The Business Review Journal
Vol. 3 * Number 2 * Summer. 2005
The Library of Congress, Washington, DC * ISSN 1553 - 5827
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An Evaluation of State Income Tax Systems and their Impact on State Spending and Revenue - A Multi-State Study
Professor Demetrios Giannaros, University of Hartford, CT
The primary objective of this study is to carry out a multi-state public finance behavioral impact comparative analysis, regarding the introduction of the income tax system in various states. The emphasis of this multi-state study is to determine whether the introduction of an income tax system, a politically controversial issue, resulted in significantly higher levels of state spending or taxation after the introduction of such revenue system. We use econometric (such as interaction variable analysis) techniques to evaluate whether a significant structural change in state public policy on spending and taxation did materialize after the introduction of the income tax in ten states. Our results do not show behavioral consistency for the ten states under study--subsequent to the introduction of the income tax. In the last few years, about forty five state governments in the USA have struggled to cover unexpected large budget deficits. The economic debate on the issue of state budget deficits revolved around the level of state government spending and taxing, the appropriate form of taxation, the impact of such forms of taxation on politicians’ behavior, and the relative stability (steady stream of revenue) of alternative tax systems. Some of the discussion and debate turned to the system of taxation and its impact on the budget, spending, taxing and the state economy. This study attempts to evaluate whether the introduction of the income tax system resulted in behavioral changes in terms of taxing and spending by the state legislatures. For this purpose, we use econometric techniques to determine if there were structural changes after the introduction of the state income tax in ten different states. The critics of the state income tax system proclaim that politicians would use the income tax as a way to expand the size of state government, that is, “tax and spend.” Proponents, on the other hand, viewed it as a fair and stable taxation system that does not necessarily result in bigger government.
Leadership Competencies: Can They Be Learned?
Dr. Stewart L. Tubbs, Eastern Michigan University
Dr. Eric Schulz, Eastern Michigan University
There is a substantial body of research evidence regarding the importance of leadership development to organizational success, Charan, Drotter and Noel (2001), Fullmer and Goldsmith (2001), McCall and Hollenbeck (2002), McCauley, Moxley and Van Velsor (1998), Viceri and Fulmer (1997). However, there remains a controversy about whether or not leadership can, in fact, be learned. In this paper leadership is defined as, “Influencing others to accomplish organizational Goals,” (Tubbs, 2005). Based on the model presented in this paper, the rationale is advanced that some aspects of leadership are more or less fixed at a young age while others are able to be developed even well into adult life. This paper describes the model and explains which aspects of leadership are fixed early in life and which are more able to be developed. A taxonomy of leadership competencies is also presented. Approximately $50 billion a year is spent on Leadership Development (Raelin (2004). Yet, one of the most frequently asked questions of leadership scholars is whether leadership can, in fact, be taught and learned. The answer seems to be a qualified yes. In other words, some aspects of leadership are more likely to be learnable and others are less so. For the purposes of this paper, leadership is defined as, “Influencing others to accomplish organizational goals,” Tubbs, (2005). Leadership is often discussed in terms of competencies, (Boyatsis (1982), Goleman, Boyatsis and McKee (2002), Whetton and Cameron, (2002). Competency is a term that describes the characteristics that lead to success on a job or at a task, Boyatsis (1982). Competencies can be described by the acronym KSA knowledge, skills and abilities. The model in Appendix A shows that leadership competencies can be represented by three concentric circles. These three circles describe three distinct aspects of leadership. The innermost circle includes an individual’s Core Personality.
Foreign Direct Investment in Post-Soviet and Eastern European Transition Economies
Nataliya Ass, Glasgow Caledonian University, Glasgow, UK
Professor Matthias Beck, Glasgow Caledonian University, Glasgow, UK
Foreign Direct Investment (FDI) is generally considered central to the development of transition economies. Based on the ‘benign model’ of FDI and development (1) it is often assumed that the attraction of FDI is a key to the long-term integration of these economies in the global market, but also represents one of the most effective means for short-run economic recovery. This paper argues that unstable countries, in particular post-Soviet states, can involve riskier investors who prefer relatively weak political regimes over stronger ones and who reduce their investment inputs once host states become more assertive. Using a panel dataset for 27 countries, including post-Soviet and Eastern European states, for the years 1998-2002, this paper examines the relationships between the extent of Foreign Direct Investment (FDI) and country risks and other economic indicators via conventional LSDV and GLSE regression models. In this context, it is noted that the ability to attract FDI, in general, corresponds with indicators of stability and policy consistency in a country, whereby a strong negative correlation exists between FDI as percent of GDP and levels of Economic Risks in all countries. It can be also observed that FDI, for most countries, is negatively related to per capita GDP, which indicates that foreign investors are likely to reduce levels of investment in a country once certain level of prosperity and, possibly, political stability are reached. Furthermore the paper notes that, for certain groups of countries, in particular European post-Soviet republics, FDI is positively related to debt and negatively to trade balance. This is likely to reflect some of the adverse effects of FDI which arise when host governments overspend as a consequence of expected revenue inflows. In recent years Foreign Direct Investment (FDI) has become increasingly important for transition and developing economies.
Emotional Intelligence: Are Successful Leaders Born Or Made?
Von Johnson, Woodbury University, CA
Is leadership a ‘natural-born’ set of skills, or can personality traits that are common to superior leaders be taught? This paper accepts the idea that heightened emotional intelligence plays a key role in leadership success; but can emotional intelligence be successfully acquired and retained through training programs? We will examine this argument from three perspectives. First, the paper will present the historical framework and contemporary thinking surrounding ‘emotional intelligence’. Second, we will briefly examine the results of various case studies where emotional intelligence measures are tested in the workplace. Third, the paper will conclude with remarks from the consultant community charged with executive training and enhancing leadership by teaching ‘emotional intelligence’. Are successful leaders born or made? If a leader possesses superior knowledge in his or her field, coupled with an academically acquired set of business skills and ‘common sense’, what ingredients are missing that set the exceptional leader apart from the pack? Is there really an ‘emotional intelligence’ that complements and accentuates the leader’s tool chest? If so, what role does emotional intelligence (EI) play in the mix of acquired skills, learned experience and personality that describe the ‘star performer’? Ultimately, if these ingredients are quantifiable and easy to understand, can training programs be developed and implemented with positive, measurable results? The roots of emotional intelligence are found in twentieth century psychological research. As early as the nineteen-forties, David Wechsler wrote about the ‘non-intellective’ versus the ‘intellective’ components of personality (Wechsler 1940); referring to the individual’s affective, social and personal traits. Wechsler later clarified his position, adding that the non-intellective factors of personality are essential ingredients for predicting an individual’s capacity to succeed in life (Wechsler, 1943).
African American Women Striving to Break through Invisible Barriers and Overcome Obstacles in Corporate America
Dr. Linda Joyce Gunn, Indiana University Northwest, Gary, IN
The purpose of this descriptive study is to determine the role of African American women in corporate America, specifically to provide some basic information about the attitudes and perceptions of barriers that prevent and preclude African American women from reaching executive positions that involve formulating policy, and to offer suggestions for the removal of those barriers. The results indicate that there are barriers to advancement of African American women in corporate America, particularly in their ability to formulate policy. Organizations must institute changes to eliminate these barriers by considering the five predictors which determine if African American women can formulate policy at the highest level of the organization: 1) the opportunity to implement policy that impacts the department, 2) the opportunity to implement policy that impacts the entire organization, 3) earning an advanced degree, 4) the availability of an African American male mentor, and 5) the availability of an African American male role model. If African American women are to be in positions of power 1) there must be an opportunity to implement policy that impacts the organization, 2) organization must be willing to sever business relationships with clients and vendors if they do not respect the organization’s employees, and 3) the individual must make a commitment to remain in the organization. Finally, organizations must take the initiative to eliminate barriers by accepting employees for who they are and what they contribute to the organization, capitalize on applicable talents each employee possesses, provide opportunities for employees to succeed, and provide the same opportunities to African American females as they do for white males and white females. Barriers [refer to factors that] hold people back and separate or hinder them from attaining certain goals; in particular, they impeded corporate progress. hieved by the use of a self-administered questionnaire using a 5-point Likert-type scale.
Global Terrorism: Past Present & Future
Dr. Jack N. Kondrasuk, University of Portland, Portland, OR
Dan Bailey, University of Portland, Portland, OR
Matt Sheeks, University of Portland, Portland, OR
Terrorism has a deep history with instances of terrorist-type activities being recorded in the Bible, presently involving many of the world’s countries with all continents but Antarctica recording one or more terrorist attacks in the last year, and has many facets to examine. Those facets include knowing about the perpetrators and their goals, the targets, the weapons, the events, and the effects of those events. Presently, the United States is the top target in the World and is likely to be so for the foreseeable future. Al Qaeda is probably the top terrorist organization aiming at the U.S. with intentions of using more lethal weapons and producing severe damage. The future will probably see a significant reduction in ideological terrorism and increases in single-issue terrorist groups attacking major cities with weapons of mass destruction. To better prevent and respond to terrorism in the world it is necessary to understand its origins. For the U.S. September 11, 2001, when the Twin Towers in New York were destroyed by terrorists and over 3,000 people were killed, marked a rude awakening to terrorism. In Spain the bombings in Madrid significantly changed political policies. Australians found how terrorism could impact them from a bombing of a tourist restaurant in Bali. Russians were reminded of terrorism in their midst when hundreds were killed at a school in Beslan. Israel was reminded of terrorism every time a suicide bomber blew up a restaurant in Israel while Palestinians thought of terrorism when one of their leaders was assassinated. People throughout the world need to understand terrorism. The purpose of this paper is to enable us to understand terrorism so as to be better able to deal with it. To this end, this paper will look at the origins of terrorism in the world and how they have led to present day terrorism. . . and very importantly, what can we expect regarding terrorism in the future?
“Winning and Losing Research and Business Methodologies for US Government Contracts”
Dr. Shawana P. Johnson, Global Marketing Insights, Strongsville, OH
Dr. Steven M. Cox, Meredith College, Raleigh, NC
In 1969 the United States government began the Earth Resources Technology Satellite (ERTS) Program, later changing the name to the Landsat Program in 1975. During the Carter administration consideration was given to commercializing the operation of the system and transferring distribution to a private company. Congress passed the Land Remote Sensing Act of 1984 providing legislative authority to transfer the satellites to the private sector. At the same time, a request for proposal (RFP) was issued for companies to bid on the contract to manage the Landsat program. EOSAT, a joint venture between RCA (which was shortly thereafter purchased by General Electric Aerospace) and Hughes Aircraft, was started in 1984 for the sole purpose of competing on the Landsat procurement. One of the first tasks facing EOSAT, after winning the contract, was how to establish a true marketing and sales function to insure that EOSAT could become a viable commercial entity. Since the initial EOSAT staff was technical in nature, the EOSAT Board of Directors decided to subcontract all of the marketing and sales functions to the Earth Satellite Corporation, (Earthsat). In an agreement between EOSAT and Earthsat, Earthsat received an exclusive contract to sell all of the EOSAT’s Landsat data. After a year of difficulties, the EOSAT Board of Directors voted to end the arrangement with Earthsat. Since no detailed succession planning had been done prior to the decision by the Board of Directors, the problem for EOSAT was what to do now; outsource again, build an in house sales capability, do no marketing and sales, or something else?
Relative Efficiency of Computer and Computer Services Companies
Seetharama L. Narasimhan, University of Rhode Island, Kingston, RI
Allan W. Graham, University of Rhode Island, Kingston, RI
This paper analyses the relative efficiency of US computer services companies using Data Envelopment Analysis (DEA). DEA provides an integrated non-parametric approach to performance measurement based on a specified set of inputs and outputs. Our objective is to investigate US computer companies and rank them into different groups based on their performance. The companies we study include Apple, IBM, Hewlett-Packard, Dell, Gateway, Unisys, Computer Science Corporation, Arrow Electronics, and Affiliated Computer Services. Our evidence suggests the sample companies fall in three categories: firms that are consistently good performers (IBM and Affiliated), firms that are improving (Apple and Dell), and firms that are erratic and or declining (Gateway, CSC, Unisys, Arrow Electronics and HPQ) in performance over a five-year period. Studies cited in The Economist (June 10, 2000) report that the growth reported for the U.S. economy is actually concentrated in the computer industry itself. Consequently, the computer industry is critical to the health of the U.S. economy, which makes it important that we understand the performance and productivity of its members. Ranking computer industry members in terms of productivity or operational performance requires that we address an important factor, which is that the industry is sometimes difficult to define. Some ranking schemes compare very divergent companies under the umbrella of “IT” industry classifications. Business Week (2004) constructs its InfoTech100 and includes not only computer manufacturers, but also firms that use computers for the conduct of their business (e.g. cell phone providers). We constrain our examination to the domestic computer manufacturers and related service providers, which are basically firms that provide personal computers and laptops, as well as other computer solutions to business, government, and the home-user markets.We find that the firms in our sample appear to fall into three categories: firms that are consistently good performers, firms that are improving, and firms that are declining.
Service Quality Perceptions: An Assessment of Restaurant and Café Visitors in Hamilton, New Zealand
Dr. Asad Mohsin, The University of Waikato, Hamilton, New Zealand
Growing competition in the hospitality sector and the need to remain customer focused impose the need to provide excellence in service and quality to retain and propagate customers. Restaurants and cafes in Hamilton (the fourth largest city in New Zealand) are no different to experience this competitive environment. This study attempts to assess the service quality perceptions of restaurant and cafe goers in Hamilton. It draws upon the responses of 340 respondents to examine their expectations and actual experiences of dining out in a restaurant or cafe. The findings, in revealing the actual experience of the restaurant goers, indicate mostly above average performance but also suggest gaps in their actual experience based on gender and age groups. The findings are expected to help the owners of restaurants and cafes to address those gaps and improve the satisfaction rate from their customers, thereby effectuating repeat business and improving profits. Customer satisfaction has now long been a feature of interest to researchers and business owners. In the contemporary hospitality business world, the true measure of success lies in an organization’s ability to satisfy customers continually (Gabbie and O’Neil 1996). In other words, service quality impacts organizational profits as it is directly related with customer satisfaction, customer retention and thereby developing customer loyalty (Baker and Crompton 2000; Zeithaml and Bitner 2000). Business gurus state it costs a lot more to attract new customers than to retain current customers (Rosenberg and Czepiel 1983; Oliver 1999). There is a strong likelihood that repeat customers develop excellent loyalty towards the business.
Health Care Delivery in OECD Countries, 1990-2000: An Efficiency Assessment
Dr. Sam Mirmirani, Bryant University, Smithfield, RI
Targol Mirmirani, University of Massachusetts, Amherst, MA
The health care delivery system of OECD nations for the period of 1990-2000 is analyzed. Outputs are: Life expectancy and infant mortality. Inputs include: Per capita health care expenditure; population adjusted physicians and hospital beds; protein intake; alcohol consumption, percent of children with measles inoculation and school life expectancy. Using linear programming under Data Envelopment Analysis, performance efficiencies of member nations are ranked (top, bottom, and most improved) and evaluated. Rapid and persistent inflation of health care costs has been burdening national economies for a number of years. This problem is of particular concern to industrialized countries where support for vital services, such as, national security and education are gaining more public demand. In 1984, OECD countries had a health care per capita expenditure mean of $870.00 (with purchasing power parity adjustment); this figure rose to $1,983.00 in 2000. The United States, for example, when compared with the overall mean of the OECD, has maintained twice as much per capita health care expenditure over the past 20 years. While controlling costs is the priority, both developed and developing nations are trying to improve access to and quality of health care services for their citizens. The majority of research in the area of efficiency measurement has focused on the firm/organizational level. In the health care sector, as increasingly more resources are poured in, it is equally important to know the relative efficiency of the entire (macro) system. However, an important aspect of macro-level analysis is to have input and output measures that are consistent, definable and uniform across different systems.
Monetary Policy as Company Guiding Principle
Dr. José Villacís González, San Pablo CEU University, Madrid, Spain
A company is a productive unit that transforms or should transform money in production. In fact, a company should generate money in order to convert it into production and so balance the amount of money and production. Such equilibrium between the amount of money generated and production is called the price equilibrium level. The essence of monetary policy is the ability of the monetary authorities to create money that can in turn be converted into production. This policy’s greatest asset is getting to know how such alchemy comes about. There are several guiding principles or philosophies that apply to monetary policy. From an internal and emotional point of view, we can mention carefulness and fear. In a practical sense, the following can be added to the list: the amount of money created, and the route by which that money is supplied. Finally, monetary policy techniques themselves complete the list of guiding principles. Companies convert money into income through production. Income is a flow of money arising from production through the companies’ activities. Income, as a money flow, will call for production –this is the classic form of Say’s Law. The medium of income is money, but money does not necessarily entail the creation of income. A company is a loop of contracts whereby factors are purchased and products are sold. Production factors are acquired in the purchasing process – and all of them are circulating factors, including those that Macroeconomics considers fixed factors. Before they are actually sold, the products are also circulating capital. Money is a production factor that can be purchased in the money market, ultimately coming – although not all of it – from the monetary authorities. In fact, it is really a rental because it has to be returned, and the rent to be paid is the interest rate. The company purchases present money with future money, and since future money does not exist, such purchase is accompanied by a promise of future production. Such is the essence of the matter, because that future production would then purchase the original debt. And if such purchase transaction deal is done, there will be equilibrium between real and financial magnitudes. We can at any time compare the cost-efficiency of the circulating capital for which a rent (or interest) is to be paid. If such comparison were possible, then a group of companies would require a certain amount of money from the system. So, it is the companies’ productivity that partially determines the creation of money. Usually, accounting and financial analysis books rank assets from the most fixed to the most liquid. Money is the most liquid asset. We will categorize assets according to their closeness to or remoteness from production.
Viral Marketing: New form of Word-of-Mouth through Internet
Dr. Palto R.Datta, London College of Management Studies, London, UK
Dababrata N. Chowdhury, London College of Management Studies, London, UK
Dr. Bonya.R Chakraborty, London College of Management Studies, London, UK
This article sets out to examine the documentary evidence and expert opinions as to the extent to which a new form of marketing via the internet which has become very prevalent and fashionable in the last few years, namely Viral Marketing, is really just an electronically extended version of what is generally regarded to be one of the oldest forms of influence on a persons decision to buy a product or service, traditionally known as Word of Mouth, as claimed by Hanson (2000). The means by which we have set out to consider this question is to firstly review the literature relating to the various aspects of Word-of- Mouth communication to achieve as full as possible understanding of how it operates, how effective it is as a means of marketing and the various factors which affect its operation. In particular, we have been especially interested to find out to what extent an essentially natural and spontaneous form of communication can be deliberately instigated, encouraged and controlled as a marketing tool and means of promotion. The second section of the article comprises a thorough analysis and overview of the Viral Marketing revolution in order to understand its means of operation, effects, potential and finally, links with its predecessor, Word of Mouth. It is an inescapable conclusion that Viral Marketing has grown from the concept of word of mouth and has taken it to totally different levels of complexity, geographical spread and possibilities of manipulation. So it cannot really be described as ‘simply word of mouth on the ‘net’, but even so the intimacy of the old fashioned word of mouth recommendation still makes it a power to be reckoned with. Word-of-Mouth `a form of interpersonal communication among consumers concerning their personal experiences with a firm or a product (Richins,1984), has undoubtedly always been a powerful marketing force (Sundaram et el, 1998), which is the only promotional method that is both the means and the end (Cafferky, 1997), thousands times as powerful as conventional marketing (Silverman, 2001), seen as a dominant force in the market place for services (Mangold, 1999) and is very important in shaping consumers attitude and behaviours (Brown and Reingen, 1987).
Are There Any Long-run Benefits from Equity Diversification in Two Chinese Share Markets: Old Wine and New Bottle
Dr. Tsangyao Chang, Feng Chia University, Taichung, Taiwan
Dr. Zong-Shin Liu, Feng Chia University, Taichung, Taiwan
Mei-Ying Lai, Feng Chia University, Taichung, Taiwan
This study provides evidence that there exist long-run benefits for investors from diversifying in two Chinese share markets over the period January 5, 1995 to May 31, 2001. The evidence is based on tests for pairwise cointegration between the Shanghai and Shenzhen’s A-share and B-share stock price indexes, using five cointegration tests, namely PO, HI, JJ, KSS, and BN approaches. The results from these five tests are robust and consistent in suggesting that these two Chinese share markets are not pairwise cointegrated with each other. These findings could be valuable to individual investors and financial institutions holding long-run investment portfolios in these two Chinese share markets. This study aims to explore whether there exist any long-run benefits from equity diversification for investors who invest in two Chinese share markets, namely those of Shanghai and Shenzhen Stock Exchanges. Recent empirical studies have employed cointegration techniques to investigate whether there exist such long-run benefits from international equity diversification (see Taylor and Tonks, 1989; Chan et al., 1992; Arshanapalli and Doukas, 1993; Roger, 1994; Chowdhury, 1994; Kwan et al., 1995; Masih and Masih, 1997; Liu et al., 1997; Kanas, 1999). According to these studies, asset prices from two different efficient markets cannot be cointegrated. Specifically, if a pair of stock prices is cointegrated then one stock price can be forecasted by the other stock price. Thus, these cointegration results suggest that there is no gain from portfolio diversification. In this study, we test for pairwise long-run equilibrium relationships between two Chinese share markets by employing five techniques of cointegration tests, namely PO, HI, JJ,
Trade Relations and Stock Market Interdependence: A Correlation Test for the U.S. and Its Trading Partners
Dr. Steven ZongShin Liu, Feng Chia University, Taiwan
Dr. Tsangyao Chang, Feng Chia University, Taiwan
Dr. Kung-Cheng Lin, Feng Chia University, Taiwan
Mei-Ying Lai, Feng Chia University, Taiwan
This paper examines the trade relation hypothesis which, in some recent studies, argues that differences in trade relations among countries can significantly explain (predict) differences in the stock market interdependence and stock price transmission mechanisms. Based on trade relations between the U.S. and its major trading partners and applying, for the first time, the correlation test with bootstrap procedure, the results indicate that the hypothesis is hardly as a general rule. Regarding the stock market interdependence, it holds only in some countries or in some specific trade relations. The initial responses of foreign stock markets to shocks in the U.S. market are correlated with foreign countries’ trade dependence upon the U.S., however, their response patterns over time do not exhibit noticeable differences. The interdependence among national stock markets has been investigated by numerous studies (e.g., Arshanapalli and Doukas, 1993; Eun and Shim, 1989; Friedman and Shachmurove, 1997; Jeon and Von Furstenberg, 1990; Von Furstenberg and Jeon, 1989; Cha and Oh, 2000; Chan et al., 1992; Chowdhury, 1994; Dekker et al., 2001; Janakiramanan and Lamba, 1998; Masih and Masih, 2001; Rogers, 1994; Sheng and Tu, 2000; Chen et al., 2002; Elyasiani et al., 1998). In general, except in some emerging markets, such as those in Taiwan and South Korea, with severe restrictions on foreign investment, a substantial amount of interdependence has been evidenced among national stock markets, especially in the post-October 1987 crash of the New York stock exchange. Moreover, markets with close geographic and economic proximity exert more significant influences over each other. Not only to evidence the stock market interdependence, the recent research arena is attempting to explore what economic fundamentals determine the stock market interdependence?
Testing the Safe-Haven Hypothesis for Selected African Currencies
Hsu-Ling Chang, National Yunlin University of Science & Technology and Ling Tung College
Hsioa-Ping Chu, National Chung Hsing University and Ling Tung College
Dr. Tsangyao Chang, Feng Chia University, Taichung, Taiwan
In this empirical note we test whether the U.S. dollar increases in value during times of uncertainty. Our test of this “safe-haven” hypothesis is based on an ARMA-GJR-GARCH-M model for the currencies of twenty-two selected Africa countries. We examine the period from January 1980 to May 2004. Our empirical results support the safe-haven hypothesis for Botswana, Central African Republic, South Africa, Zimbabwe, Burundi, and Burkina Faso six countries, only. Doroodian and Caporale (2000) argue for the dollar as a “safe-haven” currency, experiencing increases in value in times of uncertainty. Using a symmetric GARCH in mean model, Doroodian and Caporale (2000) obtain results consistent with the safe-haven hypothesis for the currencies of Egypt, El Salvador, Malaysia, and Mexico. Chang and Caudill (2004) extend Doroodian and Caporale‘s (2000) empirical work to test the “safe-haven” hypothesis using an ARMA-GJR-GARCH-M model for the currencies of six Asian countries: Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand. They examine the period from January 1979 to August 1999 and their empirical results support the safe-haven hypothesis for South Korea and Taiwan two countries, only. The safe-haven hypothesis predicts that increases in the conditional volatility of these foreign currencies increases the value of the U.S. dollar. Thus, a positive relationship between exchange rate uncertainty and the value of the dollar would confirm the insurance aspect of investing in dollar-dominated assets. In this study, we further extend Chang and Caudill’s (2004) empirical work to test the “safe-haven” hypothesis using the same ARMA-GJR-GARCH-M model for the first time for the currencies of twenty-two selected African countries: We examine the period from January 1980 to May 2004 to see whether the “safe-haven” hypothesis hold in these twenty-two selected African countries. This empirical study is organized as follows.
Long-run Benefits from International Equity Diversification between Taiwan and Its Major Trading Partners: Nonparametric Cointegration Test
Chin-Wen Mo, Feng Chia University, Taichung, Taiwan
Dr. Tsangyao Chang, Feng Chia University, Taichung, Taiwan
This study attempt to re-investigate whether there exists long-run benefits from international equity diversification between Taiwan and its major trading partners, Japan and the USA, using a more powerful nonparametric cointegration test developed by Bierens (1997), over the July 1, 1999 to December 31, 2004 period. The results from this test suggest that the Taiwanese stock market is pairwise cointegrated with the Japanese and the US stock market. These findings should prove valuable to individual investors and financial institutions holding long-run investment portfolios in these markets. This purpose of this study is to explore whether there exist long-run benefits from international equity diversification for Taiwanese investors who invest in the equity markets of its major trading partners, namely Japan and the USA. To explore this issue, recent empirical studies have employed cointegration techniques to investigate whether there exist such long-run benefits from international equity diversification (see Taylor and Tonks, 1989; Chan et al., 1992; Kasa, 1992; Arshanapalli and Doukas, 1993; Roger, 1994; Chowdhury, 1994, Arshanapalli et al., 1995; Masih and Masih, 1997; and Kanas, 1998a, 1998b, 1999), Chang (2001) and Chang and Caudill (2005). According to these studies, asset prices from two different efficient markets cannot be cointegrated. If a pair of stock prices is cointegrated, then one stock price can be forecast from the other stock price. If that is the case there are no gains from portfolio diversification. In the above studies, Johansen cointegration test (Johansen, 1988; Johansen and Juselius, 1990) has been widely employed.
Nonlinear Short-Run Adjustments in US Stock Market Returns: 1871-2002
Dr. Tsangyao Chang, Feng Chia University, Taichung, Taiwan
Jennifer Chi-Chen Chiu, Feng Chia University, Taichung, Taiwan
Dr. Chien-Chung Nieh, Tamkang University, Taipei, Taiwan
Using a more powerful nonparametric cointegration test of Bierens (1997), we find no rational bubbles exist in the US stock market over the 1871 to 2002 period. The application of a logistic smooth transition error-correction model designed to detect nonlinear short-run adjustments to the long-run equilibrium provides empirical support in favor noise trader models where arbitrageurs are reluctant to immediately engage in trade when stock returns deviate substantially from their fundamental value. Over the past several decades, studies have been devoted to investigating the relationship between the stock prices and dividends from both theoretical and empirical points of view (see, for example, Campbell and Shiller, 1987; Caporale and Gil-Alana, 2004; Han, 1996; McMillan, 2004; Taylor and Peel, 1998). From theoretical point of view, stock price valuation model assume that stock prices depend upon the present value of discounted future dividends, where the discount rate is equivalent to the required rate of return. This means that stock returns can be predicted by the dividend yield and implicitly assumes that dividends and stock prices are cointegrated with log returns dependent upon log dividends minus log stock prices. As such, returns could be modeled by a linear error-correction model (see, Campbell and Shiller, 1987). However, this relationship could not be expected to hold exactly and deviations may arise due to time variation in required rate of return, speculative bubbles and fades, and omission of other relevant variables such as retained earnings. Recent research has suggested that this relationship may be better characterized by a nonlinear model. For example, theoretical models of interaction between noise and arbitrage traders have suggested that small and large returns may exhibit differing dynamics as arbitrageurs must be aware of the potential for noise traders to drive returns further away from equilibrium before correction. More specifically, this suggests that the dynamics governing small return deviations form fundamental equilibrium differ from those governing large return deviations.
Does PPP Hold in African Countries? Further Evidence based on More Powerful Nonlinear (Logistic) Unit Root Tests
Chi-Wei Su, Feng Chia University, Taichung, Taiwan
Dr. Tsangyao Chang, Feng Chia University, Taichung, Taiwan
In this study we use a more powerful nonlinear (logistic) unit root test advanced by Leybourne et al. (1998) to investigate where Purchasing Power Parity (PPP) holds true for twenty-two selected African countries for the period January 1980 to December 2003. We strongly reject the null of unit root process for six of the twenty-two countries compared to only one case from traditional unit root tests of ADF, DF-GLS, PP, KPSS, and NP. These empirical results indicate that PPP holds true for Central African Republic, Cote d’Ivoire, Kenya, Madagascar, Uganda, and the Lesotho six countries. Over the past decades, many studies have been devoted to investigating the stationarity of real exchange rate as is has important implications in the international finance. Studies on this issue are critical not only for empirical researcher but also for policymakers. In particular, a non-stationary real exchange rate indicates that there is no long-run relationship between nominal exchange rate, domestic and foreign prices, thereby invalidating the purchasing power parity (PPP). As such, PPP can not be used to determine the equilibrium exchange rate and invalid PPP also disqualifies the monetary approach to exchange rate determination, which requires PPP to hold true. Empirical evidence on the stationarity of real exchange rates is abundant but inconclusive thus far. Details about previous studies see the work of Rogoff (1996) and Sarno and Taylor (2002) who provide details on the theoretical and empirical on PPP and the real exchange rate. Recently, there is a growing consensus that macroeconomic variables such as exchange rate exhibit nonlinearities and, consequently, conventional unit root tests, such as the Augmented Dickey Fuller (ADF) test, have low power in detecting mean reversion of exchange rate.
Are Real Estate and Stock Markets Related? The Case of Taiwan
Dr. Tsangyao Chang, Feng Chia University, Taichung, Taiwan
Chaiou Chung Huang, Feng Chia University, Taichung, Taiwan
Dr. Ching-Chun Wei, Providence University, Taichung, Taiwan
This paper studies the long-run relationship between real estate and stock markets, using standard cointegration test of Johansen and Juselius (1990) and that of Engle-Granger (1987) as well as the fractional cointegration test of Geweke and Porter-Hudak (1983) in the Taiwan context over the 1986Q3 to 2001Q4 period. The results from both kinds of cointegration tests strongly indicate that these two markets are not cointegrated with each other. In light of risk diversification, it is recommended that investors and financial institutions include both assets in the same portfolio. To portfolio investors who want to diversify in the real estate and stock markets, fully understanding the long-run relationship between these two markets is central. It is quite apparent, after all, that if the two markets have a long-run relationship, then jointly holding such assets in the same portfolio would likely offer gains in terms of risk reduction. Previous empirical studies have employed cointegration techniques to investigate whether there exist such long-run benefits from international equity diversification (see Kwan et al., 1995; Masih and Masih, 1997). Yet, exactly what have they empirically shown? According to these two studies, asset prices from two different efficient markets cannot be cointegrated. To be more precise, they claim that if a pair of asset price is cointegrated, then one asset price can be forecast (i.e., is Granger-caused) by the other asset price. Thus, these cointegration results indicate that, with regard to reducing risk, certainly no/few-if any gains are obtained from such portfolio diversification. This study contributes to this line of research by revisiting the issue by exploring whether there are any long-run benefits from asset diversification for those who invest in Taiwan’s real estate and stock markets.
An Empirical Note on Testing the Wagner’s Law for China: 1979-2002
Jungfang Liu, Feng Chia University, Taichung, Taiwan
Dr. Tsangyao Chang, Feng Chia University, Taichung, Taiwan
Dr. Yuan-Hong Ho, Feng Chia University, Taichung, Taiwan
Dr. Chiung-Ju Huang, Ph.D., Feng Chia University, Taichung, Taiwan
In this note we empirically test the Wagner’s Law for China, using annual data over the 1979 to 2002 period. To estimate the long-run relationship between government spending and income, we use a robust estimation method known as the Unrestricted Error Correction Model (UECM) -- Bounds Test Analysis. Empirical results from UECM-Bound Test indicate that there exists no long-run relationship between government spending and income in China. Furthermore, Toda and Yamamoto’s (1995) Granger-Causality test results also show that the validity of Wagner’s Law was not held for China over this testing period. Over the past two decades a vast amount of research has been devoted to testing the Wagner’s Law, which postulates that as economic activity grows there is a tendency for government activities to increase, for both industrial and developing countries. This test is more than an intellectual exercise and has important implications within the link of economic and government system. Empirical tests of this law have yielded results that differ considerably from country to country. For example, there are many multi-country studies, see Wagner and Weber (1977) test this law for 34 countries over the 1950-1972 period. Abisadeh and Gray (1985) cover the period 1963-1979 for 55 countries and their findings support the proposition for wealthier countries but not for the poorest countries. Ram (1986) covers the period 1950-1980 for 63 countries and finds limited support to Wagener’s Law. Afxentiou and Serletis (1996) examine six European countries over the period 1961-1991 and find no evidence of supporting the Wagner’s Law for countries studied. Ansari et al. (1997) study three African countries, Ghana, Kenya, and South Africa, and also find no evidence of supporting Wagner’s Law.
Examining Task Social Presence and Its Interaction Effects on Media Selection
Dr. Bo K. Wong, Lingnan University, Tuen Mun, Hong Kong, China
Dr. Vincent S. Lai, The Chinese University of Hong Kong, Hong Kong, China
Social presence has been recognized as an important theory in the area of media selection since 1976, but conflicting research results are found in the literature that deals with this theory. Carlson and Davis believe that task descriptions are incomplete in current research, and that not all of the influences on media selection have been thoroughly considered. The major objective of this research is to study the potential interaction effects between task social presence and other situational variables on media selection decisions. Specifically, task social presence and its interaction effects with the physical proximity of communicators, recipient availability, urgency, and the direction of communication are examined. A policy-capturing technique was adopted to collect data from 208 knowledge workers on media selection behavior in a medium-sized financial company. A total of 840 usable scenarios from 162 completed questionnaires were analyzed using the LISREL statistical technique. The results indicate that all of the tested interaction effects significantly influence the choice of media of knowledge workers. In particular, telephone and voicemail are found to be common substitutes for face-to-face meetings in most situations. The implications for researchers and suggested future research directions are discussed. Our findings should arouse further interest in the significance and implications of the interaction effects in this research area. Although social presence has been recognized as an important theory in the area of media selection since 1976 (Short et al.), recent research has shown that this rational-choice model cannot by itself fully explain the empirical findings on the use of communications technology (Te’eni 2001), or the conflicting research results that are found in the literature. Some evidence supports the concept that individuals usually prefer a rich medium when performing a task with a high social presence, whereas other studies find that individuals who perform a task with a low social presence often also choose a rich medium. As summarized by Carlson and Davis (1998), this could be due to the fact that individuals may have to respond not only to the task social presence, but also to other variables, such as job pressures, geographic dispersion (Steinfield and Fulk 1986b), or individual differences (Trevińo et al. 1990) simultaneously.
International Financial Integration and Economic Growth - A Panel Analysis
Xuan Vinh Vo, University of Western Sydney, Australia
This paper employs a new panel dataset and a wide assorted number of indicators both de jure and de facto measures to proxy for international financial integration to investigate the relationship between international financial integration and economic growth. Using 79 countries with the data covering the period from 1980 to 2003, our analysis indicates a weak relationship between international financial integration and economic growth. Our data also show that this relationship is not different even though we control for different economic conditions. With the development of financial market and increased degree of international financial integration around the world, many countries especially developing countries are now trying to remove cross-border barrier and capital control, relaxing the policy on capital restrictions and deregulating domestic financial system. This paper will empirically examine the growth impacts of international financial integration. This paper is going to contribute to the existing literature on the impacts of international financial integration on economic performance in a number of ways. Firstly, we examine an extensive array of international financial integration indicators, both de jure and de facto of international financial integration. We examine the IMF’s official restriction dummy variable (1) as well as the newly developed capital restriction measures by Miniane (2004). Furthermore, we explore various measures of capital flows and in disaggregation including total assets and liabilities, total liabilities, FDI, portfolio, and total capital flows as share of GDP (a total of 18 de facto indicators).
Understanding Consumer Involvement Influence on Consumer Behavior in Fine Restaurants
Dr. Theodoro Peters, FEI – Fundacao Educacional Inaciana – Sao Paulo/Brazil
This work examines the influence of involvement on the perception made by the consumer in services. Starting by explaining the concept of involvement and its influence on services performance perception, and based on qualitative research with fine restaurant managers and consumers, the article intends to cover the interpretation and treatment of consumer involvement as a way to better understand the consumer behavior in the arena of fine restaurants. The study is done in a large metropolitan area – in the city of Sao Paulo, south of Brazil – and deals with involvement depending on the subject, the object (reason to go) and the situation (motivation of going) in fine restaurants scenario. Marketing activity for a long time recognizes the importance of measuring quality and value perceived by the consumers and their interdependence with satisfaction (Zeithaml, 1988). So far, relevant marketing benefits result to business activity, translated into consumer loyalty and patronage, particularly relevant in the present period of intensificated competition, justifying concerning with consumer value perception by business managers and its insertion into marketing strategies (Bateson, Hoffman, 1999; Cronin Jr., Brady, Hult, 2000; Holbrook, 1999; Woodruff, 1997). Woodruff (1997) suggested to enrich the consumer value theory by deepening the knowledge in the area of products usage in different situations – how consumers form their preferences wich reflect the desired value – and exploring the linkage between the consumer preferences for desired value, the received value evaluations, and consumer overall satisfaction feelings. Amongst research directions in the consumer value field, Woodruff (1997) settled the search of a better understanding of how consumers perceive value in different contexts, the criteria they rely on and their relative importance, in such way that the strategic concerns with consumers retention poses a context question. In this sense, there is a need for new methods to collect and analyse data connected to particular issues of consumer value.
Strategic Implications of Surging Chinese Manufacturing Industries: A Case Study of the Galanz
Dr. Gloria L. Ge, Griffith University, Australia
Dr. Daniel Z. Ding, City University of Hong Kong, Hong Kong
Recent years witnessed the surging of Chinese manufacturing industries, and China became the world’s factory floor. Yet little is known about Chinese manufacturing firms, let alone their strategic choices. This paper presents a case study of one of the most successful manufacturers in China, the Galanz Group. As the world’s largest microwave manufacturer, Galanz has developed strategies that have made its success both in China and overseas market. By examining these strategies, domestic Chinese firms can learn how to build up their market share in overseas market, while international firms can learn to better compete in the Chinese marketplace. China is now the world’s fourth largest industrial producer behind the U.S., Japan and Germany. China makes more that 50% of the world’s cameras; 30% of its air-conditioners and televisions; 25 % of its washing machines and nearly 20% of all refrigerators (Leggett and Wonacott 2002). Nearly half of all the goods China sends overseas each year are made by foreign companies, such as Motorola and Philips. Foreign investment continues to soar and hit a record of $52.74 billion in 2002 (China Daily, 15 January 2003) and China surpassed the United States to become the largest recipient of foreign investment in the world. When foreign companies, such as Philips Electronics and Motorola, started their investment in China, most of them had objectives to sell products to a billion Chinese. However, it turns out it is much easier and more profitable to use China as an manufacturing base and exporting center than selling goods inside the country. Today, Philips operates 23 factories and produces about $5 billion-worth of goods in China each year, and nearly two-thirds of that is exported to overseas. In domestic markets, more and more multinational corporations (MNCs) are beaten out by their Chinese counterparts.
Supply Chain Coordination with Asymmetric Information
Dr. Gang HAO, City University of Hong Kong, Hong Kong
How to make effective contract decisions that retaining healthy partnerships among independent chain parties and improving the chain value is critical to the supply chain success. The contract study in the literature has largely assumed a simple two-party chain structure involving a single supplier and a single buyer or a serial contractual relationship along the chain. There has been a growing industrial trend of outsourcing or subcontracting to external parties whose advantages derive from scale, focus and location. When outsourcing involved, the supplier needs to initiate and enable the contracts with both the buyer and the outsourcing party. This study provides an optimal contracting framework that allows integrated analysis and systematical tradeoffs among all three contracting parties. Simultaneous consideration of multiple contracts in a single framework brings both contracting complexity and extra rooms for improving chain coordination and efficiency. Supply chain management has been increasingly recognized as a core competitive strategy to meet the twin goals of reducing cost and improving service. Companies all over the world are pursuing supply chain as the most powerful means to build the sustained competitive advantages. The key to the supply chain success relies on effective partnering and coordination among chain parties, who are independently managed entities seeking to maximize their own profits. It is through collaborated pursuit of the chain value optimisation, the chain parties, ultimately the customer, will benefit. Hence, how to make effective decisions that retaining the healthy partnerships while improving the chain value become critical.
Diagnosing Qualitative Issues of Enterprise Systems Adoption: The Cases in Indian Context
Dr. Vineet Kansal, Arab Open University, Kuwait
A range factors have strongly of influenced and encouraged the wide spread adoption of Enterprise Systems (ES). However, there is a widespread belief and a emerging consensus that ES has in many cases failed to provide expected benefits. The increasing by hyped role of, and dependency on ES and the uncertainty of these large investments, has created a strong need to monitor and evaluate ES performance. It is worthwhile to analyze corporate practices concerning ES, in an organization, in Indian context with a view to develop a better vision of the current state of ES software. This paper reports on three suit case study application. The cases were reported using interviews and observation techniques. The Situation-Actor-Process (SAP) of framework SAP-LAP paradigm was used to analyze the cases. Based on extensive interactions and brain storming sessions with ES practitioners a relative ranking method analogous to ‘VED’ (‘Vital’, ‘Essential’, and ‘Desirable’) in context of selective inventory management technique was adopted. This ‘Normal’ (N), ‘Important’ (I) and ‘Critical’ ( C) were somewhat akin to the notion of ‘VED’ in reverse order. A synthesis was performed in the management context, situation factors, role of factors, processes used in ES. The resultant learning issues in conjunction with the conclusion of the study may help in identifying the potential key areas in ES adoption in Indian context. As the pace of change accelerates in the twenty first century as a result of technological opportunities, liberalization of world markets, demands for innovation, and continuality desiring life cycle, organization are feeling that they have to continuously readjust and realign their operations to meet all these challenges.
The Exploratory Study of Competitive Advantages of Hsin-Chu City Government by Using Diamond Theory
Dr. Lieh-Ching Chang, Hsuan Chuang University, Taiwan
Cheng-Ted Lin, Hsuan Chuang University, Taiwan
This study is to discuss the competitive advantages of nations and of local government. The local government should think about the ways to use the competitive theory and to develop useful strategies for enterprise in practice. The purpose of this study is to help the local government to improve its competitive advantages based on Michael Porter’s theory --“The competitive Advantage of Nations” (1990). Moreover, this study also applies global competitive index and SWOT analysis into Hsin-Chu City government of Taiwan. With the changing of international environment, the promotion of government functions and efficiency will depend not only on their promotion within a state, but also on the promotion of the overall national competitiveness against the other countries all over the world. Besides depending on the leadership of and efforts made by the central government, each local government should further implement the national advancement policy and connect itself with the world. By summing up the observations of international political scientists on the globalized knowledge economy, the financial editor of the British Newspaper The Independent, Coyle, pointed out: the central government has been historically strong, but the local government now becomes a tendency; in the future the “municipal government” will replace the central government; this viewpoint, besides reflecting the governing predicament of the central government in each state, points out the new tendency in the global democratic development in the future (Mary Yang, 2003). However, Taiwan now provides very little information about the county and city development researches and the county and city competitive advantage analyses. Moreover, competitiveness is an ambiguous concept that connotes a rather complicated composing system.
Reverse Engineering: A Technology Transfer Tool
Dr. Alireza Lari, Fayetteville State University, Fayetteville, NC
Dr. Nasim Lari, North Carolina State University, Raleigh, NC
Reverse engineering has always been considered as a kind of industrial piracy in which a company copies someone else’s product, enters in the same market, sometimes competitively, and threatens the original innovator. In this paper another aspect of reverse engineering is considered in which companies, mostly in less developed countries, try to use reverse engineering as a tool for survival rather than competition. These are mostly companies who first try to obtain the technology thru formal channels of technology transfer, but due to problems that exist in transfer of technology, become discouraged and start looking for ways to do reverse engineering. This reverse engineering does not put these countries in a position to compete with the innovators but helps them to increase their industrial knowledge and satisfy their market needs. Their market does not overlap with the innovator’s market and as a result this type of reverse engineering may be considered as an instructive tool for the global economy. Today, business is global. Even if you are the owner of a small business and have suppliers and customers who are solely domestic, you are likely to have some sort of foreign competition. There are many foreign companies competing for consumer dollars in the U.S. market, but US-based companies also enjoy marketing their products and services throughout most of the world. While foreign companies are competing for the dollars of some 275,000,000 consumers in the United States, US companies are selling products and services to a market of more than 6,118,000,000 (over 6 billion) consumers around the world (Haag et al. 2002). One of the major effects of globalization is the flow of innovation and new products to less developed countries (LDCs). For a long time, most of the LDCs have relied on imported innovation and technology of products from multi-national companies (MNC). Their development has mostly been in the assembly of products and not much in product development. Their R&D activities have mostly concentrated on process improvement rather than product development and innovations. Globalization has created localization pressures. Localization pressures include both country-specific factors and MNC-specific factors. Country-specific factors include three primary pressures: trade barriers, cultural differences and nationalism.
Farmer Adoption of ICT in New Zealand
Dr. Stuart Locke, University of Waikato, Hamilton, New Zealand
The adoption of information communication technology (ICT) by farmers in New Zealand is investigated in this paper. Government has initiated a number of policies to expand the availability of broadband internet coverage to rural regions from 2000 onwards. Since the end of 2004 all schools in New Zealand (NZ) have access to broadband and the local communities and businesses, including farmers, in the vicinity of the schools now have broadband access too. Results of in person questionnaire surveys of farmers conducted in July 2003 and July 2004 regarding ICT usage are reported and discussed. The importance of high level information communication technology penetration into the business and household sectors of New Zealand has been stressed in successive government reports, culminating in a digital strategy (MED 2004). “This Strategy provides an ambitious plan for the development and implementation of policies aimed at achieving the ideal of all New Zealanders benefiting from the power of ICT to harness information for social and economic gain” (p1). Components of the strategic initiative include legislative reform, e-government implementation, e-learning programmes for developing capabilities, and several others. The telecommunication networks covering landline, mobile and satellite systems are owned and operated by the private sector. Government has, as part of its Digital Strategy, invested in a project known as PROBE. This provincial broadband extension project was to ensure “all schools and their surrounding communities have access to broadband by the end of 2004” (p95). The topography raises difficulties with an alpine range running the length of the South Island with glaziers flowing to the west.
Prepare for E-Generation: The Fundamental Computer Skills of Accountants in Taiwan
Dr. Yu-fen Chen, National Changhua University of Education, Changhua, Taiwan
The study aimed to explore the fundamental computer skills of accountants for E-generation in Taiwan, also to examine the proficiency levels of these computer skills possessed by accountants currently to serve as crucial references and suggestions to education authorities, schools, faculties and curricular planners. Literature review, expert meetings and questionnaire surveys were utilized for gathering data concerning the items of fundamental computer skills of accountants and proficiency levels of these computer skills possessed by accountants in Taiwan. Data collected from the questionnaire surveys were analyzed through statistical methods including frequency distribution, T-test, one-way ANOVA, and Scheffe’s method. The study developed 3 major categories and 17 subcategories as a research framework in consisting of the items of fundamental computer skills of accountants for E-generation in Taiwan. The progress of information technology not only trigger the business management mode to change but new graduates entering the job market will invariably be required to possess rudimentary computer skills. As the administration of the Ministry of Education directed that training manpower, the intermediate professional technician should be a key objective in all vocational junior colleges . In 2000, the Chinese Computer Skills Foundation indicated that junior college graduates are not only required to be fluent in the domain of conventional accounting knowledge but also need to be proficient in computer skills, such as computer operating system, system software, word processing software, spreadsheet software, packaged commercial accounting software, database software, graphic software, presentation software, multimedia software, Internet software and so forth. A survey in 2002 also found the top four technology skills for new accounting hires to possess, in order of importance, were spreadsheet software (e.g., Excel), Windows, word-processing software (e.g., Word), and the World Wide Web .
Who’s Responsible for New Medical Treatment Development: A Model of the Ethical Interaction Among Major Stakeholders
Dr. C. Michael Richie, University of South Carolina Aiken, Aiken, SC
Dr. Michael “Mick” Fekula, University of South Carolina Aiken, Aiken, SC
Dr. David S. Harrison, University of South Carolina Aiken, Aiken, SC
Dr. Pavel Smirnov, International Institute of Management, Sarov, Russia
This paper proposes a model to examine the interactions between stakeholders who play critical roles in the development, delivery, and receipt of cutting-edge medicines and procedures targeted at debilitating and life threatening illnesses. A multi-level approach is used to position the various stakeholders and an ethical dilemma framework is imposed upon those positions. The application of a meta-level dilemma is used to analyze cross-level relationships in ethical terms. The conclusion suggests that organization-level stakeholders represent the best solution for achieving more effective medical treatment and procedures. However, this deduction points to need for collaborative efforts among all stakeholders in order to diffuse the risks related to significant amounts of invested capital. Advancements in medical technology have grown in geometric proportion during the last fifty years. Many illnesses that were once fatal are now routinely prevented, detected, or cured, such as pneumonia and polio. With the discovery of treatments that we now take for granted, maladies that once threatened the daily quality of life exist now only as curiosities in some research laboratories. The current medical research environment continues to make startling breakthroughs daily, with the promise of more and better outcomes. Nowhere else is the future of medical treatment more promising and exciting than in the area of Gene Therapy. Simply put, many ailments are caused by the lack of certain gene coding in the human genome.
Enterprise Valuation for Closely Held Firms
Dr. Thomas A. Rhee, California State University, Long Beach, CA
Valuing a firm, when the shares are not publicly traded, is quite difficult. However, the value of a firm depends on three economic factors: (1) production technology the firm employs, (2) economic conditions facing the industry, and (3) the volatility of the market as a whole. These economic factors are manifested in the firm’s asset betas. Any anticipated change in asset betas will change the firm value, and we will forecast firm values accordingly. Empirical studies suggest that short-run betas converge. The convergence requires certain restrictive assumptions about parameters underlying asset betas. When betas are assumed to follow a certain Wiener process, a firm’s asset beta will converge over time, however, to a level much lower than the industry beta. Value of a firm is a direct function of the firm’s asset beta. The asset beta is generally known as unlevered beta, which typically is obtained from levered equity beta. However, if a firm is not a public company or does not have a long enough history on the exchanges even if the firm’s shares are publicly traded, it is difficult to measure equity betas statistically. This necessitates us to examine components of asset betas directly. Fortunately, there are a number of studies that examine factors determining betas, but very little studies are available today to describe why and how betas may change over time under uncertainty. (1)
Agency Costs and Valuation Effects of International Franchising Agreements
Dr. C. Pat Obi, Purdue University Calumet, Hammond, IN
This study documents the financial market response to the decision of American firms to franchise overseas. Conventional event study methodologies are used to determine the magnitude of post-entry risk-adjusted returns. Agency theory is then employed as a way to explain the motivation for firms to seek such opportunities abroad. To minimize agency costs, franchisors seemingly charge a higher initial fee in relation to royalties, in comparison to what they would charge domestically. In effect, a high bonding cost is created between the franchisor and the overseas franchisee since the latter would have a disproportionate financial stake in the venture. This study is designed to provide an empirical verification of this notion. This study is an attempt to evaluate the wealth effects of international franchising agreements between U.S. firms and foreign business units. The current global market structure presents huge international investment opportunities for American firms more than ever before. As a result, the international portion of the U.S. gross domestic product has grown dramatically from a low of only eight percent in 1990 to the current high of almost 15 percent. The primary avenues of entry for American firms seeking new opportunities overseas are joint venture and franchising agreements. The literature documents that among external factors responsible for the growth of international franchises are the level of domestic saturation, competition in the home market, new market opportunities in emerging economies especially in the former eastern bloc and South East Asia, as well as regional economic integrations such as the European Union and North Atlantic Free Trade Agreement.1
Information Security Awareness Status of Full Time Employees
Dr. Eyong B. Kim, University of Hartford, CT
Based on the framework provided by HIPAA security regulations section 5 (i) (ii), the questionnaire items were developed to measure security awareness level amongst full time employees. The survey was conducted on a sample of sixty three full time workers in Northeast region. Main finding is that information security awareness among full time workers is not in an acceptable level. Surprisingly many full time workers did not have any information security training in their work so that they violated many information security procedures unknowingly. Even though they had security training, the training seemed to be “once-done-then-forget-it” event that results the lack of knowledge on the recent information security issues. In addition, the preventative measures learned from any security training seemed not properly implemented in end users’ everyday computer usage. The author recommends that security awareness should be on-going programs that focus on a user’s behavioral change instead of transferring knowledge about information security. It was reported that overall financial losses due to computer crimes dropped significantly from $456 million in 2002 to $202 million in 2003 based on the survey conducted by the Computer Security Institute (CSI) in San Francisco. These surveys have been conducted by CSI and FBI together on about 500 large corporations and government agencies (503 respondents in 2002 while 530 in 2003). In spite of this decrease of financial losses, information security seemed very important issue to most companies. For example, there was a huge demand for training to helping network professionals to be armed for things like computer viruses, intrusion detection, cyber terrorism and denial of-service attacks, was the No. 1 IT training trend in 2004, according to attendees of Colloquium 2004,
E-Learning, IT and the Physically Challenged
Dr. Leonard Presby, William Paterson University, Wayne, NJ
Online instructional courses typically take advantage of the Web. It has facilitated course delivery. A group of learners that is sometimes not considered when a course is developed, however, is the physically challenged. This paper examines how one can incorporate multimedia in an IT class in order to help students, but with consideration towards the physically challenged. It shows the learning process of all students can significantly improve by including a personalized cd video. Considerable increases in student interest have resulted as well as involvement in learning. Information Systems/Technology (IS/IT) is one business course that is needed for AACSB accreditation. Even those schools that do not pursue an accreditation route, nevertheless, provide students with a tech course. The goal of such a course is to aid all business students learn how to use and manage information technologies to help the business process conduct electronic commerce, improve business decision making and gain competitive advantage. Without understanding how technology affects business processes and workflow, one cannot anticipate whether it will produce the required results (Greengard, 2003). There is no complete uniform course content from one university to another. But all colleges face the challenge to maintain a current course in the face of a rapidly changing environment (Srinivasan, Guan, and Wright, 1999). With the advancement of IS, more topics need to be covered. For example, not long ago topics like, security and ethical challenges in E-Business were not typically discussed. Enterprise and Global Management did not assume much treatment either. And of course, the role of the Internet, intranet and extranets played a minimal role as well. It becomes apparent that in a one semester IT course not all topics that were once covered can get now appropriate handling and equal time. In there lies the problem.
The Czech Republic: An in-depth look at its Global Posture
Dr. J. Kim DeDee, University of Wisconsin Oshkosh, Wisconsin
Lynda S. DeDee, University of Wisconsin Oshkosh, Wisconsin
Despite the interest in global business, scholars give limited attention to the transition economies of Central and Eastern Europe (CEE). This paper provides a framework of the Czech Republic, a key nation to go from command economics to market driven economics as applicable to U.S. firms. Crafting a set of competitive advantages requires management to identify the variability of evolving markets, to understand the needs of those markets, and then to deliver products and services at the right quality, quantity, price, and timing to meet or surpass most demands. (McDougal, 1989; Yeoh & Jeong, 1995; Morris & Paul, 1987).Entrepreneurial firms intent on a global presence establish ventures that engage in traditional or emerging international markets, which, in certain cases, could involve the ongoing transition economies of Central and Eastern Europe (CEE) Taking advantage of the growing potentials there, while managing for real and perceived risk, calls for approaches that may differ significantly from standard U.S. practice. Considering the merits and differences of the market potentials of CEE countries, the Czech Republic (CR) stands out as a leader in the ongoing transition from centralized government command economics to market driven demand economics The authors first examine how the government of Czechoslovakia, and later the Czech Republic, when given the opportunity, laid the cornerstone for a private sector economy and later acted as a host country for free market capitalists worldwide. Next, the most salient long-range characteristics of the Czech transition economy are identified and finally, we explore important dimensions of the Czech market and its implications to U.S. business. From an historical viewpoint, both perceived and real attributes of a nation can be argued as necessary for the understanding of that nation as a potential market The Czech Republic is land-locked.
Monitoring and Control of PERT Networks
Dr. Wayne Haga, Metropolitan State College of Denver, CO
Dr. Kathryn Marold, Metropolitan State College of Denver, CO
This research involved attempts to develop better methods of monitoring and control of projects. This is accomplished by creating a list of critical dates at which the manager should review the project to decide if activities need to be crashed. Crashing refers to bringing in additional resources to shorten the completion time of an activity. The traditional method of crashing PERT networks ignores the stochastic nature of activity completion times, reducing the stochastic model to a deterministic (CPM) model and simply using activity time means in calculations. A new method of crashing PERT networks is proposed. A computer simulation model is used to identify “crash points” for each activity in the network. The crash point for an activity is the point at which the expected value of cost overruns given that the activity is crashed exceeds the expected value of the cost overruns if the activity is not crashed. Crash points are determined by making a backward pass through the network, such that each crash point is based on decisions that will be made regarding crashing at later points in the project. Cost overruns are calculated by specifying a penalty function for late completion of the project. A simulation program was written in the C++ programming language to implement and test the new proposed methods of crashing. It was found that this method could greatly reduce project overrun costs. This work was initially explored by Haga (1998) as part of his Doctoral dissertation. There has never been a more critical time to develop methods of improving project management. Trends toward offshoring and reductions in funding for team projects warrant a re-examination of crashing networks to monitor and control project development.
Diffusing Technologies: Factors Effecting Adoption Decisions
Dr. Jifu Wang, University of Houston-Victoria, TX
Dr. Ronald J. Salazar, University of Houston-Victoria, TX
In this article, we investigated some of the precursors of and responses to the rapid technological innovation being undertaken by China’s machine tool industry. Following Caselli and Coleman, (2001) we investigate the process of technology adoption taking an industry approach. Specifically, we analyze that taken by a large Chinese manufacturer of computer numerical control (CNC) machine tools. The industry has been identified as a key strategic component of China’s plan to join the global economic powers and to supply its rapidly growing industrial base. Drawing on the technology diffusion literature we observe the possible influences of corporate governance systems, tariffs and trade barriers. The article suggests directions for further empirical investigation. Stiglitz (2004), has pointed out that globalization can be seen as a threat to traditional values. In doing so, his work is enriching a growing body of research Parente, (1994); Young, (1992); Benhabib, (1994); Caselli, (1996, 2001); Stiglitz, (1987) concentrating on the economics of globalization. The dramatic growth observed Durlauf, 1991) in the radical opening of the Chinese economy to outside influences form the backdrop to the research we report.
Companies Prefer Liquidity
José Villacís González, University San Pablo CEU, Madrid, Spain
Companies are consumers of money at first and then consumers of production factors (inputs). They later sell the products and regain the money. During that period of time, which is called the company’s average maturing period, the working capital is destroyed and production is created. Production is basically a destruction process. Everything is destroyed except for money, which is transformed. Such is the final conclusion of this paper. Money is a fully liquid means of payment that represents the monetary universe, and is purchased by the company as such. It is then transformed step by step into less liquid segments, still remaining money until it reaches financial assets, which are money substitutes. These constitute the portfolio, which can be unpredictably large and heterogeneous, and even dysfunctional. The production and sale of products is followed by regaining fully liquid money. Money goes back to its original simple status of liquidity. The company’s financial activity relies on such metabolic process transforming money from the most liquid to the least liquid segments, and finally to return to its liquid status. This process simultaneously represents the consumption–destruction process and the selling of the production for a price. These activities describe the real processes of the economic system. The company’s portfolio is in between, with its role of money distributor for the working capital in production.
Why Does HRM Need To Be Strategic? A Consideration of Attempts to Link Human Resources & Strategy
Dr. Martin Wielemaker, The University of New Brunswick, Fredericton, NB
Dr. Doug Flint, The University of New Brunswick, Fredericton, NB
There is a move in HRM to position itself as strategic, based on the increased importance of people in gaining competitive advantage according to the Resource Based View of the firm. However, we argue that even if an organization’s human resources are deemed important, i.e. strategic, that doesn’t automatically elevate the HRM-function in an organization, - embodied by the HR manager - from a supportive to a strategic level. Not surprisingly, the field of HRM has proposed a number of suggestions and tactics to capitalize on the proposed new role of human resources in organizations such as the use of strategy discourse in HR, the use of performance measures, and the use of integrative tools such as the balanced score card or strategy map. Yet, these tactics still fall far short of situating the HR manager in the room where strategy is formulated. This leads to the question whether HRM should focus its efforts on a superior way to make HR strategic or whether it should accept the support role it currently plays in executing strategy.
Importance of Portal Standardization and Ensuring Adoption in Organizational Environments
Dr. Prasad Kakumanu, University of Scranton, Scranton, PA
Marc Mezzacca, University of Scranton, Scranton, PA
Enterprise information portals provide delivery mechanisms that overcome information barriers between technical, functional, and cultural silos that limit the internal creation and development of competitive advantages within organizations. Seamlessly integrating this technology into an organization has represented a daunting challenge since the technology’s inception. Since the designs of these systems have often lacked uniformity, information portals still lack any significant degree of standardization. This issue of consistency, accompanied by a scarce supply of in-depth research in the field, has made utilizing enterprise information portals difficult and inefficient. This study was conducted during a three month research program at The University of Scranton. There were two primary objectives with regard to this paper. The first of which is to facilitate a more fundamental understanding of enterprise information portal technology. The other is to provide the decision makers of various firms and educational institutions with some comprehensible and practical information concerning portal technology and its respective impact on a particular organization. The research completed during this study includes conclusions drawn from the examination of a real world case designed to clarify many vague subject areas addressed by this new technology. In addition to this, the paper will also provide insight into future progression of enterprise information portal technology as its popularity continues to increase.
Competitive Advantage Through Nonmarket Strategy: Lessons from the Baywatch Experience
Marc T. Jones, Macquarie University, Australia
Patrick Kunz, University of Technology, Sydney, Australia
This paper examines how international firms operate strategically in the nonmarket environment to secure advantages which improve their cost and/or revenue structures and, hence, their economic performance. The paper centers on a detailed case study of the globally popular Baywatch television show’s efforts during 1999 to secure attractive locational subsidies by placing the states of New South Wales, Queensland (both in Australia) and Hawaii into competition with each other. The paper is organized into three core sections: the first reviews the concept of nonmarket strategy; the second examines the Baywatch in detail; the third concludes with some observations/recommendations for various impacted stakeholders in this and similar nonmarket contexts. According to Baron (2000:3), the business environment consists of both market and nonmarket components. The market component includes the interactions between firms and other parties that occur across markets or through private agreements such as contracts. The nonmarket environment includes social, political and legal arrangements that structure interactions outside of – but in conjunction with – markets and private agreements. It encompasses those interactions between the firm and individuals, interest groups, government entities, and the public that are intermediated by public institutions rather than markets or private agreements. The distinguishing characteristics of public institutions include majority rule, due process, broad enfranchisement, collective action, and transparency. Vitally, a firm can secure advantages in the nonmarket environment which serves to protect or enhance its position in the market environment.
The Effects of Mood and Motivation on Attitude
Michael Ba Banutu-Gomez, Ph.D., Rowan University, Glassboro, NJ
Amanda R. Wingate, Rowan University, Glassboro, NJ
This paper deals with the effects of mood and motivation on “attitude toward world view.” With increasing business globalization and the different world views of work groups, maintaining motivation becomes a challenge. This meeting room experiment attempted to measure the level of mood and motivation of participants when asked to read a positive story and headlines, a negative story and headlines, and complete a survey. We predicted that positive world view would be higher in participants who read a positive story and headlines versus those who read a negative story and headlines. Statistical analysis revealed no significant effect between mood and motivation. Motivation can be defined as the reasoning for people to do certain things. A motive is a need within someone to attain something, which is a key element in achieving effective performance. To motivate someone requires giving him or her an incentive, which in some minds, can be viewed as an underlying form of manipulation. Theories of motivation can fall into two categories. First, there is content theory, which includes the requirements of an individual to complete a task. Second, there is process theory, which emphasizes how and by what goals an individual is motivated rather than the content of individual needs (Smith, 1993). The greater the deprivation of a need, the higher its importance, strength, and desirability becomes. For instance, the longer a human goes without food, the hungrier he gets, and most importantly, the more valuable food becomes.
Service Providers’ Communication Style and Customer Satisfaction
Cynthia Webster, Ph.D., Mississippi State University, MS
The research reported here examined the effects of two general communication styles, affiliation and dominance, on customer satisfaction in the service market. Findings reveal that highly affiliative providers produced more satisfaction among their customers and highly dominant providers produced less satisfaction. However, it was also found that the relationship between a service provider’s communication style and customer satisfaction depends on service criticality and whether the service is experience or credence in nature. In today=s fiercely competitive service environment, marketers are seeking to enhance customer satisfaction by establishing and improving relationships with new and existing customers (Singh and Sirdeshmukh 2000). Of particular interest are the communication factors that contribute to the creation of a strong bond between the service provider and customer. Among the communication factors, communication style is one of considerable importance because of its vital role in connecting employees and customers and in establishing customer trust and satisfaction (Ring and Van De Ven 1994). Further, communication style has been found to affect a listener=s feeling of confidence, sense of control, sense of connectedness, and self-esteem (e.g., Albrecht and Adelman 1987). Although a service employee’s or provider=s communication style is likely to affect the quality of the service encounter by influencing the customer=s impression of the provider and the service firm, there is a lack of research on the impact of communication style on service customers= attitudes, despite the call for such research (see, for example, Czepiel 1990).
How Can Marketing Tactics Build Behavioral Loyalty?
Dr. Yi Ming Tseng, Tamkang University, Taipei, Taiwan
This research explores the effects of relationship marketing (RM) tactics on enhancing relationship quality in the services industry. Through data from banking, airlines, and travel agencies, we discuss five types of relationship marketing tactics and how they influence the customers’ perceptions about long-term relationships. We also include customers’ inclination toward the relationship as a mediator into the model to help the framework more completely. Research findings support that tangible rewards, preferential treatment, and memberships are effective in developing customers’ long-term relationships, and behavioral loyalty is also influenced by relationship quality. Relationship marketing has been conventionally defined as "developing," "maintaining," and "enhancing" customer relationships (Berry and Parasuraman 1991). What are the effective methods for developing and keeping these relationships and how they work may be complex questions. Relationship marketing tactics are methods that can be actually executed for implementing relationship marketing in practice. We would like to propose and discuss five main kinds of relationship marketing tactics in the service industry and construct the relation model of these tactics and other relationship marketing concepts. These efforts will be helpful in yielding insights in the field of relationship marketing.
A Comparative Essay on the Causes of Recent Financial Crises
Dr. Tarek H. Selim, The American University in Cairo, Egypt
Causes of recent financial crisis are explored. The study points out different reasons for the financial crisis which have plagued different countries and takes a country by country analysis as the main approach. The essay includes aspects of short-term volatility, macroeconomic fundamentals, policy misalignments, banking performance, exchange rate management, and contagion. A comparative summary concludes the analysis. Countries studied include Mexico (1994), Thailand (1997), Korea (1997), Indonesia (1998), Malaysia (1998), Russia (1999), Brazil (1999), Turkey (2000), and Argentina (2001). Globalization and uncontrolled speculation have been blamed as the leading reasons for the effects of recent financial crises on developing economies (Kraussl 2003). The size and speed of capital flow movements in international financial markets are argued to have created "devastating" consequences for those countries, and as have been quoted by Malaysian Prime Minister Mahatir in the Jakarta Post on January 24, 1998: "For forty years, all these (emerging) countries have been trying hard to build up their economies and a moron like George Soros comes with huge sums of money to speculate and destroys everything". Different financial crises arise due to different reasons. It can be argued that a specific financial crisis initially occurs due to specific market failures in specific sectors of the economy and then it may spread to other countries through contagion and other regional spill-over effects. However, three general forms of financial instability have constituted most forms of recent financial crises (based on Kaminsky and Reinhart 1996, Caprio 1998, Kraussl 2003, and White 2000): (1) short term volatility, (2) medium term misalignments including excessive international capital flows, and (3) contagion.
Human Capital Convergence: A Cross Country Empirical Investigation
D. Stamatakis, Athens National and Kapodistrian University
Dr. P. E. Petrakis, Athens National and Kapodistrian University
This article conducts an empirical investigation comparing human capital convergence in three country groups belonging to significantly different development categories: G7, developed and developing. Human capital evaluation, in this context, goes beyond enrolment and/or attainment rates. Apart from enrollments and government spending, alternative factors determining human capital effectiveness, e.g. book availability, researchers per capita and students per teacher, are included. Results indicate moderate evidence of convergence among the three-country groups when “traditional” variables are included. The convergence “picture” taking into account additional variables is quite different, implying the existence of a “convergence trap” manifesting in a scenario of worldwide polarization. A key economic issue currently is whether poor countries tend to grow faster than rich ones and converge over time to some level of per capita income. Instead of evaluating convergence based on a specific growth model, the present article considers the factors of production. Specifically, it comprises an empirical attempt to evaluate and interpret human capital convergence and constitutes a supplement to former studies regarding education and growth (e.g. Petrakis and Stamatakis, 2002; McMahon, 1998; Barro and Lee, 1993). Meanwhile, the conclusions are drawn from the intersection between former findings on enrollment rates and the empirical outcome of an augmented set of human capital proxies; stocks and flows.
Financial Integration through Capital Mobility: Does the GATS Approach Help or Hurt?
Karla Scappini, George Mason University, Fairfax, VA
In a time when international economic debate is dominated by a trend toward globalization, and fueled by financial crises of the late 1990s, the debate regarding the effectiveness of government capital controls in developing countries for macroeconomic stability has regained importance. Whether for or against capital controls, this debate takes place within the context of a much larger topic: the international financial architecture and the extent to which emerging market economies are integrated or integrating into the global system. This paper considers the classical theories (1) favoring free trade in and liberalization of financial services, particularly the arguments for free capital flows relative to their contribution to financial integration, and whether General Agreement on Trade in Services (GATS) is an appropriate forum for facilitating integration of emerging markets. By comparing the arguments for and against capital controls with the free trade theories underlying GATS, insight into the potential role for GATS in the integration process will result. Part I of the paper is a review of the literature on financial integration and its macroeconomic challenges. Part II reviews the literature on capital controls and the policy dilemma regarding their use in macroeconomic policy. Part III delves into the relationship between the free trade models and gains from trade resulting from capital as a factor of production. Part IV defines economic integration within the constructs of WTO and the GATS. Conclusions are presented in the final part of the paper.
Production and Macroeconomic Equilibrium
Dr. José Villacís González, San Pablo CEU University, Madrid, Spain
Companies have to finance themselves in two different ways: on the one hand, by using new monetary resources, and on the other hand, by using the system’s savings, which partly belong to the company and partly belong to others. Both, new money created in the system and previous money –in the form of savings– make it possible for production to be formed and demanded in the system as a whole. New money will have to be converted into new production. We will prove such premise. We will also see that the system requires three groups of assets: the first two groups are the result of production and they are consumer goods and capital goods. The third group is made up of artificial and speculative assets. Macroeconomics main characteristic will experience a change with these new assets. This article develops and expands Germán Bernácer’s Macroeconomics theory. He was the first and last person to study them. Every time new production is generated, production factors are employed and paid. Such periodic payment, which is a flow, is called income. Income has a monetary equivalent in production, which is why there is an equation according to which net production is equal to domestic income. If we consider period zero the moment when production is initiated, and assuming that there has been no previous production or income, then new production is only possible if there is new money that enables the payment of new income to production factors. Once the incomes and production are generated, two events will take place: the first event is the monetary circulation of initial incomes, and the second event is the creation of new money that will finance new productions.
Selecting a Software Package: From Procurement System to E-Marketplace
Yumiko Isawa, Monash University South Africa, Johannesburg, South Africa
A leading media group partnered with a software vendor to build a trading e-hub for its group of companies. The project had taken a broader approach than merely buying the technology, rather they adopted a dual focus that included the acquisition of the packaged software as well as implementing business processes aimed at achieving the benefits associated with strategic sourcing. Following a short procurement and package selection process, and a 3-month pilot phase at two of the Group’s companies, the trading platform was in the process of being rolled out throughout the Group. The project champion, expected savings of approximately R120 million per year on the Group’s R2 billion procurement budget. In addition to the benefits associated with cost savings, came potential new sources of revenue via the new trading exchange enabled by the new technology. Organisations are increasingly moving to commercial off-the-shelf software for major business applications. In 1999, Butler predicted however, that organisations are increasingly moving towards packaged software and that the ratio would go beyond 3:1 in favour of packaged applications (Butler, 1999). The benefits of selecting packaged software rather that bespoke software development are numerous. Several researchers and practitioners have offered various advantages of using package software. (Lucas, 1988; Butler, 1999; Lassila & Brancheau, 1999).
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