control systems and security procedures used in these entities in addition to changes and developments in the field of e-commerce, which make auditors face significant challenges related to the development of audit procedures when dealing with these changes, and to dispel these fears, International Federation Of Accountants issued the international statement no. (1013) concerning the impact of e-commerce on the audit of financial statements, which focused on the level of scientific knowledge of the auditors, and working knowledge, and risks of the client's business and internal control and security considerations. The current auditor faces a challenge in light of the enormous development of computer technology and used it in electronic commerce within companies, and by which this technology produces problems that affect the auditor, and then the negative impact on the efficiency and effectiveness of the implementation of auditing process in an environment of electronic accounting information systems.  It is clear that the main problem facing both internal and external auditors is the difficulty of obtaining sufficient evidence and proof which is necessary to audit process under the advanced systems of information, because the course of audit is no longer exists in its conventional form which is known among the members of the profession of accounting and auditing, also many studies called for the need and the availability of new methods and tools to help track the references in audit, in light of advanced information systems, which are complex.  It is apparent that the problem that was mentioned lead to address the new problem the auditors must face which is scientific and practical rehabilitation of the auditor who deals with modern systems of information in general and the audit of the accounts of electronic commerce in particular, which imposes on auditors to keep pace with technological development and working to raise their skills in the use of computers and their applications.

 

Gender Gap and Gap 5: A Servqual Empirical Study of Trans-Atlantic Airlines Passengers

Dr. Kien-Quoc Van Pham, Humboldt State University, CA

 

ABSTRACT

The SERVQUAL model is used to identify and explore gender differences in service quality expectations and perceptions of passengers on Trans-Atlantic flights. In-flight SERVQUAL based surveys were administered and collected. The study finds no gender based statistical significant difference in the overall importance ratings of the SERVQUAL five operationalized service quality dimensions with the exception of the Assurance dimension. Further investigation was conducted to isolate which of the twenty two service quality attributes would evidence any statistically significant disparity. Identified gender gaps in service quality perceptions and expectations should prove beneficial to airlines intent on pursuing a gender segmentation strategy.  Recent Asian, and American airlines promotional campaigns targeting women passengers driven by the projected increase in the number of women travelers, especially , business women and the paucity of gender specific research in this particular industry indicates the need to empirically validate this emerging trend for gender market segmentation beyond the traditional business economy class one. Furthermore, the advent and sustained global proliferation and growth of low costs airlines, increasing transaction costs transparency and information diffusion with the internet, i.e. virtual airfares comparisons given an itinerary via travel portals, airlines websites, and subsequent legacy purchasing channels “disintermediation” all have contributed to the  acceleration of the “commoditization” of airlines services. In a “commoditized”, highly competitive environment, the pursuit of a differentiation strategy via quality services is an imperative.  The application of the segmentation concept is a timeless topic of critical import in marketing literature and practice. Management has long condoned and sustained the practice of relying on intuition and on traditional segmentation techniques based on socio-demographic variables for both products and services marketing.  Shostack (1977) wrote about some of the fundamental differences between the marketing of goods and services. Services are thought to be processes and are less standardized than goods, partly because of their reliance on interpersonal interactions [31]. Zeithaml (1981) posited that services are characterized by experience and credence properties (i.e. those that can only be evaluated after some consumption or are difficult to evaluate even with some trial) more than search properties, whereas goods are characterized more by search and experience properties [35]. As services are distinctively characterized by their intangible, heterogeneous, inseparable, and perishable nature, academics and practitioners have acknowledged that service marketing is inherently different from product or goods marketing. The services business sectors, e.g. banking, retail, medical, hospital, tourism, travel, entertainment, etc. nowadays are being challenged to come up continuously with more innovative ways to compete and  sustain their basic “raison d’etre” in light of commoditization.  For many services, customer-contact employees influence the interaction quality that reflects how the service is delivered [4]. Yet, the airline industry and all of its constituent passenger air-carrying actors have deemed appropriate to sustain principally a segmentation strategy predicated upon the differentiation between business and economy class passengers. Teichert, Sheu, and Von Wartburg in their latest study (2007) of the airlines’ marketing practices suggested the need for more alternative segmentation approaches, ones that would capture: a) the preference heterogeneity among customers and b) provide for a better understanding of consumer preferences [32].

 

Technopark Models: University Incubators Worldwide

Dr. Hanadi Mubarak AL-Mubaraki, Kuwait University, Kuwait

Dr. Michael Busler, Richard Stockton College, NJ

 

ABSTRACT

The purpose of this paper is to investigate and identify the outcomes of technopark models in context of university incubators worldwide. Moreover, the university incubator units offer considerable advantages to new, growth-orientated firms in the provision of shared facilities such as offices, administrative staff and access to university research and grant support. The goal of technopark is promoting economic development, commercializing new technologies, and enhancing universities research mission. Design/methodology/approach: Empirical evidence is presented from twelve in-depth, longitudinal case studies of entrepreneurial firms based within a university incubator located in united state. Findings: The current research highlights the specific role of the university incubators models, and in particular, the analysis of case studies based on outcomes of university incubators such as 1) Technology Transfer as License Income, 2) Entrepreneurial Development, and 3) Industry Research Partnerships. Future research needs to consider the relationship between the funds of technology transfer with number of jobs created. Originality/value: this paper will add value to academia, practitioner, and policy maker for successful implementation.  A business incubator offers an ideal environment for start-ups and technopreneurs to transform their ideas, patent and innovation into viable business ventures. Entrepreneurs and small businesses receive support and guidance to be able to start up their business concepts, operate effectively and keep up with the pace of change whilst remaining competitive (NBIA, 2010; Info Dev, 2009).  According to National Science Foundation budget report for fiscal year 2011 (NSF, 2011) the amount of budget for research infrastructure $1.8 billion (24%), provides a tremendous opportunity for technology transfer. There is a direct relationship between the volume of research performed and the flow of invention, although the strength of that relationship varies widely across institutions. In addition, these activities have tremendous economic value by jobs creation (Allen and Levine, 1986; Mian, 1997; Thierstein and Wilhelm, 2001) and academic licensing of technology.  Many scholars such as Mian, 1994, 1997; Phillips, 2002; McAdam and McAdam, 2008 argue about the incubators goals for technological entrepreneurship, commercialization and technology transfer. Furthermore, the university incubators fostering technological innovation and industrial renewal (Allen and Rahman, 1985; Smilor and Gill, 1986; Allen and McCluskey, 1990; Mian, 1996).  The objective of this paper is to identify the university incubators models were used to fostering technological innovation and technology transfer. It will focus on technopark outcomes such as 1) Technology Transfer for License Income, 2) Entrepreneurial Development, and 3) Industry Research Partnerships.  The paper is structured as follows: Section 2 provides a thorough review of the literature on the detail university incubators models. In Section 3 the research methodology included the successful case studies to illustrate different key performance of the university incubation. In Section 4, the authors briefly discuss the finding of the study drawn from analysis of case studies of university incubators. Section 5 concludes with implications of the university incubators from successful international universities.  Many benefits from university incubators for successful transfer of new technologies from the research laboratory to the commercial sector such as 1) promoting economic development, 2) commercializing new technologies, 3) enhancing universities, 4) research mission, 5) the creation of wealth, 6) new jobs, and 7) new solutions to society's problems. The total of Stanford's cumulative income from patent licenses since the creation of the technology licensing office is more than $300 million, but the annual revenues of the companies born at the university total more than $100 billion their market capitalizations are in the tens of billions, and the jobs created in the hundreds of thousands (Lawrence M. Fisher, 1998). 

 

Product Characteristics and Parallel Systems Strategy

Dr. Kevin Mason, Arkansas Tech University, Arkansas

 

ABSTRACT

Large organizations develop and integrate corporate, business, and functional level strategies in order to achieve strategic goals.  This paper focuses on the interdependence among the functional-level strategies and systems organizations use to address three basic problems faced by organization: the entrepreneurial problem, the engineering problem and the administrative problem. Firms respond to these problems by developing (1) marketing strategies that match the firm’s products to customer needs, (2) production strategies that match the manufacturing processes to the product requirements, and (3) administrative systems that generate the behaviors needed to produce the product. This article presents a “parallel systems” framework that can be used as a tool to examine the impact of product characteristics in each of these key areas.  Finally, implications to the parallel systems framework for business practitioners and researchers are identified and discussed.  Large organizations develop and integrate corporate, business, and functional level strategies in order to achieve strategic goals.  Corporate level strategy asks “What business do we want to be in?” and planning focuses on the mix of businesses and the allocation of resources to those businesses.  Business level strategy asks “How can we compete?” and planning focuses on how a particular business will compete (costs leadership, differentiation, or focus) within its own market(s) and industry (Porter, 1980).  Functional level strategy asks “How do we support the business-level strategy?” and planning focuses on the ways each functional unit (e.g., marketing, production, finance) contributes to goals defined at the corporate and business levels.  This paper focuses on the interdependence among the functional-level strategies and systems organizations use to address three basic problems faced by organization: the entrepreneurial problem, the engineering problem and the administrative problem (Miles, Snow, Meyer and Coleman, 1978). Firms respond to these problems by developing (1) marketing strategies that match the firm’s products to customer needs, (2) production strategies that match the manufacturing processes to the product requirements, and (3) administrative systems that generate the behaviors needed to produce the product.  The characteristics of the product(s) produced and/or sold by a firm provide a basis for analyzing and linking marketing strategies, production strategies, and administrative systems.  Product characteristics affect (1) the amount of information marketers’ transfer between customers and producers, (2) the predictability and stability of the processes required to produce the product and (3) the predictability and stability of employee behaviors needed to produce the product. These factors, in turn, affect a broad range of marketing, production, and administrative decisions.  This article presents a “parallel systems” framework that can be used as a tool to examine the impact of product characteristics in each of these key areas. The parallel systems framework is extended and revises by considering the impact of advanced manufacturing technology (AMT) on the relationships among product characteristics, marketing strategies, product strategies, and administrative systems. The parallel systems framework is extended and revised by considering the impact of advanced manufacturing technology (AMT) on the relationships among product characteristics, marketing strategies, product strategies, and administrative systems. Finally, implications to the parallel systems framework for business practitioners and researchers are identified and discussed.

 

The Role of Costing Method Based on the Basis of Activity in Providing Competitive Advantage for the Hospital Managements

Dr. Baki Yılmaz, University of Selcuk, Konya, Turkey

 

ABSTRACT

This study is a studying done for the practicability of the costing that is base on the activity in the hospitals that are a management of production of service. The objective is the role of, one of the strategic and advanced cost methods in the hospital managements, “The Costing Method That Is Based On The Basis Of Activity” as a weapon of competition, and its effect to the performance of management and to provide that this method becomes lodestar in the decisions that hospital managers take.  The dynamic competition atmosphere, in our day, has made necessary that in the hospital managements, good-quality services are produced with more justly and low costs. The hospital managements, for keeping their activities on this intense competition atmosphere, need the costing methods, which cater to some changing customer demands instantly and which have the good quality and justly information of the low cost and have the capability of offering a wide service range. This need, at the present time, has brought into open the necessity of new cost accounting method providing a true cost information.  The transformations lived in the matter of the cost accounting method has increased the importance of costs in the cost information system and caused to the consequence that they are used effectively. In this context, in terms of the competition threaten the aims and the existence of managements is transformed into opportunities after eliminated the negative effects of it, the importance of the cost accounting activities has increased gradually.  Especially, flexible and computer-aided production systems that are advancing for last two decades have changed the production and organization structures of managements, and as a consequence of this, old-production philosophies have lost its validity. In parallel with this change, the traditional accounting system that does not provide information about the whole management has remained incapable about the costs are used in the strategic management decisions, besides. At the end of a new method seeking, which is able to establish more correctly the relation between product and resource cost that the product consumes, and which is able to follow the cost that every activity done will bring to a management, “Costing Method Based on the Basis of Activity-(ABC)” has been built up (Oker, 2003: IX).  In our day, it is seen that ABC applications have become important in the hospital managements. In this context, that ABC gives a more true costing information, and improves the costing activity without ignoring productivity and service quality, and uses resources voluminously, and gives an opportunity to the improving of activities, and helps for business management to be taken strategic decisions is among the root causes that the hospital managements in the whole world tend to ABC. The hospital managements, which are a social organization that have been established by the aim of catering for the need of health that is an indispensible element of human’s life and providing health service for people appear with a conceptual structure.

 

Most Feasible Strategies for Green Marketing Mix under Business Sustainable Development

Dr. Wen-Lan Wang, Ling Tung University, Taiwan

 

ABSTRACT

The main goal of this research is to explore the relationship between consumer lifestyles and green marketing mix strategies. The research samples people from the general population in Central Taiwan and collected 439 valid samples. A Structural equation modeling was used to analyze the data and facilitate a discussion on the effect of lifestyle on green marketing mix strategies. In this way, green marketing mix strategies are used in a timely manner toward consumers with different lifestyles to increase the sale of green products.  The research discovered that consumers consider different factors when purchasing green products depending on their lifestyles. Therefore, marketing strategies are differentiated to suit different lifestyles; explanations of product quality and functionality are suitable for plan-oriented and price-oriented lifestyle consumers. Promotional activities for products are applied to price-oriented lifestyle customers, whereas consultation and recycling services are provided for work-oriented lifestyle consumers. For plan-oriented lifestyle consumers, emphasizes governmental laws, regulations, and incentives related to green products is recommended. Incentives such as price and attractive packaging are more appealing to price-oriented lifestyle consumers.  Because the Earth is seriously polluted, governments all over the world are imposing restrictions to trade, and green products are becoming increasingly popular due to the rising awareness of environmental protection among consumers. Green consumption is also gradually becoming a new trend. Therefore, manufacturers also need to understand the consumption market and the decision factors of consumers when purchasing green products, to grasp the opportunity to position themselves in the green trend and work toward sustainable development.  Human consumption influences pollution levels. The products that consumers purchase, the extraction of the raw materials used to make such products, and the processes of use and scrapping of the product may all cause harm to the planet. This harm ultimately influences peoples’ lives. To avoid and reduce the harm inflicted on our planet, consumers have begun to reflect upon their own consumption behavior. Therefore, consumer behavior has begun to change, and consumers are gradually beginning to focus on and utilize green products, hoping to make their contribution to the planet Earth. However, the research involved in environmental products and the environmental protection policies of nations may elevate the costs of green products, rendering them unable to achieve a competitive advantage in terms of price. Therefore, a critical aspect of successful marketing involves understanding the decision factors of consumers when they make purchases. Consumers with different lifestyles have different purposes for buying green products, so the application of proper marketing strategies to different consumer groups is very important for the industry. Therefore, this paper mainly explores the relationship between lifestyle and marketing strategies for green products. In this way, green marketing mix strategies are targeted to consumers with different lifestyles to increase the sales of green products.

 

Knowledge and Working Performance as Barrier and Driver for SMEs

Dr. Alena Klapalova, College of Commerce and Hotel Management, Brno, Czech Republic

 

ABSTRACT

The aim of paper is to present the results of survey realized in year 2009 focused on detection of barriers and drivers of entrepreneurship stemming from external as well as from internal environment. The respondents of the inquiry were owners and managers of small and middle tourism and hospitality enterprises in the Region of South Moravia (one of 14 regions of the Czech Republic). Results show that main two barriers are knowledge of managers and staff and working performance of human resources. Both barriers are perceived also as the most important drivers for future development of companies. There are also some differences when considering size and age of companies, i.e. among microenterprises and small and middle companies and among those starting the business before the year 1990 (during socialism era), during 1990´s and after year 2000.  Although not every entrepreneur wants to do business in large scale (and some even not in middle scale) (Bartlett et Bukvič, 2001), there probably would not be many owners who prefer to have their business be unsuccessful. Pasanen citing Simon (1996) stresses that “the most important and the most challenging business goal is long-term survival (Pasanen, 2005). Small and middle enterprises play very important role in tourism and hospitality industry where the customer demand is extremely heterogeneous and the supply can correspond to this character of demand relatively easier compared to other industries. The diverse wants and needs of customers together with relative lower capital intensity and relative lower level of knowledge offer many opportunities to start and continue business. Moreover, tourism and hospitality industry has become one of the largest and growing industries of economy worldwide since the 1990s with lesser impact of economic crisis of the latest two years than other industries. In the European Union tourism “represents the third largest socioeconomic activity”, where primarily SMEs co-create app. 5,2% of the total workforce generating more than 5% of EU GDP and SMEs are also the essence of the fact that “the tourism sector has significant potential for the development of entrepreneurial activity” (Europe, the world’s No 1 tourist destination – a new political framework for tourism in Europe, 2010)Nevertheless, small and middle enterprises (SMEs) in general must cope with many barriers that hinder their growth or distort their stability. The aim of this paper is to contribute to the existing body of knowledge concerning the character of barriers of entrepreneurship for this type of companies in the industry of tourism and hospitality, particularly in HoReCa sector, in the region of South Moravia, pat of the Czech Republic. South Moravian tourism together with other hospitality branches from the so called HoReCa sector (hotels or accommodation, restaurants, bars, cafés) represents a significant part of the Czech tourism and hospitality sector.  Paper offers the results of empirical survey searching for the problems which owners and managers of tourism and hospitality SMEs solve within their entrepreneurial activities. Results show that knowledge working performance of employees represent the main barrier for stability and /or growth of existence. Results differ for different size of companies (in number of employees), different age of companies (according the year of establishment), different profitability and different share of foreign clients.

 

Diversification Strategy and Performance of Taiwan Financial Firms in the Global Financial Crisis (2007–2008)

Hou Ou-Yang, Kun Shan University, Tainan, Taiwan

 

ABSTRACT

This study uses agency theory to predict the influence of related and unrelated diversification on a firm’s performance. Further, this study argues that the link between diversification and performance is moderated by the environment in which firms operate. Financial firm data covered the years 2003 through 2009 was acquired from the Taiwan Stock Exchange (TSE) and Taiwan’s over-the-counter market. This study data spans the period of the Global Financial Crisis (2007–2008).The regression results reveal that financial firms pursuing related (or unrelated ) diversification have significantly positive (or negative) effects on market performance in stable environments, but have significantly negative (positive) effects on market performance in dynamic environments.   In recent years, the knowledge-based economy tide taking over the entire world is knowledge. Both the diversification strategy and the environment which firms operate are key determinants in acquiring the competitive advantage in Taiwan’s financial industry. In this study, agency theory is used to examine how diversification strategy influences a firm’s performance. To add to the existing literature on this topic (e.g., Lin ,2001; Ou-Yang 2010, 2011), it considers the role of the environment (Simerly and Li, 2000Lim, Das, and Das, 2009) as a moderator of the relationship between strategy and performance. This study argues that the influence of diversification on a firm’s performance is contingent on whether the environment within which firms operate is stable or dynamic. It also suggests that the standard forecasts of agency theory might not hold up under dynamic conditions when unpredictability, uncertainty, and business risks are high. Therefore, this study extends existing theoretical explanations of the diversification-performance linkage by showing how managerial diversification strategy may differ under dynamic vs. stable environments.  This study chose agency theory as a theoretical lens because the agency theory of equity has had a strong influence on strategic management research (Rumelt, Schendel, and Teece, 1994). Agency theory is also suited to this study because of its focus on principal-agent problems under uncertainty. This study uses a Taiwan financial firms data sample to test the generalizing agency theory arguments and their usefulness beyond the U.S. and European contexts.  The motive of this study is to explore the effects of the environment in which financial enterprises operate and how it influences the relationship between different diversification strategies and market performance. To accomplish this goal, this study focuses on the effect of diversification on firm performance. It explores whether the diversification strategy (including related non-related diversification) of financial companies in a group enterprise has a positive or negative effect on firm performance. It also examines how the environment influences the linkage between diversification and performance.  The remainder of this study is outlined as follows: Section 2 presents the literature review and development of the hypotheses. Section 3 discusses the research methods and design. Section 4 presents the empirical analysis, results, and discussion, with conclusions and recommendations following in Section 5. 

 

The Impact of SOX on the Relationship Between the Managers’ Earnings Management Behavior and Voluntary Restatements

Prof. Ya-Fang Wang, Providence University, Republic of China

 

ABSTRACT

I examine the question that why managers’ voluntary restatements have been more prevalent even if after the SOX by addressing the managers’ earnings management behavior made by a restatement sample of 483 companies during 1997-2005. First, I adopt a variant of Heckman’s (1979) two-stage estimation procedure to deal with endogenous problem for the voluntary restatement announcements. Second, I consider seven characteristics of restatements to examine the impacts of SOX on the relationship between the managers’ earnings management behavior and the content of voluntary restatements. Overall, my findings suggest that managing earnings by real manipulation activities seems to be the driver for the dramatic increase in voluntary restatements during the post-SOX period.  In recent years, the incidence of financial report restatements has increased dramatically (GAO 2003; Wu 2002). A research report done by the Glass Lewis & Co. indicates that 1,195 companies (8.5 percent of all public companies) made restatements in 2005, compared with 613 companies in 2004. Moreover, it reveals monotonic increases that companies release the restatement announcements in 2006. The erosion in the quality of earnings and financial reporting as evidenced by the proliferation of financial report restatements has caused concern among academics, practitioners, and regulators alike. Although the Sarbanes-Oxley Act (hereafter called SOX) imposed substantial criminal penalties on CEOs/CFOs for issuing misstated financial statements (Section 305), still I found many companies voluntary to release the restatement announcements. Therefore, I particular concern is the why managers’ voluntary restatements have been more prevalent even if after the SOX.  While previous research has provided strong evidence on the incentives that exist for companies to engage in earnings manipulation (e.g., Kedia 2003; Erickson et al. 2003; Richardson et al. 2003; Beneish 1999; Dechow et al. 1996), the evidence on the consequences of earnings manipulation for company is weak. In this paper, I examine whether managers attempt to engage in earnings management ex-ante and lead managers’ voluntary restate their financial report ex-post. Arguably, if managers’ earnings management behavior are triggered for the consequences of managers’ voluntary restatements, I should observe less managers’ voluntary restatements in the post-SOX period because the SOX has stipulated stringent requirements on the responsibilities of firms’ audit committees to oversee companies’ financial reporting processes (e.g., Section 301) and imposed substantial criminal penalties on CEOs/CFOs for issuing misstated financial statements (e.g., Sections 302 and 305). However, the high jump in restatements reported in Glass Lewis Trend Alert (2007) seems inconsistent with the regulatory goals of the SOX and warrants a more detailed investigation. Therefore, I investigate this question as to why managers’ voluntary restatements have been more prevalent even if after the SOX by an examination of the managers’ earnings management behavior made by a restatement sample of 483 companies during 1997-2005.  The empirical results reveal several important and amazing findings that never have been found in the past studies. Surprisingly, I find the coefficients on the content of voluntary restatements are all insignificant in the pre-SOX period. However, I find some of the coefficients on the content of voluntary restatements are significant in the post-SOX period. It indicates that all companies are more likely to use real activities manipulation to manage earnings after the passage of the SOX. The result is consistent with Cohen et al. (2005). In the post-SOX period, I have four important finding. First, I find managers probably utilize the opportunity of voluntary restatements to pretend that everything is going well. Therefore, it shows the reverse phenomenon that managers engage in real activities manipulation to decrease abnormal production costs in prior year and lead to increase amount of restatements in next year. Second, managers thought the non-quantified of the restatement announcement like to wear masks, and it makes investors to confuse. Hence, managers probably utilize the qualitative voluntary restatements to cover the fact of they have more negative abnormal production costs in prior year.

 

Factors Affecting Customer Satisfaction and Employee Satisfaction in the Hotel Industry in Egypt  (A comparative study)

Dr. Ahmed Samir Roushdy, Sadat Academy for Management Sciences

 

ABSTRACT

The aim of this Research is to identify customer and employee levels of satisfaction in the hotel industry, and also to define most significant factors of both employee and customer satisfaction, as well as to examine that relationship between customer satisfaction and employee satisfaction. Two structured questionnaires were used to collect data, one for customers and the other for employees. A case study was applied on El Gouna Resort in north of Hurghada on the west cost of Red sea in Egypt. El Gouna is home to 14 spectacular hotels built along 10 kilometers of beach front and spread across islands inter linked by lagoons. The town is easily accessed from Europe via the nearby Hurghada International Airport. El Gouna Hotels were chosen as winners in Trip Advisors 2012 Travelers’' choice awards. Moevenpick Resort El Gouna (built on 12 islands surrounded by gardens, total number of rooms is 554, we will call it hotel A) and Sheraton Miramar Resort El Gouna (built on nine islands surrounded by gardens, total number of rooms is 339, we will call it hotel B) were chosen to be winner in the "Top 25 hotels" in Egypt for 2012 Travelers' choice. That was the reason behind selecting these two hotels.  The need for close interaction and communication in service organizations generally threatens the satisfaction of the consumers, since the production and consumption process cannot be separated. For the accomplishment of guest satisfaction, the satisfaction of employees in the hotels is imperative. It should be noted that job satisfaction is a key factor to maintaining high performance and efficient service, which will directly increase the productivity of the organization. Researchers have focused on job satisfaction and link this concept to other variables such as organizational commitment, stress and burnout, empowerment, organizational performance, motivation, turnover intention, and sometimes demographic and personal characteristics (Chen, 2006; Fairbrother and Warn, 2003; Furnham et al., 2002; Gaertner, 1999; Ghiselli et al., 2001; Jernigan et al., 2002; Karatepe et al., 2006; Lam et al., 2001; Linz, 2003; Silva, 2006; Spence Laschinger et al., 2002; Tepeci and Bartlett, 2002; Tsigilis et al., 2004).  The research is structured as follows. The next section provides a brief literature review of customer satisfaction and employee satisfaction in hotels. Our data and empirical analysis are explained in section 3. The results of the research provided in section 4. Finally provides a further discussion of our results giving some managerial implications in section 5, along with limitation and some suggestions for future research.  The ability of an organization to attract and retain customers is vital to its success. Customer satisfaction and loyalty requires a strong desire by the customer for a product, and availability of several product vendors to choose the product based on his/her preferences (Dick and Basu, 1994; Otim and Grover, 2006). These two factors are very much applicable in the hotel industry as more and more people visit different places and need places to stay (Nunes and Spelman, 2008), and huge number of hotels are available. Customer satisfaction and loyalty is often shaped by positive experience by the customer during his/her stay in a hotel (Mason et al., 2006; Nasution and Lavondo, 2008). A number of factors contribute to the experience (Clow et al., 1994; McCleary et al., 1993; Yavas and Babakus, 2005): customer service; cleanliness; facilities; price; food; and location. Customers use a variety-of attributes to judge the quality of service that they receive during their stay in a hotel (Wilkins et al., 2007). Both physical and service qualities of a hotel have positive impact on customer satisfaction (Ekinci et al, 2008). Some of these criteria or factors are related to the intangible service elements, some are related to the tangible physical elements, while some other factors such as "value for money" are more complex to define (Mohsin and Lockyer, 2010). The intangible elements are essentially service related – customer service, understanding and caring on the part of hotel management, assurance, and the relative convenience of dealing with transactions while staying in a hotel. This will also include the service that the customer receives at the restaurant, if any, in the hotel.

 

The Role of Personality and Parental Support in Taiwanese College Students’ Career Self-Efficacy

Ching-Hua Mao, Chihlee Institute of Technology, Taiwan

 

ABSTRACT

The purpose of the present study was to determine whether personality or parental support is the main predictive indicator of career self-efficacy. A parental support scale, a career self-efficacy scale, and the Holland Personality Scale were employed to study 435 Taiwanese college students. The results show that the Conventional type of personality is the most significant predictive variable of career self-efficacy among Holland’s six themes. In addition, among the four subscales of the parental support scale, Esteem and Autonomy Support played a significant role in predicting college students’ career self-efficacy. As compared to the parental support variable, which only accounted for 3.9% of the variance, the personality traits variable accounted for 36.5% of the variance.  In recent years, research on the Social Cognitive Career Theory (SCCTLent, Brown, & Hackett, 1994) has become a popular subject in the field of career development. The core concept of the theory is based on career self-efficacy, which directly forms individuals’ career interests. The theoretical model also claims that person inputs (including gender, personality, race, and physical condition) and background contextual affordances are leading factors that construct different learning experiences and influence the development of career self-efficacy. In the past, studies often focused on the discussion of personal variables and overlooked the impact of contextual determinants on personal career process. Although some research includes contextual determinants in the analysis, scholars do not find sufficient evidence to support the SCCT model or have proposed disaccorded paths.  Lent et al. (2001) divided contextual determinants into contextual supports and contextual barriers. The former includes social support, role model, and financial backup. Among these, social support is an important element in the process of career development. As a result, the emergent “relational approach to career development” focuses on the interconnectedness of career progress and the quality of relationships in one’s life (Schultheiss, 2003). The theory suggests that significant others are resources that affect a person’s career decision. Schultheiss, Kress, Manzi, and Glasscock (2001), Phillips, Christopher-Sisk, and Gravino (2001), and Schultheiss, Palma, Predragovich, and Glasscock (2002) conducted qualitative research to explore the support network of individuals and presented an analysis of categories and subjects. Their studies elaborated on the dimensions of social support, such as emotional support, esteem support, information provision, and tangible assistance. However, there is still scant quantitative research to support the influence of social support on career development.  Personality and Career Self-Efficacy. Career self-efficacy refers to a person’s beliefs concerning his/her ability to successfully resolve future career-related issues. Hackett and Betz (1981) proposed this concept by extending the notion of self-efficacy that is described in Bandura’s social learning theory. Lent et al.’s (1994) SCCT emphasizes the predictive role of career self-efficacy in career development and states that career self-efficacy plays a direct role in developing individuals’ career interests. The theoretical model also claims that person inputs (including personality) and background contextual affordances are leading factors that help create different learning experiences and influence the development of career self-efficacy. Therefore, SCCT asserts that personality is the leading factor in the development of career self-efficacy in an individual. Some empirical studies have verified the assumption of SCCT. For example, Nauta (2004) found that career self-efficacy is the mediator between personality and career interests.

 

Cost-Integration Between Balanced Scorecards and 6 Sigma and its Role in Enhancing the Overall Quality of Industrial Companies

Dr. Abdallah Barakat, Shaqra University, Saudi Arabia

 

ABSTRACT

The rapid developments of many of the administrative and technical concepts have led contemporary industrial firms urged to find ways, methods and appropriate strategies aimed at achieving excellence and enhancing the products and services of firms.  The current study identifies the possibility of integrating balanced scorecards and 6 Sigma to enhance the overall quality of industrial companies. To achieve the goal of this study, a virtual model was built that shows the relationship between cost-integrated balanced scorecards and 6 Sigma. The study depends on completing the vocabulary of the theoretical framework with respect to the sources, references and foreign literature relevant to the study, including the Internet.  This study arrives at a number of theoretical conclusions that are commensurate with the assumed form of the study on which it was based, and it provides a set of recommendations that are consistent with these conclusions.  The initial aim is to construct a method to study management through the use of abstracts and referenced literature specifically related to the study.  The main objectives of the study are the following:   To provide a conceptual framework of the balanced score card and 6 Sigma and to determine their role in enhancing the overall quality of the companies to which they are applied.  To monitor the strengths and weaknesses of each of the two methods and to determine how to integrate cost between the two methods to enhance the overall quality of industrial companies.  The study pointed out that the B.Sc. which takes into account the four aspects (financial, customer, the internal operational processes,   learning and growth) is an administrative tool that helps to translate the vision and mission of the organization into measurable targets, and then adjusts and guides the organization's performance towards achieving these targets in each of the four  aspects. It is critically important when applying 6 sigma to determine the measurements, statistics and basic operations, and to identify the black belts who are the leaders, and as such will lead the staff while improving operations.

 

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