The Business Review Journal

Vol. 24 * Number 1 * Summer 2016

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

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Predicting Innovation Ability by Hofstede’s Cultural Dimensions

Hannes Witte, Jacksonville University, FL

Dr. Gordon W. Arbogast, Jacksonville University, FL

Dr. Jim Mirabella, Jacksonville University, FL



Globalization and the need for technology are two of the main trends businesses are currently facing. Both are also reason for companies to find innovation friendly countries for their subsidiaries. Selecting a location is not trivial and influenced by many diverse factors such as culture. Starting in 1979, Geert Hofstede, a social psychologist in the field of business, used employee surveys to analyze cultures by their components. His now well-known and widely spread work bases on the categorization of cultures by four (later six) different dimensions. The focus of this paper is to investigate if companies can use Hofstede’s cultural dimensions to identify countries with great innovation potential. Therefore, this paper explores the relationship between countries’ scores in each dimension to their number of patent applications per capita. The research also develops the “best” model to help explain the variation in patent applications. This final model is a parsimonious model as it explains differences of innovation ability with an R square of 42% with only two explanatory variables: The Power Distance Index and the Pragmatism Index. The paper concludes with recommendations for further research. This includes measuring the ongoing shifts in cultural features that has been observed as occurring in several of the major countries.  What do international giants like Apple and many urban millennials, challenging their entrepreneurial skills, have in common? Both are increasingly relying on the emergence of innovation. Modern technology turned innovation from a need to an enabler which is highly sought after and more easily accessible than ever. In addition, the impetus of globalization elevates the issue of innovation to yet another level of importance. With decreasing international trade and investment barriers, even smaller companies are quickly enticed to move abroad to become MNE’s (Multi-National Enterprise). Besides selling and producing in other countries, international companies are also building R&D facilities away from their headquarters.  This allows them to immerse themselves into innovative environments, like Mercedes-Benz has increasingly done in Silicon Valley. This allows them to stay on top of the challenges of the digital era (Berman, 2015).  Which region or country should an organization choose for its FDI (Foreign Direct Investment)? This study seeks to evaluate the attractiveness of countries for FDI, measured by their potential to support innovation. It is assumed that especially FDIs in R&D should aim for regions that are rich in intellectual know-how. However, it is sometimes not obvious to what degree various countries support innovative cultures. Therefore, it is important that business leaders have metrics that will help them make such global decisions. One way such a matrix could be constructed is by investigating national cultures and their relationship to business in general. Cultural differences are major factors that must be well understood by businesses (Hill, 2014). How culture can be underestimated was illustrated by Walmart when they attempted to bring their U.S. business strategies to Germany using copy-and-paste tactics (Berfield, 2013).  Geert Hofstede was one of the first psychologists to study the relationship between culture and business on a large scale.


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A Replication of the 2008 U.S. National Report Card Study on Women in Firefighting

Dr. John Griffith, Embry-Riddle Aeronautical University, FL

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

Dr. Ronald Wakeham, Embry-Riddle Aeronautical University, FL

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



Women comprise 51% of the population in the United States (U.S.), but fill only 3.7% of paid firefighting positions.  This study replicates the survey portion the 2008 benchmark study The National Report Card on Women in Firefighting (Hulett, Bendick, Thomas & Moccio, 2008). Using the same survey instrument as the 2008 study, this research examined the perceptions of 141 firefighters from across the U.S. to determine key issues limiting female participation in the fire and emergency service and how results compared to the findings by Hulett et al. in 2008.  Results showed that significantly more women than men felt they were treated differently due to their gender, experienced ill fitting “turn-out” or “bunker gear,” perceived supervisors did not address complaints concerning gender related incidents, and were treated differently due to sexual orientation. In addition, they revealed that there were no formal procedures for race or gender-based complaints.  More women than men felt that promotions were not decided upon fairly and that their gender was a barrier to career development (α=.05).  Another set of findings were that the group of survey takers in this study answered in a statistically similar way to the survey takers in the 2008 The National Report Card on Women in Firefighting survey.  Recommendations include future studies using the 2008 study findings as a benchmark, and the introduction of polices supporting cultural changes in the fire and emergency services.  This research attempted to replicate The National Report Card on Women in Firefighting study (Hulett et al., 2008).  Underrepresentation of females in the fire and emergency services was one of the major issues identified in the 2008 study.  In 1980, the percentage of women firefighters was barely above 0%.  As of 2010, women accounted for approximately 11,100 of 354,000 paid firefighter positions.  This translates to 3.7% of paid firefighter positions in the U.S. (Haynes & Stein, 2014; Newman, 2011; U.S. Census, 2012, U.S. Department of Labor, 2013).  Hulett et al. argued that women should represent approximately 17% of firefighters nationwide after reviewing women of typical firefighter age (between 20 and 49 years old) working full time in one of 184 occupations resembling the firefighting environment.  This perceived gap of 14% amounts to approximately 49,000 female firefighters who could be in the ranks of paid firefighters but are not.  Hulett et al. argued that if nothing changes and the growth rate remains less than 0.2% each year, the percentage of women firefighters will not hit the 17% mark until approximately 2080 (2008, p.2).  An additional set of issues explored were how women perceived they were treated with regard to promotions and sexual harassment incidents and the gap in perceptions between men and women on those topics (Griffith, Schultz, J, Wakeham and Schultz, M, 2015; Hulett et al., 2008; International Association of Women in Fire and Emergency Services [i-women], 1995)


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 Promote Undergraduate Students’ Research Experience through the U.S. – China Collaborative REU Program

Dr. Sha Li, Alabama A & M University, AL

Dr. Derrick Davis, Alabama A & M University, AL

Dr. Lydia Davenport, Alabama A & M University, AL



With the development of the global economy, international collaboration has been more and more emphasized. To develop our students’ capabilities to grow in the globalized environment is ultimately important. Alabama A & M University and Nanjing Forestry University has developed an internationally collaborative REU program (Research Experience for Undergraduates) to training American students in learning how to conduct scientific research in the Chinese academic environment. The study shows that the students’ learning experiences are much more enriched and fruitful as compared to the REU programs conducted on our own campus of Alabama A & M University. This study also found some issues that need to be resolved and provided some suggestions and solutions to the future similar programs so as to improve the international collaborated educational programs between America and China.  President Obama announced a 100,000 Strong Initiative Program in 2010 (The White House, 2011). This Initiative Program is a strategic movement in American education. He encourages American faculty and students to increase their interaction with China in the areas of education especially on science, math, and engineering (McLaren, 2012). The initiative provides the opportunities for the American young scholars, especially the underrepresented and underserved minority undergraduate students to go abroad to learn in a globalized setting, in China in particular. The REU (Research Experience for Undergraduates) program in China is a valuable long term investment that is beneficial for the U.S.-China collaboration in a global economy co-development (McGiffert & Schwarzman, 2014). The Chinese education is strong in math, science, and engineering. The American students are called by the President to catch up so as to be strong in the global economic competition. By the way, the American students could also learn the international interaction skills with Chinese people in the areas of education, science, and related social studies. This program is funded by the National Science Foundation (NSF). The purpose of this REU-in-China Program conducted in Alabama A & M University (AAMU) is to promote research experiences among the diverse undergraduate students of agriculture and environmental sciences across America through a U.S. – China higher education collaborative endeavor. In order to enhance global cooperation and meet the worldwide competition, This REU program is designed to submerge American students in China’s college research setting to physically gain research experiences, cultural understanding, and the ability to collaborate with Chinese scholars in one of China’s higher education institutes.  The REU program is designed based on the experiential learning perspective. According to David Kolb's Theory of Learning, experiential learning involves learning from experiences. (Kolb, 1984; Kolb, Boyatzis, & Mainemelis, 2000).  This type of learning can be defined as "The process whereby knowledge is created through the transformation of experience” (Miettinen, 2000, p. 54).  The experientialists assert that students learn better when practical application of concepts and theories are provided in an authentic learning environment.


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Active Learning Strategies in Accounting

Dr. Denise de la Rosa, Grand Valley State University, MI

Dennis C. Stovall, Grand Valley State University, MI



When determining the best way to teach accounting students, considering all the different ways they can be taught is an important factor. This paper discusses the many styles, specifically active learning strategies in which collegiate level accounting classes can be taught to enhance the students’ success. Active learning strategies are those that are focused on learning approaches where the teaching emphasis of the professor is centered on the student and how he or she learns. In the text the benefits of active learning over passive learning are also discussed. Though some constraints do apply biased on the individual student’s preferences overall the strategies discussed can be used to enrich accounting students learning.  The way in which students learn has gained a significant amount attention in the modern world. As a result, many colleges and universities devote plenty of time researching the methods and strategies they can use, to provide effective learning experiences to their students. Active learning strategies are learning approaches that can be defined as methods in which the teaching emphasis is centered on the student. Colleges and universities try to develop new learning methods and strategies that will be the most effective by tailoring them to a certain student populations. For instance, students who are majoring in business may prefer to study in a way that is different from how their peers that major in engineering do. Also, how an individual learns can vary vastly from each student biased on their personal preferences. This paper will cover the learning strategies that can be used to enhance students learning experiences primarily in accounting classes. When it comes to active learning in accounting classes, the spotlight has moved from the traditional lecture format to a more active and team learning format. This change has occurred mainly due to the Accounting Education Change Commission’s pronouncement encouraging universities to use effective methods in the teaching process and the effort of many accounting departments to incorporate the American Institute of Certified Public Accountant (AICPA) personal competencies in student learning.  According to Saunders and Christopher, the main objectives of student involvement in the learning process consist of: The student should be an active participant in the learning process; The student should be taught to identify and solve unstructured problems that require use of multiple information sources. The student should learn by doing: The student should learn to work in groups; The students should be taught the creative use of technology. All the above objectives are directly link to active learning, enabling students to achieve a deeper level of learning. The most common active learning methods are discussion, seminars, case studies, project based learning and problem based learning (Carter, Hogan). Discussion can be considered as a method that goes well with the traditional lecture format.


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Exploring the Gap between Millennials’ Pay Preferences and Compensation Practices

Dr. Lovorka Galetic, Professor, University of Zagreb, Croatia

Dr. Ivana Nacinovic Braje, University of Zagreb, Croatia

Dr. Maja Klindzic, University of Zagreb, Croatia



From an organisational perspective the aim of the reward system is to attract, motivate and retain high performing employees. Pay systems that are incompatible with employee pay preferences can create direct or indirect costs for the organisation. Organizations might be able to increase their attractiveness without affecting labour costs by adapting company compensation practices to employee pay preferences. This study investigated compensation preferences of 249 students in Croatia. Research results indicate that besides high base pay, benefits were clearly identified as a preferred compensation tool by millennials'. Research results can be used by managers in developing or modifying reward plans for this generation.  Compensation is a key element of the employment relationship and, in addition to being the single greatest operating cost for many organizations,  it has been advocated as a tool for enhancing organizational performance and sustained competitiveness (Milkovich & Newman, 2008). Due to high impact of compensation management on overall firm performance (Stajkovic & Luthans, 2001, Hansen, 1997, Jenkins et al. 1998), we recognized the need to research it in detail among Croatian companies.  Organisations have choices about methods of pay. Although the list of compensation dimensions is pretty exhaustive, Milkovich & Newman (2008) argue that strategic compensation dimensions include external competitiveness (e.g., pay level), internal pay structure (e.g., pay hierarchy), employee contributions (e.g., individual vs. group contribution), benefits (e.g., flexible vs. fixed), and alternatives to traditional pay systems (e.g. pay-at-risk or skill-based pay). Based on these strategic dimensions, each organisation will shape its own reward strategy that will guide employees towards fulfilment of companies’ objectives. However, as argued by Kerr & Slocum (1987), reward strategy is defined purely from organisation’s perspective where company interests may take precedence over those of the employees.  Compensation systems may act as signalling devices to job seekers by providing information not only about work expectations but also organization's culture: philosophy, values, and practices (Cable & Judge, 1994). Adopted reward strategy is thus a way to distinguish an organisation from other employers in the labour market (Turban & Keon, 1993, Cable & Judge, 1994).  Employees’ affective reactions to both amounts of pay received and administration of pay delivery include pay satisfaction, pay justice and pay preferences (Heneman & Judge, 2000). Congruence between the implemented pay system and employee pay preferences, meaning pay system characteristics that tend to (dis)satisfy the individual, can have an effect on employee pay satisfaction. Consequentially, this can influence both broader performance indicators and employee retention, in terms of turnover intentions, absenteeism, and voluntary turnover (Heneman & Judge, 2000, Williams, McDaniel & Nguyen, 2006). For example, it has been reported that organisational loyalty is being threatened by employees’ dissatisfaction with their pay and methods used to determine pay (LeBlanc & Mulvey, 1998). Employees' predispositions toward particular compensation variables may affect their reactions even in case they are dissatisfied with overall organizational compensation procedures. In addition, employees are likely to compare features of a particular preferred compensation package component with those of similar firms in the labour market rather than evaluating packages in absolute terms (Shaw & Schaubroeck, 2003) Pay systems that are incompatible with employee pay preferences can be costly for organisations (Brown, 2001).


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A Comparative Study Between the UK and the USA House Price Indicators Before and During the Financial Crisis of 2007-2009

Dr. Abdelhafid Benamraoui, University of Westminster, UK



Although many studies investigated the house price movements’ indicators in different markets, the existing literature has less focus on comparing the housing market behaviour before and during the financial crisis of 2007 to 2009. This study uses two major housing markets, the UK and the USA, to test the correlation between average house price changes and economic fundamentals, which have significant impact on each of the two mortgage markets. Multiple regression analysis shows that most indicators, including interest rates and earnings, behave analogously in the pre- and during the financial crisis. However, the directions of relationship for some of the parameters have changed when the market is in crisis, especially in the case of loans extended to house purchase and consumer price index.  The housing market experienced a steady growth before the recent financial crisis as house prices reached one of their highest levels in history. This, however, has changed after 2007 under the impact of subprime mortgage crises. The sudden downturn in financial markets has attracted the interest of many scholars who focussed on issues such as the causes of the crisis, the factors behind the spread of the crisis, and the impact of the crisis on different financial market segments. Some studies also specifically focussed on the impact of the financial crisis on the housing market (i.e. Dodd and Mills, 2008; Yener, 2009; Bagliano and Morana, 2010; Duca et al., 2010; Demyanyk and Van Hemert, 2011; Goetzmann et al., 2012; Wang and Zhang, 2014; Grimes and Hyland, 2015; Immergluck, 2015).  The studies addressing the effect of financial crisis on the housing market, however, tend to revolve around one market and also not looking at the behaviour of economic fundamentals driving house prices both before and during the crisis period. The research investigations also do not capture the effect of different types of mortgages rates on house prices in the two time frames. This has motivated our study to find further empirical evidence on the relationship between economic fundamentals and house prices in the two major global mortgage markets, the USA and the UK, prior and during the recent financial crisis of 2007 to 2009.  The paper builds on previous empirical tests between house prices and economic fundamentals. The literature shows that different approaches were used to investigate the factors driving house price movements. Among these approaches indices are widely used to measure housing activity and trend. For example, Himmelberg et al. (2005) construct an index by comparing the imputed rent with the actual rent, which is then used to find if houses are highly priced. McCarthy and Peach (2004) note that it is highly complex to create a housing index for different states or regions in the USA because selling of properties is not carried out in a centralized market. Therefore, they decided to apply asset pricing model instead to capture the effect of interest rate on house price movements in the USA.  The most widely technique used by scholars to examine the housing market activity is the standard stock-flow model, which aims at finding the equilibrium point between the supply of and demand for housing.


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Profitability of Traditional Banking in Croatia

Dr. Alen Stojanovic, University of Zagreb, Croatia

Dr. Vlado Leko, University of Zagreb, Croatia

Dr. Jaksa Kristo, University of Zagreb, Croatia



A banking system cannot be properly assessed out of context of the overall financial and economic system in which it operates. A stable and successful banking system is a precondition for efficient mobilisation and allocation of savings to profitable projects, and as a result, stable growth of the overall economy. Otherwise, an unstable and inefficient banking system is not able to fulfil its fundamental tasks and functions, but as a rule results in production and investment decrease, decline in living standards and decrease in economic growth. This paper reviews the sustainability of the traditional banking activities in Croatia, taking into account the current economic surroundings, market environment, regulatory requirements and other important factors of banks’ performance. The findings of this analysis may also be of use to many other countries because the problems and questions to which this paper is trying to give answer to are of universal and global character. Contemporary financial systems are determined by dynamic economic, social and political circumstances, regulatory changes, internationalisation, new technological solutions, and many other important changes. Nowadays, an overall and strong competition in a financial market contributes to the introduction of new financial services, price competitiveness, and development of the overall financial and thereby economic system. Traditional banking methods and business techniques change, go through the process of restructuring, redefining and adapting to a new environment. Contemporary banks strive to expand their business outside the usual borders and classic business schemes. They change their business philosophy and policy, enter non-banking financial operations, and even found non-banking financial institutions themselves. Thus banks start to conduct all financial services, which turns them into universal or "full service" financial institutions. All abovementioned is also easily perceived in the altered balance sheet structure, income statement, profitability ratios, efficiency and performance of banks in general. However, not all banks go through this “transition” period with equal success. The dynamics and efficiency of despecialization strategy is a result not only of particular bank management competence, but a number of other factors. These are, for example, general state of economy, market potentials and demands, the role and presence of the government on a financial market, regulatory restrictions still present in many countries, tendency toward financial innovations of a society as a whole, as well as numerous particularities of economic, social, cultural and historical heritage. In any case, contemporary banking is characterized not only by additional business possibilities and sources of income, but also by additional risks and costs. The objective of this paper is to analyse profitability and sustainability of traditional, dominantly loan and deposit banking business model, for the past 10 years on the example of the Republic of Croatia. This paper presents a theoretical frame and selected newer interpretations of the basic determinants, especially regulation, structure of funding sources and assets, as well as income statement, and their influence on the profitability of banks in Croatia. This paper aims to determine sustainability of new market and regulatory requirements not only in the context of total costs of banking intermediation, but also in the demanded profitability for stockholders.


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Multiobjective Evolutionary Algorithms (MOEAs) Based on Decomposition: A Promising Area of Artificial Intelligence

Dr. Konstantinos Metaxiotis, DSS laboratory, Dept. of Informatics, University of Piraeus, Greece

Konstantinos Liagkouras, DSS laboratory, Dept. of Informatics, University of Piraeus, Greece



Multiobjective evolutionary algorithms (MOEAs) based on decomposition provide a reliable alternative to Pareto-based approaches. MOEAs based on decomposition, decompose a multiobjective optimization problem (MOP) into a number of single objective optimization problems with the assistance of linear or nonlinear aggregation methods. This paper examines two of the most well-known MOEAs based on decomposition, namely the MOEA/D and the MOEA/D-DRA. The performance assessment is carried out with the assistance of the ZDT family of test functions. The relevant results indicate that the MOEA/D-DRA performs better in terms of Hypervolume but at the expense of the Spread of solutions across the Pareto front.  In Multiobjective optimization it is not possible to find a single optimal solution, as this category of problems require the simultaneously optimization of several often conflicting objectives (Liagkouras and Metaxiotis, 2014), (Liagkouras and Metaxiotis, 2015), (Liagkouras and Metaxiotis, 2013). Instead, the specially designed algorithms for optimizing multiobjective problems try to find a set of points known as the Pareto optimal set (Metaxiotis  and Liagkouras, 2014), (Liagkouras and Metaxiotis, 2015). The set of points that belong to the Pareto optimal set, share a common property, that there is not feasible solution which improves one component of the objective function vector without deteriorating at least one of the remaining ones.  Most MOEAs are Pareto dominance based, meaning that the fitness of each solution at each generation is determined by its Pareto dominance relations with other solutions in the population.  A number of MOEAs make use of a linear or nonlinear aggregating function that combines the two or more objectives into a single scalar value, and in which the weights are varied in order to generate different nondominated solutions. The weights are called trade-off coefficients. The resulting approximation of the PF from such an aggregation technique can be decomposed into a number of single objective optimization problems. The Multiobjective Evolutionary Algorithm based on Decomposition (MOEA/D) (Zhang and Li, 2007) and the MOEA/D with Dynamical Resource Allocation (MOEA/D-DRA) (Zhang, Liu, and Li, 2009) are using the decomposition principle as described above. The remainder of the paper is organized as follows. In section 2, a description of the MOEA/D and MOEA/D-DRA is given. The performance metrics are discussed in section 3. In section 4 are presented the experimental results for the two algorithms with the assistance of the Zitzler-Deb-Thiele's (ZDT) set of test functions for two performance metrics. Finally, section 5 analyses the results and concludes the paper. As we explained in the introductory section of this study, the MOEA/D uses a decomposition mechanism for converting the problem of approximation of the PF into a number of scalar optimization problems.


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Disadvantages of Template Analysis of Creditworthiness of Firms in Banking

Dr. Ugur Ozarslan, Ide Training &Consulting, Maltepe University, Istanbul



This paper examines the differentiations between the template financial analysis and the supported financial analysis with the working styles of firms.  The credit evaluation process is one of the most important factors in banking. Credit institutions and banks should give credit. Bankers bring together counterparts who have excess funds and the firms which are in need of funds. Money collected by banks has to be placed as credit. The highest priority target of banks is to minimize the amount of bad loans, because it is quite difficult to compensate for the results of bad loan. The margin of interest between the cost of deposit and the loan interest is very low because of high competition.  A wrong credit appraisal causes either a bad loan or profit loss of the bank. If a Credit analysis is made, without using the right credit techniques or without defining the precise funds needed by a company, it causes a wrong credit decision. On the other hand, if a bank doesn’t open a credit line to a company because of a wrong appraisal, it means profit loss for the bank. Both of these situations are considered as failure in banking. Credit evaluation study must be taken into consideration in wide perspectives.  In this study, all of these perspectives will not be discussed, but the disadvantages of template analysis, which is considered by banks as the easiest way to review a balance sheet, will be examined in detail. Template analysis in credit evaluation means that financial statements taken from a company are analyzed directly using several ratios. In these kinds of studies, the real fund needed by the company is not taken into consideration. Many credit evaluation officers use this method, however, some credit officers use some advanced assessment tools by adjusting some figures on a trial balance sheet of a company, then decide whether the company is credible or not.  Despite their knowledge of many aspects of lending, graduate loan officers often do not know what exact steps must be taken when a borrower request a loan (Sathye, Bartle,Vincent, Boffey, 2003).  In fact, credit analysis without understanding the asset conversion cycle of the company results in wrong decisions related to companies’ creditworthiness. It is not possible to understand the doubtful receivables only by looking at a balance sheet but we must also know the average real sale maturity of companies.  At the same time, we do not understand the real inventories carried by firms by only examining the balance sheet of firms. We need to understand the asset conversion cycle. Accounts receivable can be divided into age categories matching the periods used for the credit sale. Refining measures to improve performance measurement of the accounts receivable collection function (Leitch P. and Lamminmaki D. 2009). The quality of the receivables asset is an excellent barometer of customer service. It is feedback the customer willingly and quickly gives. It is tempting to call it a free quality control measurement system, except it is not free.


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Creating Taxpayer Awareness in the 21st Century. Just Culture

Ramon Bonell Colmenero, Professor, The Real Centro Universitario Escorial-María Cristina, Spain

and Tax Law Adviser



This article's main objective is to encourage a development of tax consciousness. It aims to provide conceptual schemes on fiscal responsibility and to help incorporate it as a right of citizenship to the taxpayer. The article provides tools to form critical and committed for 21st century citizens. The relevant factor to educate citizens in this civic conscience if we want to maintain the “Welfare state”.  By contributing to the system, the national tax system receives funds to carry out social policies approved by the Spanish national budget, the Autonomous Communities and the Municipal Entities each year. These are decisions that in the best of cases have been presented in the political programs of the candidates before the elections and have had the support of citizens through the different mechanisms of democratic participation.  We have gone from the citizen-soldier of the 19th century to the citizen-worker in the 20th century to the current citizen of the 21st century, who is not only a consumer but an authentically contributing taxpayer who defrays the national budget with his economic and contributive capacity.  Paying taxes is a reality that has transcendence towards and for the Welfare state that we want. Making citizens conscious of the importance of contributing is the ethical and moral reason that conflates both dimensions.  It is necessary to install policies of transparency, control and coordination between all of the public entities, carrying out actions that lead the way towards giving citizens information along with legal and contributive training, with the goal of them obtaining consciousness. Nowadays it is taxes that mark the economic life of any country as well as the actions of the government and the decisions that economic leaders, professionals and citizens make.  One must take conceptual schemes into account when thinking about fiscal responsibility that aid in forming a consciousness pertaining to the tax system founded upon values and the exercise of a participative citizenship with solidarity and commitment.  Having contributive consciousness means having citizens who have a deep knowledge of the obligation and duties participating in the sustainment of public spending through their contributions around the tax system.  Citizens go from being unconsciously incompetent of contributing to being conscious of the incompetence to understanding taxes and the current fiscal system, to searching for a consciously competent knowledge of the tax system, when today’s society expects them to be unconsciously competent, through learning to learn, with the civic and tributary education. (2)  The process of assimilation of this knowledge is reached the very moment that we assume we are competent in contributing, that we have economic capacity and that we need to contribute. Going from DNA, authenticity, differentiation, the notoriety of genetic, cultural and experiential knowledge to DNR, going from what we expect and know, to surprises, and to be surprised and being able to prove the added value, with the action of relearning to contribute, to demand a receipt, to pay the corresponding value added tax.  Assuming ones responsibility, foreseeing the consequences, we being with the ius puniendi: Criminal law (with penalties that deprive one of liberty). Administrative penalties law. The starting point is considering the ius puniendi of the State from the perspective of Administrative and Criminal Law:  Behaviors:  Offence; Infringement.


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 Creativity in Technology – Are Technology Startup’s More Creative than Large Technological Firms?

Antonio Caldas Neto, Stetson University, FL

Dr. Joseph M. Woodside, Stetson University, FL



Startups are generally referred to as being more innovative and creative than larger traditional firms. Many successful technology based startups with stocks listed either in the NYSE or NASDAQ, became so prosperous that they grew into large companies over the last 20 years, facing the challenge of keeping the innovation momentum to survive. The purpose of this research report is to compare the innovation drivers present in tech/Internet based startups and a selection of prominent companies of the same business segment that reached one billion dollars in revenue and had continued success levels after their IPO’s. We’ve selected Google Inc., Facebook Inc., Twitter Inc., LinkedIn Co. and Yahoo Inc., as references for the “Large Tech” group and conducted text analytics on annual reports to identify the frequencies of innovation concepts within this group.  Worldwide markets are currently experiencing volatility and companies face increasing stakeholder pressures.  During previous periods of financial crisis and recession, companies experienced significant IT cut-backs, though nearly two-thirds of CIOs identified IT staffing as a limiting factor in deploying new and innovate technologies.  In the lean business environments of today, ongoing short-term requirements absorb the majority of the bandwidth from executives, managers, and professional workers.  Organizations are too busy responding to immediate customers, that limited time is spent towards improvements within the organization, thereby restraining organizational evolution.  When spending constraints and alternative investments are evaluated, competition for resources is high.  Organizations then often choose to make minor incremental investments vs. major investments in a few innovative areas, leading to slow progress and limited value delivery (Woodside, 2013).  Despite the challenges, leading companies continue to dedicate funding for innovation. This past year IT teams placed an increased importance on creativity and innovation. With IT becoming more dynamic and the field continually changing, the ability to adapt is surpassing the importance of traditional technical skills hiring methods. Due to budget and resource constraints, CIOs are seeking out creative and innovative candidates to help with cost saving opportunities. An added bonus is that these same traits also increase employee satisfaction. While the importance of creativity and innovation is clear, the link between the two and the creativity practices that lead to innovation within the organization are limited in their management practice (Courtemanche, 2015).  The diffusion of innovation (DOI) theory explains how an idea, product, or service is adopted through a system over time.  This adoption of innovation occurs at different rates within people or those within an organization ranging from early innovators to late laggards (Rogers, 1962). Companies are seeking creative individuals to speed the diffusion of innovation and develop innovators earlier on the curve.  This paper seeks to define the practices and management implications for increasing innovation through increased company creativity.  This research follows a qualitative design science approach with problem relevance, construct and artifact development, and design analysis and evaluation with a contributory conclusion section.  As pointed and defined by Thiel and Masters (2014), a startup is the “largest group of people you can convince of a plan to build a different future”.


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Value Relevance of Earnings, Book Value, Revenue, and R&D

Dr. Lianzan Xu, William Paterson University of New Jersey, NJ

Dr. Francis Cai, William Paterson University of New Jersey, NJ



This paper examines the valuation of the high-tech industries, especially those high-tech loss firms, during the 1990-1999 pre-2000 market melt-down and from 2000 to 2012 after the melt-down. We find evidence, within the high-tech sector, of the anomalous relation between negative earnings and stock prices as reported by earlier research. We also find evidence demonstrating the persistence of the anomalous price-earnings relation after adding book value of equity in the model. Within the high-tech sector, our test results reject the claim that the abnormal price-earnings relation is due to model misspecification (missing value relevant variables) and inclusion of book value into the valuation model eliminates the abnormal relation. Our empirical test results demonstrate that sales revenues and R&D expenses, instead of earnings and book value, are highly value relevant in the valuation of high-tech firms, especially loss-making firms, both before and after year 2000 market crash.  This study explores the abnormal price-earnings relation for the high-tech sector and the relevance of revenues, book value, and R&D expenses in the valuation of high-tech industry, especially those loss firms. The negative price-earnings relation for loss-making firms raises questions about the validity of the assumption of a positive and homogeneous relation between price and earnings, as expressed by the simple earnings capitalization model (Jan and Ou 1995; Burgstahler and Dichev 1997). A significant negative coefficient on earnings means that the more negative a firm’s earnings is, the higher its stock prices, which makes no economic sense. We examine this abnormal price-earnings relation and the role of book value in loss firm valuation within the high-tech sector. Consistent with our hypothesis, we find evidence for both the pre-2000 stock market meltdown of the 90s and post-2000 years up to 2012 that the abnormal price-earnings relation exists for not just the loss-making high-tech firms alone, but all high-tech firms in general. We also find evidence that the inclusion of book value in the regression model does not eliminate the abnormal price-earnings relation in the high-tech sector, contrary to the finding of Collins et al (1999). It suggests that the role of book value in stock valuation, especially loss firm valuation, is not universal. At least for high-tech sector, earnings are not value relevant. The value relevance of book value is limited, if significant at all.  We further examine the relevance of revenues and R&D expenses in the valuation of high-tech industry. Revenue is believed to be harder to "manage." R&D expenses must be fully expensed, according to SFAS #2. Evidence from our empirical tests indicates that both revenues and R&D expense are value relevant for high-tech firms, suggesting that the market rewards investment in R&D and regard the accounting losses as transitory if high-tech loss firms have large expenditures for R&D.  This study adds to the current literature of loss firm valuation by focusing on the high-tech sector, and examines the value relevance of earnings, book value, revenues and R&D expenses. The remaining part of the paper is as follows. Section II is a literature review. Section III describes the sample selection and data. Section IV and V report and discuss the test results on the anomalous negative price-earnings relation and the value relevance of book value, sales and R&D expenses. Section VI is a summary and conclusion. 


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