The Business Review, Cambridge
Vol. 9 * Number 1 * December 2007
The Library of Congress, Washington, DC * ISSN 1553 - 5827
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Relationships between Goal Setting, Innovation, Project Management, Quality, Speed to Market, and New Product Success
Dr. Ying-Chieh Yang and Dr. John Cipolla,
Successful new products and services are critical for business success in the global economy. Many companies, however, continue to find successful new product development (NPD) difficult. Few studies have investigated the impact of organizational culture on NPD. The literature suggests that environmental conditions intervene in NPD, but little research has been conducted on relationships between organizational culture, environmental conditions, and NPD success. This study aims to develop a theoretical framework based on Nakata and Sivakumar’s (1996) culture-NPD model which integrates four cultural values, environmental uncertainty, and firm size as keys to NPD success. Two research hypotheses originate from this theoretical framework. 460 target participants were invited through phone invitations. The survey was sent to 449 respondents who agreed to participate in this study, but 219 questionnaires were returned. Because of having 18 incomplete questionnaires, the final number of usable questionnaires was 201, for a response rate of 44.7%. Through hierarchical multiple regression and moderated multiple regression (MMR), findings indicate that project management, market performance, and innovation were significant positive explanatory variables of NPD success rates, while clarity, speed to market, product quality, and team member satisfaction were not. Environmental uncertainty and firm size did not completely mediate the impact of the cultural variables on NPD success rates. Finally, this study also provides limitations and direction for future research.
Long-Term Trends in USA Stoppages – An Unobserved Components Approach
L. J. Perry, Ph.D. and Patrick J. Wilson
We examine the pattern of annual work stoppages in the USA for the period 1927-2006 to investigate the presence or otherwise of cycles as suggested by Franzosi (2001). The methodology utilized to model the pattern of stoppages is the structural time series modelling approach popularised by Harvey (1989, 1999), which identifies underlying trend and cyclical regularities (if any) in time series data. Evidence is found of two regular cyclical processes around a long-term non-linear trend. These results are operative in the presence of discrete breaks in the series associated with, firstly, World War II and its immediate aftermath and, secondly, a major change in the definition of stoppages introduced in 1982. Forecasts of stoppages are made 10 years into the future. Notwithstanding the well-known limitations of attempting to divine the future, the data suggest that, if the past pattern of trend and cyclical processes continues into the next decade, stoppage rates in the USA will continue to gradually decline. With but few exceptions, there has been a decline in the power and influence of unions around the world over recent decades (Lipset and Meltz 2004, Freeman, Hersch and Mishel 2005, Visser 2006, Blanchflower 2007). This general decline has been reflected in falling union density (the proportion of employees who are union members), falling time-loss rates due to work stoppages (particularly strikes), a decline in the incidence of collective bargaining and a decline in the influence of unions in shaping government policy. Many researchers, who have sought to forecast how union power and influence may develop in the future, have cautiously forecast a continuation of declining power. For example, Calfors et al. (2001) have argued that, so far as European experience is concerned, union power and influence is likely to continue to decline.
Generations in the Workplace: Understanding Age Diversity
Dr. Suzanne M. Crampton and Dr. John W. Hodge
America’s work force has been divided into four distinct groups identified as generations. Each generation, because of differences in experiences, has developed a set of values and attitudes toward work. Managers should consider these generational differences in order to be effective. However, our understanding of generational differences is somewhat limited and caution is recommended before fundamental changes in management strategies are undertaken. The typical business will continue to be challenged by downsizing, outsourcing, and privatizing while demographically the workforce continues to diversify. Historically we tend to think of diversity as being related to differences in age, race, religion, sexual orientation, political affiliation, and gender. However, more and more attention is being given to diversity issues that evolve from generational differences. The bottom line for business is labor cost control in order to compete in today’s global economic system. However, as the work force has diversified, organizations have downsized and outsourced to control labor costs. Lawsuits associated with diversity continue. The extent to which there is a causal relationship among cost containment strategies, work force diversification and employment-related lawsuits can not be concluded. However, if the ultimate goal in cost containment is success and performance, issues related to generational differences should not be overlooked. It is not surprising that when diversity is discussed, more attention is given to race, gender, age, religion, disability, and sexual orientation as these tend to be problematic areas that may involve discrimination lawsuits. The same cannot be said for generational differences.
Analyzing Business Data With Pivottable Report
Dr. Jim Chen
A primary objective of any financial system is to provide accurate and timely financial reports. A frequent complaint is that we are not provided with the kind of financial reports we want. Microsoft Excel PivotTable report makes data analysis and report generation a snap. It can summarize thousands rows of data instantly, generate a concise report, and let us pivot the view with ease. Clearly, it is a powerful tool that can help us to “summarize transaction data into useful management reports that management can use to manage the business”. The PivotTable, however, may be one of the least understood and used features in Excel. Excel 2007 makes PivotTable more accessible and understandable than earlier versions. As such, this paper demonstrates the ease of use of PivotTable in Excel 2007 and illustrates its essential features, i.e., the use of PivotTable to count frequency, perform calculations, sort data, group data, collapse/expand data, and filter data. The primary objective of an accounting system is to "summarize transactional data into useful management reports that management can use to manage the business" (Kieso et al., 2006). A powerful vehicle that helps us to achieve this objective is Excel PivotTable report. It provides us a powerful tool to organize and summarize data, and display the output in different views. Displaying summarized data in different views allows us to make comparisons, explore relationships, and identify trends, i.e., convert data into information. Typical uses of PivotTable report are business-data analysis and report generation. Data such as budgets, costs, operating expenses, sales, inventories, etc., are good candidates for PivotTable report. Many companies praise PivotTable; for example, Microsoft claims the PivotTable is its primary vehicle for analyzing financial data (Accounting Software Advisor, 2003), and those CPAs who have used the PivotTable indicate it is the most important reporting tool they use (Collins, 2003).
Organization Cultural Characteristics Applied to Semiconductor Manufacturing
Romulo Werran Gayoso
The objective of this paper is to analyze the organization cultural characteristics that influence the degree of flexibility in organizations. In order to accomplish this objective one needs to consider the role values and norms play in the making of organization culture. This paper will also analyze the different perspectives the literature considered so far. Last, this paper will consider the combination of characteristics that will help US semiconductor companies be more competitive. In order to properly analyze the key organizational cultural characteristics that influence organization flexibility, it is imperative to first consider the role values play in influencing norms and, ultimately, determining behavior. The debate in the literature (Hofstede, 1990; Schein, 1996) implies it is acceptable to state both individual and collectively held values play a strong role in helping individuals formalize concepts of proper norms; and proper refers to the way in which norms better reflect or augment the sets of values. It is also acceptable to state values and corresponding norms to a great extent help predict and explain people’s behavior, for the combination of values and norms helps one understand what is considered acceptable and unacceptable behavior within the context of an organization. Some of the debate in the literature was not centered on the values-norms-behavior link, it rather centered on how values are formed, and what sets of values are most determinant in the formation of norms. These sets of values are of capital importance today because the literature (Kosaka, 2004) reminded us globally dispersed corporations had to find ways for their norms to be somewhat standardized, so that behavior could be similar across the globe. Although organizations had people from different cultures who held different values, it was imperative to ensure standardized behaviors independent of location or context.
Comparative Analysis of Select Provisions of the Sarbanes-Oxley Act with the European Union’s Eighth Directive
Dr. Roy J. Girasa and Dr. Michael Ulinski
The controversy surrounding the integration of global capital markets seem to be focused on regulation and transparency of issuers’ financial statements. Both the Sarbanes-Oxley Act and the European Union’s Eight Directive have provisions intended to promote efficient capital markets and protect the investors in those markets. The authors present an analysis of key provisions of the SOX Act and Eight Directive. The passage of the Sarbanes-Oxley Act of 2002 (SOX) in the United States has created an intense debate in international circles concerning its impact on global markets. The provisions of SOX clearly intend to apply to apply to foreign companies that have a substantial presence in the U.S., especially if their securities are listed in U.S. stock exchanges. The allegedly onerous provisions of the Act and its lack of exceptions for companies otherwise regulated by foreign governments have caused significant outcries by the affected companies. They have threatened to delist or will refuse to be listed in U.S. exchanges unless exceptions are granted to them. The enactment of the 8th Directive (1) by the European Union, (2) however, appears to have lessened the intensity of the anguish over restrictive provisions of SOX inasmuch as the Directive appears to contain many articles that emulate SOX. This paper is intended to make a comparative analysis of both enactments, clarify the debate, and propose a resolution of the main complaints concerning SOX.
Assessment of a State Marketing Program: A Case Study using the GO TEXAN Marketing Program Evaluation
Dr. Roger Hanagriff, Dr. Tim Murphy, Dr. Marcy Beverly and Dr. Michael Lau
GO TEXAN is a Texas Department of Agriculture (TDA) member-based program to market and promote Texas products. GO TEXAN promotes all Texas agricultural products under one easily recognizable trademark: a brand in the shape of Texas. TDA distributed a survey in May 2007 to all GO TEXAN members to gather information on general demographic details, selected business practices, participation patterns in GO TEXAN events, perceptions regarding benefits associated with GO TEXAN membership, usage of the GO TEXAN logo, media contacts made as a result of GO TEXAN participation, and the types of assistance obtained from TDA marketing activities. GO TEXAN membership illustrated positive economic results through ROI for direct and economic impacts are $5.31 and $9.45, respectively. Considering the economic benefits, there is substantial evidence of not only program success, but also economic benefit to the Texas economy. The Texas Department of Agriculture (TDA) adds value through marketing and regulatory services to advance the agency’s mission statement: “Making Texas the nation’s leader in agriculture, while promoting excellence in children’s nutrition, rural economic development and providing efficient and extraordinary service.” As the state’s second-leading industry, agriculture remains a cornerstone of the Texas economy. TDA’s GO TEXAN marketing program supports this vital industry through a member-based initiative that promotes products grown and processed in Texas. Membership in GO TEXAN offers a multitude of marketing and promotion programs.
The Effects of Positive Reinforcers on the Academic Behavior of Mildly Disabled Middle School Students
Dr. Julius Demps II, Dr. Gordon Arbogast, and Dr. Mohamed Sepehri
The purpose of this experimental quantitative research was to examine the effects of positive reinforcement on the academic behavior of mildly disabled middle school students in Learning Strategies classes. The lack of intrinsic student motivation was found to be a factor that negatively impacted the number of homework assignments submitted by mildly disabled students. Teachers in this pilot study have also had difficulty with extrinsically motivating students to submit homework assignments. This research project was intended to enrich the body of research as it relates to student intrinsic and extrinsic motivation. This paper was also intended to gain further insight as to how middle school students are being prepared to accept accountability and responsibility. These are behaviors that are critical to positive workplace habits. One of the most important roles of parents and teachers in our society is to positively influence the academic growth and behaviors of children. This influence should take place at a young age. In some situations, parents expect children to earn their high school diplomas and attend college. Others may encourage their children to serve in the armed forces. Unfortunately, for many parents and children, these expectations do not always come to fruition. These expectations may also be increasingly difficult for children who possess learning disabilities.
Monetary Policy and Currency Exchange Rate: Implications for Dollar and Global Economy
Dr. Mohamad Sepehri, Dr. Mary Werner, and Vincent Narkiewicz
The focus of this paper is to discuss and examine the implications of monetary policy to influence the value/exchange rate of dollar and to analyze its impact on National and global trade and economy. For example, many national and international economists make solid arguments in favor of weaker dollar against other currencies. In general, a weaker dollar makes the price of imports cheaper and boosts American exports and, as a result, reduces the US balance of trade and balance of payments. However, in a global economy, any intended policy to change the value of the dollar may be influenced by the action of the central banks in other countries to keep their currencies weak in relation to the dollar. Furthermore, any attempt to intentionally adjust the value of the dollar may cause unintended harm to US as well as the global economy by causing recession, inflation, and retaliatory action by other US trading partners. Although, historically, the focus of the monetary policy has been the domestic economy, however, the impact of globalization of the markets and the integration of the world economic systems strongly points to the particular impact that U.S. monetary policy may have on the economies of the emerging markets (Keleher, 1999). Keleher specifically identifies the internationalization of the financial markets, the continued domination of the dollar as the primary world currency, and the “dollarization” of economies in significant number of emerging markets. In another word(s)*, the empirical evidence suggests that changes imposed by the Federal Reserve monetary policy, will have consequent impacts on international financial markets and, especially, in emerging economies (McKinnon, 1999).
The Effects of Human Capital and Entrepreneurial Competencies on the Career Success of SME Entrepreneurs in Thailand
Dr. Chinintorn Nakhata
In order to survive and compete in the new knowledge-based economy, Thai SME entrepreneurs must enhance their human capital and entrepreneurial competencies. Thus, this study aims to provide a better understanding of the effects of human capital and entrepreneurial competencies on the career success of Thai SME entrepreneurs. A total of 13 hypotheses have been developed based on an individual perspective by applying the human capital approach in examining the relationship between human capital factors and career success and the competency approach in examining the relationship between entrepreneurial competencies and career success.The questionnaire-delivering/collecting period occurred during 7 April–5 July 2006. The hypothesis testing from 388 questionnaires completed by Thai SME entrepreneurs showed that all three human capital (years of formal education, years of prior industry experience, and years of entrepreneurial experience) and ten entrepreneurial competencies (opportunity, relationship, analytical, innovative, operational, human, strategic, commitment, learning, and personal strength competencies) evinced positive relationships with both objective and subjective career success. This implies that successful SME entrepreneurs are people who have relatively high levels of human capital and entrepreneurial competencies. Small and Medium Enterprises (SMEs) provide the solid foundation for Thailand’s industrial development, their products being utilized in larger industries as semi-products or raw materials (Tapaneeyangkul, 2001). In addition to their industrial role, SMEs constitute the key element in gauging and linking all crucial units of industry together and in filling the small gaps in industrial clusters (Simachokedee, 1999). SMEs also compensate for the limited success that large enterprises in Thailand have had in generating jobs. The concentration of economic power and the financial and physical-capital-intensive nature of large enterprises are, in many instances, in direct conflict with the goals of the Thai government’s social and economic development plan.
Development of the Czech Fiscal Policy During the Transformation Period
The subject of this paper is to analyze the development of the Czech fiscal economic policy in the transformation period. The aim of the paper is to prove that the development of the basic Czech fiscal indicators (deficit of the state budget, state debt) has been significantly influenced by the political ideology of current government. Furthermore, the relation between the deficit of the state budget and the state debt will be tested by an econometric model. The econometric model will be used also to assess the dependence between the development of government expenditures and GDP. The second model should verify or disconfirm the hypothesis that Czech governments had used expenditures to increase aggregate demand or the GDP, as the case may be (according to the Keynesian theory). The Czech Republic is one of the so-called post-socialist countries, where market economy started to develop again in the 1990s. The preceding centrally planned economy had been distinguished by features unfamiliar to market economy; for instance the private ownership was missing, there were almost no other companies than those owned by the state, supply of goods and services was artificially hampered as well as demand was not fully satisfied, prices of goods and services were centrally determined without regard to market situation. Such “working” system of centrally planned economy was spontaneously replaced by marked economy after the so-called Velvet Revolution in 1989. All the economic subjects had to adapt to new conditions. An approved government economic policy should have served as a guideline—or a certain help—in the first years of the transition. The government clearly declared acceptance of market economy principles and in its policy it attempted their quick implementation into real economy. The transformation period in the Czech Republic lasted till 2003 according to some foreign experts or till 2006 according to others.
Financial Measuring of the Czech Republic Companies Competitiveness
Dr. Petr Suchanek and Dr. Jiri Spalek
The paper deals with measuring the competitiveness of Czech enterprises. It proceeds from the assumption that company competitiveness is reflected in its performance and financial success which is possible to measure with standard ratio indicators, and also from the assumption that competitiveness results from certain characteristic factors. The aim of the paper is to divide the companies into a number of groups using selected ratio indicators and to search for characteristics typical of them. Partially, the aim is also to find out whether there are different factor characteristics for particular groups, i.e. whether it is possible to consider the selected factors to be the factors of competitiveness. Therefore, we proceed from the assumption that the competitiveness is to be defined as a feature allowing an entrepreneurial entity to succeed in a competition with other entities (Pitra, 2001). It is obvious that only such entity can succeed in a market that is able to profit from a given competitive advantage and as a result to gain predominance over its competitors. There is a question what is the way of viewing the competitiveness. In view of the fact that company competitiveness is connected with its future vision and that a business strategy depends on this vision, there is a possibility of determining the competitiveness using the value or the extent of the value produced by the company. In this view performance depends on the competitiveness and it should hold true that provided that a company is capable of competing, it is efficient, too. We also suppose that an efficient company will be qualitatively different from a non-efficient company, i.e. it will have certain characteristic features. Those features are based on a so-called Donaldson and Preston’s stakeholder model of a company, i.e. on the fact that it is possible to characterize a company from the point of view of different interest groups. We suppose that the most important of those groups are owners, employers, creditors (investors), general public (a state), purchasers (customers) and suppliers, which means that we are focused above all on primary stakeholders (Donaldson, Preston, 1995). We also suppose that companies belonging to a certain efficiency group will have characteristic features, i.e. they will represent a certain concrete manifestation of the above mentioned model.
Capitalization of Major Markets and the Progress of Adoption of the International Accounting Standards
Lana S. Nino, CPA, MSBA
The international effort toward adopting the International Accounting Standards (IAS) has taken a fast turn, with European companies starting to report based on the new standards in 2005. Many countries that are aligned with Europe have followed suit including Australia, New Zealand, and Hong Kong. Countries that are considered major markets as defined by the World Federation of Exchanges (WFE) based on their market size such as European markets, Canada, and Japan benefit from adopting IAS. The adoption opens up their markets to international companies desiring to list their stock on major exchanges. The US, currently the biggest single major market, has taken a cautious and a slower track to the adoption of IAS. This paper explores the effect of the US approach on its dominance in world markets. Deloitte and Touche summarized the adoption of the International Financial Reporting Standards (IFRS) by countries around the world in January of 2005. Of the 132 reporting countries, 68 have adopted the new standards. More than 21 countries have permitted reporting under the new standards, 35 countries have not permitted their use, and 8 countries are selectively adopting only sections of them. Essentially 89 out of 132 have either adopted or permitted IFRS for their domestically listed companies, but how does that compare to the size of these markets in dollars? Many of these adopting countries have a small market size, and a few countries constitute the larger percentage of the overall market. The larger the market size, the more impact the adoption of the standards has on the overall movement toward adoption and the more influence that country will have in guiding the development of the standards.
Globalization: Its Impact on the United States Economy
Dr. Renee Boudousquie, Dr. Bala Maniam, and Dr. Hadley Leavell
Globalization is not a new concept in the United States or elsewhere. However, as a result of advancements in technology and constant communication, globalization is becoming more pervasive. Businesses in the U.S. have to evaluate their business models to determine how to be effective in other cultures, time zones, and political regimes. Policymakers in the U.S. have to assess the implications of global economic legislation upon their constituents. The United States as a society must analyze and filter the massive amounts of information and determine how to leverage the advantages for the United States of a globalized society. Globalization has been an integral segment of the United States economy truly since the birth of the nation stemming from commerce with France and England. The push for globalization has been growing increasingly throughout the past century. Recently, the concept has been more economically driven by technology, the influx of capital, and the rapid growth of international trade. Technology, culture, political policy and other social issues are impacting the success of the concept. Society norms can mold and sculpt international integration (Pettis, 2001). Increasingly, globalization is seen as the interdependent relationship between cultures, economies, institutions and nation-states (Rhoads, 2003). Global integration may be influenced by different indicators in a society. The precursor for globalization historically was whether major investors and companies were willing to expand monetary wealth beyond national borders. Conversely, globalization now can occur on a granular basis; individuals in the U.S. can become players globally with eBay or other online venues. In the past, globalization has generated fears from unions and less-skilled worker constituencies. Political risks were incurred if seen as encouraging globalization since jobs could be outsourced to lower-waged economies. On the other hand, stimuli for economic growth is viewed as a positive for the U.S. and competing globally is essential for that growth. Interdependence among countries through the global economy is complex and comprehensive. The issues addressed are real for each side and this study will look at how these varying views impact the choices made for the U.S. economy and the framework for negotiating the disputes within a globalized economy.
Midwestern Marketing Students Endorse Experiential Learning
Over the years, marketing students at Augustana College, a Midwestern Christian liberal arts institution, have researched, written and presented marketing plans for a variety of clients, ranging from bankers developing new debit products to be distributed through third-party retailers to notoriously under funded non-profit organizations such as the Fellowship of Christian Athletes seeking more participants. The professor’s nine years of teaching an introductory marketing course have led her to seven conclusions regarding the value of student-produced marketing plans. The value is derived by students in the process they perfect, and also by clients who end up with many viable marketing plans among which to pick and choose. In an effort to test the accuracy of her conclusions, and also to discover whether she could continue to require students to research and write plans while learning marketing concepts (half of the semester’s grade depends on this work product, while the remainder of the grade is determined through performance on four exams, small assignments and case studies), the professor surveyed clients and students, past and present. The intention was not to approach collection, organization or analysis from a strict statistical standpoint; rather, the professor wanted specific information that reflected on her past practices and how those should inform the future. The questionnaire asked students specific questions about their experiences, whether they connected with clients’ missions, and generally attempted to glean reactions to a fairly rigorous and time-intensive requirement of students enrolled in that first – and sometimes only – college marketing course. Past clients were asked to evaluate the value of the student work they received. In an effort to triangulate data, the professor also averaged grades earned by students who composed non-profit versus for-profit plans.
Online Projects VS the 3 Ring Binder: A Case Study
Stacy M.P. Schmidt, Ed.D., David L. Ralph, Ph.D. and Bruce Buskirk, Ph.D.
Projects are a component of many classrooms from elementary school to graduate school. Projects provide a means for students to compile their work into a single document that is both thorough and creative. According to Hewitt (2005), portfolios [projects] have been used in classrooms for many years as a means to showcase one’s accomplishments often with commentary and/or reflections. With today’s technology frenzy it is no surprise that these projects or portfolios are being completed online. This case study is a comparison of classes that utilized the 3 ring binder for their course project one quarter and used an online program for their course project the following quarter. This case study compares the student achievement as well as the student’s feelings towards the two medium. In addition, the faculty’s analysis of the two mediums and their experience with both. The newest trend in the technology classroom is the electronic portfolio or e-portfolio. This simply means “that the portfolio is technology based” (Hewett, 2005). This allows for portfolio to be “easily accessible, having the capability to store multiple media, being easy to upgrade, and allowing cross-referencing of student work” (Hewett, 2005). Furthermore, Hewett (2005) indicates that “electronic portfolios” are being used by elementary, secondary and college educators to lead their classrooms toward learner-centered rather than teaching-centered learning environments”. Furthermore, “e-portfolios give students ownership and responsibility for their own learning”.
The Organizational Learning in Malaysian Companies
Mandy Mok Kim Man, Vlado Dimovski and Miha Škerlavaj
The aim of this paper is to study the companies learn in Malaysia. We used Organizational learning measurement instrument developed and tested by Dimovski (1994), Škerlavaj (2003), Dimovski and Škerlavaj (2005). It employs four measurement variables (Information acquisition, Information quality, Information interpretation, and Behavioral and cognitive changes) as well as 48 items (presented in the paper) to measure Organizational learning construct. In year 2005, data from 300 Malaysian companies were gathered. Results indicate that Malaysian companies have high mean in the way they perceive quality of information and their interpretation, as well as behavioral and cognitive changes. Today’s’ companies function in constantly changing and highly turbulent business environment. This a cause why there is a constant need for them to change and learn at individual, group, organizational as well as inter-organizational level (Sanchez, 2005). Organizational learning is considered to be one of the most promising concepts in modern managerial literature. According to deGeus (1988) ‘ability to learn faster than your competitors might be the only sustainable competitive advantage you have’. It has been established on base of investment banking industry in Ohio (Dimovski, 1994) and Slovenian companies with more than 100 employees in 2003 and 2004 (Škerlavaj, 2003; Dimovski and Škerlavaj, 2005) that better developed organizational learning contributes to improved organizational performance in financial as well as non-financial terms. In 2005, research was conducted in order to get an answer to the following research question: What is the companies learn in Malaysia? Organizational learning measurement instrument developed by Dimovski (1994), Škerlavaj (2003) and Dimovski and Škerlavaj (2005) was used in order to gather data from Malaysian companies on that matter.
Integration of Bulgaria and Romania to the European Union
Ceylan Onay, Ph.D.
This paper examines the long-term financial integration of second-round acceding countries’ with the European Union equity markets during the Accession Process. The low pairwise correlations between these markets imply portfolio diversification opportunities, yet correlation is a short-term measure. The long-term stock market interdependence is analyzed with Johansen (1991) cointegration approach, which suggests non-cointegration across the second-round countries on bivariate as well as on multivariate settings with the EU. This finding is further confirmed with the Engle-Granger (1987) causality test which presents no evidence of a casual flow from EU to these markets. The results indicate that the completion of accession negotiations with Bulgaria and Romania have not yet resulted in the complete financial integration of these markets with the European Union. They still offer significant long-term diversification opportunities for the international investors. The objective of this research is to investigate if the fulfillment of Copenhagen economic criteria and increased trade linkages during the accession period towards the Maastricht criteria have resulted in the stock market integration of second-round countries with the European Union. The EU Enlargement entails three main criteria to be fulfilled by the acceding and candidate countries; political, economical and adoption of the Community Acquis. The Copenhagen economic criteria oblige these countries to have a viable market economy, apply reform programs to obtain capacity to cope with market forces and competitive pressures within the Union and ability to take on the obligations of membership including Economic and Monetary Union (EMU). Thus, these countries have to adjust their monetary and fiscal policies to adopt to EMU nominal convergence criteria in the areas of inflation, long term interest rates, exchange rate stability and GDP deficits defined in Maastricht Treaty. Accordingly, their economies become more and more connected with the EU member states. Furthermore, accession to EMU demands new member states to have closer trade links with the EU-15 or with the current Eurozone, including the intra-industry trade, synchronization of business cycles, actual exchange rate variability and actual factor mobility between the new and old members.
Building the International SME Across National Settings: A Global Policy Inquiry and Response
Prof. Terry Mughan and Prof. Lester Lloyd-Reason
The past twenty years has seen growing academic and policy interest in the role of SMEs within a global context. There has been much debate surrounding the negative impact of globalisation on the international SME arising from increased competitive pressures. However, SMEs have long found opportunities in the global economy and as international trade has expanded, so too have these opportunities. The numerous benefits to SMEs engaged in international trade are well documented, with a considerable body of evidence that international trading activity stimulates increased productivity growth by strengthening competition and innovation and increasing access to new ideas and technology. International trading activity enables businesses to achieve growth and economies of scale which domestic markets alone would not provide. Exporters are consistently found to out-perform non-exporters using a variety of measures of success, including profitability, production, wages and sales volumes. Despite these advantages, the SME share in the total value of international trade is often found to be markedly lower that their share in GDP, evidence of the barriers facing the SME seeking to access international markets. Accordingly the international SME has attracted the attention of policy makers, as any barriers to international trade are likely to impinge disproportionately on this group of firms which are often the most productive, R & D intensive and most growth orientated, and thus potentially the strongest contributors to a dynamic national economy. This paper is based on a study undertaken by the OECD/APEC to gain a better understanding of the barriers to internationalising (defined as all those constraints that hinder the firm’s ability to initiate, to develop, or to sustain business operations in overseas markets) faced by SMEs, and to share knowledge of government interventions to reduce those barriers. It will focus on the responses to the SME survey but will relate these to the main findings from the member-economy survey.
The Effect of Government Performed R&D on Productivity in Canada: A Macro Level Study
Rashid Nikzad, Golnaz Sedigh, Reza Ghazal, Ph.D. Candidate and Frederick Kijek
The contribution of the public R&D on the productivity of a country was always an important question. This paper estimates the effects of government and higher education R&D on the labor productivity of Canada at the macro level. Moreover, the paper investigates how the shares of public R&D changed during last decades in Canada. The main finding is that government R&D and higher education R&D have positive and significant effects. In this paper, we study the impact of the R&D performed by the government, higher education and business sectors on the labor productivity of Canada for the period of 1981-2004. The study is based on the model developed by Coulombe and Acharya (2006). Our data sources are Statistics Canada, Penn World Table, and SourceOECD. In addition to finding the effects of R&D performed by business, government, and higher education sectors, we study how government R&D funds have been distributed among different fields and sciences. The structure of the paper is as follows. The next section consists of the literature review on the effect of R&D on productivity and the role of the government in R&D. Section 2 presents some facts about the shares of business, government, and higher education R&D expenditures of Canada. Section 3 introduces the model and presents the econometric results. Section 4 concludes. Moreover, some highlights for further study will be presented in section 4.
Putting All the Pieces Together: The Nativisation Problem in the GCC Countries
Dr. Yousuf Al-Busaidi, Sultan Qaboos University, Sultanate of Oman
The six countries that make-up the Arab Gulf Cooperation Council (Saudi Arabia, Oman, United Arab Emirates, Kuwait, Qatar, and Bahrain) are facing the problem of rising unemployment which has created many security, social and political unrests in the recent years. The root of the problem goes back to the social structure, economic planning, internal government policy, and the decision makers in the private sector. The main objective of this paper is to examine major factors that have created the unemployment problem and propose solutions. Although GCC countries have taken many steps toward solving the unemployment problem, the number of young people looking for a job is still on the rise. We propose that GCC countries pay more attention to the small and medium enterprises. The Cooperation Council for the Arab States of the Gulf (GCC) was established in May 1981. The GCC countries, Saudi Arabia, Sultanate of Oman, United Arab Emirates, Kuwait, Qatar, and Bahrain, share common challenges and economic structure. All GCC countries have experienced much growth and change in their economic and social conditions over the past decades as a result of increased revenues from oil. By the late 1970s, faced with the desire to gain national control over vital sections of their respective economies, many governments in the region adopted a policy of giving first priority to nationals in filling administrative and management positions. This was particularly emphasized in the government sector, where government mandates gave exclusive rights to nationals for these positions (Abdel-Halim & Ashour, 1995). The dependence only on nationals to perform the work, however, was not possible because the national workforce in the region was sorely under-skilled. Therefore, governments had to utilize foreign workers to provide the skills necessary to support the established governments’ goals for development. These non-national workers provided most of the governments’ diverse labor requirements, ranging from the least skilled laborers to managerial and technically skilled personnel. .
The Dynamics of Educational Wage Premia for Female Polish Workers over Transition
Dr. Vera Adamchik, University of Houston-Victoria, TX
This paper analyzes the dynamics of educational wage premia for female Polish workers over a mature phase of a transition to a market economy, namely 1994-2001. The results indicate that wages of women were closely related to such essential human capital factor as educational attainment: the wage return to schooling was positive and higher for workers with more education. However, we do not observe the “explosion of differentials at all levels,” predicted by many leading models on transition. On the contrary, rates of return to education seem to have declined. The estimated wage advantage from more schooling fell for women at all educational levels. The decline was especially striking for the two highest educational levels – university and post-secondary. For instance, ceteris paribus, women with university diplomas earned 46 percent more than women with only an elementary education in 1994 and 39 percent more in 2001. Similarly, during the same period, the rates of return for women with post-secondary education fell from 22 to 17 percent. We also examine the dynamics of education premia for women in the private and public sectors. In both sectors, returns to education fell. A similar pattern of a reduction in the educational wage premia for women has already been reported for some Central and East European countries, but not for Poland. We briefly discuss possible socio-economic explanations for our findings. It is well known that returns to education affect the overall educational level of the population, which is one of the key determinants of a country’s economic growth. Increased returns to education are believed to raise incentives for more schooling and training; on the other hand, decreased returns to this factor tend to reduce incentives to acquire skills. Understanding the dynamics of returns to education in an economy, a government may successfully influence it through institutional factors and, thus, enhance positive trends and minimize or eliminate socially undesired outcomes.
The Need for Capitalizing on the Value of a Brand Name: The Case of Sabah State in Malaysia
Mandy Mok Kim Man and Dr. Leopoldo Arias-Bolzmann
The need for branding the state of Sabah within the ecotourism industry is proposed. Like consumer products, states are increasingly trying to brand themselves in order to appeal to the tourism market. Consumers continue to rely on country and state images to pick their tourism destinations. Brand association continues to be a critical aspect for a consumer prior to engage in a purchasing decision. According to the literature review, effective state branding should reinforce positives images and thus provide a competitive advantage in world markets. The purpose of this paper is to investigate the various aspects of branding theory, with particular application to branding Sabah state ecotourism. The conceptual study begins by addressing theory and practice of country branding and further continues with recommendations for Sabah state ecotourism branding. The proposed study proposes Sabah to be associated with its natural beauty. As a result, offers a number of recommendations derived from branding theory. Ecotourism is a concept that requires careful management to ensure ongoing sustainability through a strategic balance of numbers and yield. The key to achieve optimal return on tourism investment is to develop and manage the ecotourism brand by identifying and understanding the target audience, that is, to get into the heads of the audience (stand out), and to deliver the ecotourism branding messages in a way that they will understand it. Under the globalization concept, there is a need for a country to brand itself on four different dimensions (public diplomacy, tourism, exports, and foreign investment dimension) (Vicente, 2004). Similarly, state branding is important because consumers rely heavily on country or state images to make their economic decisions.
The Economic and Social Values Consumers Place on All Natural/Healthy Beef Products and How this Value Added Commodity Effects Demand: A Literature Review
Dr. Michael Lau, Dr. Marcy M. Beverly, Dr. Stanley F. Kelley, and Dr. Roger D. Hanagriff
In the past 20 years, the beef industry has experienced significant changes in consumer demand at the retail counter. With health and convenience being the initial driving factors however, more recent changes have occurred due to palatability preferences and safety concerns of the consumer. These changes have spurred new marketing programs, which include product differentiation and changes in production practices. Case in point, the natural/organic (no hormones or antibiotics) beef market. Because of these changes, consumer demand has prompted marketing campaigns in the natural and organic arena. The success of these natural niche markets for beef products resulted in the United States Department of Agriculture (USDA) implementing a set of national standards for foods labeled as natural. With the new standards from USDA, combined with innovative marketing strategies and production requirements for natural and organic products, the cost of production has increased 25 percent over traditional beef marketing and production methods. Which in turn requires higher revenue for producers and retailers is needed to offset this increase in cost. In light of these increases, this paper will examine the rationale traditional beef consumers use when consuming and paying for natural beef products. Additionally, meat purchasing behaviors, perceptions, and preferences for natural beef will be examined. This literature review will combine the information into a complete picture of the value chain. Why is the beef industry experiencing major changes, some literature is attributing it to changing consumer tastes and preferences which has spurred the need for product differentiation in the beef industry, which is pressing producers to utilize alternative marketing methods for their beef products.
Social Capital and National System of Innovation
Chih-Kai Chen, Ph.D., Chung Shan Medical University, Taiwan
Research on national innovation system has increased noticeably in recent years. However, while some literature is available on technology management, little information is available on social capital. Meanwhile, while the study of social capital has been mounting steadily, little work is available on national innovation system. Thus, this work used the reports world bank and world value survey, applying the linear structural relation model to consider this relationship between the social capital and the national innovation system. Overall, the results showed that the innovation ability of knowledge and technology could explain the difference of cross-country economic performance. However, the innovation activity was a collective achievement embedded with other organizations and social activities. Put differently, the performance of various innovation cooperation based on social capital were better than that of single business. Thus, this work proposed that each country should not only improve the R&D expenditure but also accumulate and enrich the social capital, for example, improve social cooperation relationship, construct open social network based on bridging and professional trust, in order to effectively improve the performance of national innovation system. Recently the innovation issue has attracted a great deal of attentions worldwide. The innovation ability of knowledge and technology seems to be an important factor in the national economic development. However, the innovation process was affected by some complex factors in the violent external competition. Individual business has difficulty in initiating innovation alone, to obtain and exchange different resources, information, and knowledge by external cooperation rather than internal resources. Put differently, in the economic competitiveness, although technological innovation significantly affects economic development, lacking the social capital will inversely affect the innovation proliferation and performance. Moreover, the issue on social capital (SC) has increased noticeably in recent years. Some works showed that social capital except technological competitiveness plays an important role in the innovation system and sustainable political society.
The Texas Wine Industry: A Descriptive Analysis of 2001 to 2007 Texas Wine Production and Consumption
Dr. Roger Hanagriff and Dr. Michael Lau
Starting March 2007 and ending in July 2007, the assessment team visited 52 wineries to learn about their needs and objectives. Nearly all assessments were completed on-site, while others were completed at Texas Wine and Grape Growers Conference or at the locations of winery owners or main offices. Another aspect of this project was to review production numbers for the Texas wine market as well as consumption of Texas wines. Production and consumption information was acquired from the Texas Alcohol and Beverage Commission (TABC). A large group of wineries are participating in tasting competitions (67 percent) and primarily use the event as an exposure tool (68 percent) with a much smaller sector using the competitions for feedback value regarding the quality of their wine (6 percent). There has been an increase in wine consumption in Texas (2006-07 9.4%), but Texas production has remained constant creating a loss in market share. During 2001 to 2005, there has been a 67 percent increase in new wineries that are very small in production size. In 2005, market share of Texas wines is slightly over five percent and completing a market assessment project is essential to understand production and consumption of Texas wines. Starting March of 2007 and ending in July, the assessment team visited 52 wineries to learn about their needs and objectives. Nearly all assessments were completed on-site, while others were completed at Texas Wine and Grape Growers Conference or at the locations of winery owners or main offices. Another aspect of this project was to review production numbers for the Texas wine market as well as production of Texas wines. This information was acquired from the Texas Alcohol and Beverage Commission (TABC). This applies to the strategic plan by providing historical review of demand and supply as well as giving measurement standards that can be used to trace the success of plans into the future.
Liquidity Power of Korean Currency in Post East Asian Crisis Period
Dr. Myoung Shik Choi and Dr. Kyung Soo Kim
Focusing on the recent experience of Korean won-US dollar foreign exchange market this study assess the liquidity power of Korean currency over the period of post-East Asian Crisis. In this paper, a liquidity power of a currency is represented as a control and influence exercised over turnover of the currency. We claim that the won-dollar foreign exchange market is not liquid because the exercise of the hedge and speculation instruments on the won turns out to be considerably limited. In this manner, the paper develops a model for currency liquidity power of the world economy. This links foreign residents’ trade patterns with the won-dollar market structure including NDF offshore trades. The testing results indicate that the liquidity power of the won has significantly increased since the liberalization of foreign exchange transaction followed by East Asian crisis. As a result, there exist substantial evidences that some structural breaks are associated with the liquidity power of the won. In a world of trade among nations using different currencies, the transaction of currencies parallels accompanying trades of goods and services. Currency trades also occur alone by international financing in the world economy. Unless they are fixed exchange rates, however, foreign exchange rates tend to be volatile over time so market participants bear the risk of the exchange rate movements. Sager and Taylor (2006) provide two stylized facts about the foreign exchange market after the breakdown of the Bretton Woods system. First, the foreign exchange market is not transparent and the uncovered interest rate parity condition (UIRP) significantly violates. Consequently, the foreign exchange market does not appear to be efficient. Second, standard macroeconomic fundamental variables are little correlated with the short run behavior of exchange rates although they influence the long run movements. However, the second stylized fact may be modified once controlling non-macroeconomic factors such as microstructure of the foreign exchange market, market participants’ interactions, etc. In the presence of exchange rate risks we experience a currency liquidity problem, which represents a gap at current prices between our current holdings of a particular currency and our desired holdings of that currency as Grossman & Miller(1988) explain.
Managing Under Crisis: The Source of Atonement at JetBlue Airways
Dr. Melissa Waite
Reeling from a February 14, 2007 New York City ice storm that put JetBlue Airways under severe scrutiny, CEO David Neeleman introduced the Customer Bill of Rights days after the storm disrupted more than one thousand flights. The desire for atonement at JetBlue Airways is the product of CEO David Neeleman, a devout Mormon whose life experiences as a 20-something missionary in Brazil shapes his daily interactions with crewmembers (employees) and customers. His leadership style resonates with JetBlue crewmembers, who provide outstanding customer service to JetBlue’s loyal and growing customer base. February 14, 2007 will forever be remembered at JetBlue Airways. A New York City ice storm was responsible for a massive operational breakdown at John F. Kennedy Airport, resulting in more than 1,000 cancelled JetBlue flights, nine full JetBlue aircraft sitting on the tarmac for six hours or more, and disruptions to the carrier’s flights and passenger itineraries that lasted for days. Media scrutiny undercut JetBlue’s solid reputation for customer service, and within days JetBlue CEO David Neeleman introduced the “Customer Bill of Rights” to remunerate passengers inconvenienced by flight delays and cancellations within JetBlue’s control (Carey & Everson, 2007). JetBlue’s stumble has been faulted on the airline’s inadequate communications system and understaffed control center. Yet its rapid response to its crisis, hailed by the business press as an effort to “atone” the airline, appears to be working. JetBlue’s steps to apologize to the 10,000 passengers affected by the February meltdown and restore its luster in the public eye stem for the airline’s core values.
The Perceived Effects of Work and Family Related Variables on Faculty Performance: An Exploratory Analysis
Dr. Razali Bin Mat Zin and Dr. Mourad Mansour
Given the increasing multiple and complex roles assumed by faculty members, and the high degree of spillover between work and non-work of university faculty, many researchers emphasized the need for further research on work and non-work life from different perspectives. This exploratory study is attempted to determine the perceived effect of work and family variables on the performance of university faculty. The findings confirmed previous research regarding the interrelationships of the work variables and family domains. The role of faculty in higher education is multifaceted. They are under great pressure to conduct research, publish articles, teach classes, advise students, and serve on committees. Many find it necessary to work on weekends and during vacations to meet their job responsibilities, and they are likely to spend large amount of time working at home. Pressure is greatest for beginning faculty who must compete to obtain tenure and promotion; the growing proportion of female academicians who marry and bear children; and male faculty who find themselves expected to take on family commitments. Previous studies concerning the interrelationship of work and family (Burge and Culver, 1989; Felstehausen et al., 1986; Near and Sorcinelli, 1986; Schultz and Chung, 2000; Sorcinelli and Near, 2002; St. Johns, 2003) have shown consistently high positive relationships between work and family. The main purpose of this exploratory study is to investigate the perceived level of work satisfaction, family satisfaction, effect of work on performance, and effect of home and family on work performance of faculty members at King Fahd University of Petroleum and Minerals (KFUPM), Saudi Arabia.
Managing Resources Towards Achieving Malaysian Vision 2020: Policies, Prospects and Challenges
Dr. Razali Bin Mat Zin and Dr. Amine Nehari Talet
The government of Malaysia has provided a clear vision to its companies and their employees: to reach the standard of living of industrialized countries by the year 2020. This plan, called Vision 2020 is accelerating Malaysia's shift to high-technology industries. Specific objectives include accelerated industrial restructuring, technological upgrading, human resource development, and industrial linking. Malaysia's seventh development plan emphasizes the capabilities of its manufacturing sector by producing higher-value-added products and developing workers better capable of meeting the requirements of more sophisticated manufacturing processes. The purpose of this paper is to analyze the New Policy directions based on the Ninth Malaysian Plan which are intended by the government to establish the foundations for the long journey towards that ultimate objective of achieving Vision 2020. Malaysia is on its way to becoming the fifth so-called "tiger," or newly industrialized economy, of East Asia, along with Taiwan, Korea, Hong Kong, and Singapore. The country has averaged a real 9.6% growth in GDP over the past eight years. Its goal is to increase trade at an average annual rate of 8.5%. While Malaysia is somewhat behind Singapore in its development, it has a clear vision of its goal for the year 2020. Malaysia has a population of 20 million people producing an adjusted GDP of $171 billion. It has a free market economy with an 8-9% growth each year (GDP growth for 1995 was 9.6%) (Siow Keng & Shahar Ali, 2001). Malaysia is larger, more geographically dispersed, and richer in natural resources than Singapore. It has a total land area of 329.8 square kilometers and consists of a peninsular area (East Malaysia) and Sabah and Sarawak (West Malaysia) on the island of Borneo. Malaysia is a multilingual culture. The major languages are Bahasa Malaysian and English (the official business language), with Chinese, Tamil, and Hindi also spoken by many of its residents. Malaysia is an Islamic state that has succeeded in balancing religious fundamentalism with pragmatism in application of its laws and business environment. Malaysia practices parliamentary democracy and has been a stable, single government since achieving independence in 1957 (Farland, Parkinson & Satiman, 2003). Malaysia enjoys a unique situation at this point of its development history.
Adoption of Internet-Based Interorganizational Systems in Supply Chain Management and Their Impact on Performance
Dr. Ismail Sila
One of the objectives of this study is to test a model of the relationships between factors that determine Internet-based Interorganizational Systems (IBIS) adoption, IBIS, business process performance, operational performance, and financial performance. The model is developed through extensive literature review and uses the resource-based view as the underlying theory. The study also tests model relationships across companies using environmental factors as moderators. The Internet-enabled supply chain is one of the recent developments in the evolution of interorganizational information systems (IOIS). The term interorganizational system (IOS) has been used to describe information technology systems that cross organizational boundaries (Bakos, 1991) such as extranets and EDI. To compete effectively in the dynamic global markets, companies increasingly need to integrate their operations with those of their partners using IOS as discrete functions within the supply chain such as MRPII and JIT become insufficient (Williamson et al., 2004). Some of the organizational performance benefits that can be reaped from such IOS include search cost reduction, inventory reduction, and closer relationships with customers (Johnston and Vitale, 1988).
De Facto Fiscal Legal Administrative Arrangements and the Rights of the Crown in the Global Environment: The Australian Experience
This paper concentrates on the potential application in the trade practices and tax law fields of de facto administrative arrangements and the rights and powers of the Crown. Attention will be focussed upon the competing demands of public interest in ascertaining sources of evidence by way of production of documents and the disclosure of information and de facto administrative arrangements and rights of the Crown in preventing such production and presentation respectively. The objective is to determine whether the actions of fiscal and executive authorities are more broader and more intrusive than a permissible ambit would allow in the light of fundamental longstanding rights. Immunity from production of documents and the disclosure of information, it is argued itself promotes public interest in that it enhances the administration of justice by facilitating the representation of clients by advisers. An assessment will be made as to whether the current law in Australia in this area is in need of statutory amendments or insertions. It is submitted that such intrusive conduct by fiscal and executive authorities be carefully scrutinised and not extended unnecessarily.
Changes in Korean Governance Since the Asian Financial Crisis
Dr. Jonathan Lee and D. G. McCalman
The contemporary mode of corporate governance in Korea could be characterized by a simple, if not immature, structure of corporate control and management dominated by an owner-cum-manager. This concentration of power is a legacy of Korea’s rapid development history, during which Korea was conceived and grew at an astonished speed. It was under such a short span of time that the framework for Korea’s corporate governance was shaped. The relationship that developed between the government and big business might be likened to a classic principal-agent relationship; the pragmatic and result –driven government took on the role of the principal and monitor, and the exporting big business took on the role of the agent executing the government’s development programs. The incentive structure is also rather simple, provided through government subsidies to the business sectors based on the investment and export performance. The Ministry of Finance and Economy set up a Corporate Governance Reform Committee to draw up a best practice for future Korean governance structure. This committee made recommendations for best practices implementation. This paper included ideas such as: the majority of directors should come from outside the firm; and the compensation and accounting committee should be formed by the board. In addition to new procedures and rules, Korean governance will be changed by more insistent enforcement by authorities, as well as by the continued public support for change. The impetus for reform and transparency that mushroomed after the financial crisis of the late 1990s has continued, indicating a permanent public preference for accountable and open governance.
The Effects of the 2001 Economic Crisis on the Insurance Industry in Turkey: Increasing the Share of Foreign Capital
Since 1980, Turkey has used an integration policy between itself and abroad as a serious transformation strategy. In this period, we have observed increasingly intensifed financial crisises fed by the adoption of new structures. The deepest of these crisises, which caused a clear transformation, was the 2001 economic crisis. In essence, that turning-point occured because of the unhealthy structure of the financial industry that is weighted towards the banking sector. Insurance, another fundamental sub-finance industry in Turkey, has some of the oldest roots in finance. The insurance sector in Turkey has not developed adequately when compared with other countries in a similar risk group. After the 2001 crisis, it was this most exposed sub-financial sector that faced a deeply changed capital structure. During this period, bankruptcies by insurance companies increased : a symptom of the general atmosphere of failure that was caused by the crisis. Foreign capital and various domestic funds have merged or acquired insurance companies that had been public or private companies, and these have been reactivated as life, non-life or pension funds. Since 2001, foreign capital has been used to acquire a noticeable share of the insurance sector. This article analyzes the effects and results of the 2001 crisis, and the destructive effects of the bankrupcy of companies in the insurance sector. Additionally, we will discuss the reasons foreign funds have an increased interest in Turkey’s insurance market, and how inreasing foreign capital will affect the evolution of and competition within this industry.
On the Profitability of Technical Analysis: Evidence from Greece
Dr. Massoud Metghalchi and Dr. Yong Glasure
This paper tests trading breakout rules for the Greek stock market. Our results indicate that trading breakout rules do indeed have predictive power and could discern recurring-price patterns for profitable trading. Moreover, our results support the hypothesis that technical trading rules can outperform the buy-and-hold strategy. A dominant theme in financial economic since the 1960s has been the concept of an efficient financial market. Fama (1970) defined an efficient financial market as one in which security prices always fully reflect the available information; any new information will be quickly and instantaneously reflected in prices. Furthermore, since news on any company, by definition, is unpredictable (arrives randomly), price changes will be unpredictable or follow a random walk. Fama made a distinction between three forms of Efficient Market Hypothesis (EMH): (a) the weak form, (b) the semi-strong form, and (c) the strong form. Advocates of the weak-form market efficiency hypothesized that investors could not drive profits above a buy-and-hold strategy using any trading rule that depended solely on past market information such as price or volume, implying that technical trading rules are useless. The early results from the literature about the profitability of technical trading was overwhelmingly negative. For example Larson (1960), Osborne (1962), Alexander (1964), Granger and Morgenstern (1963), Mandelbrot (1963), Fama (1965), Fama and Blume (1966), Van Horn and Parker (1967), Jensen and Benington (1970) all had shown that the stock market is weak form efficient. By early 1990s, it was concluded that it was not possible to outperform the market using technical trading rules.
The Necessity of the Competition Culture for Business Environment in the Context of the New EU Competition Policy Approach: The Case of Romania
Dr. Alina Mihaela Dima, Academy of Economic Studies from Bucharest, Romania
In the new context of globalization, business envionment must be aware that the liberalization of the markets, the deregulation and the privatization process in all the economic fields may increase the competitiveness only if the implications of competition policy are known and realized enough. Completing the single market remains one of the EU's big unfinished tasks, and competition policy is an essential weapon in this battle. Lately, there has been mentioned in the literature and by high officials, the existence of a “competition discipline and of a culture in the competition field as an obligatory and necessary requirement which might allow a deeper accession to the EU” (Monti, 2001). The proper understanding and interpretation of legislation is a key element but not the single one in the context of a new and more successfull approach of the EU competititon, that envisages relaxing the responsibilities of competition authorities in this field by increasing the commitment of the companies towards the competitors, authorities and especially the consumers. In this regard, the assessment of the degree of information and knowledge of the business envronment regarding the enforcement of the competition rules and their impact on their performance is an essential tool. The paper is based on a original and qualitative research and aims at emphasising the increased necessity of the promotion of a competition culture for the competitiveness of the Romanian business environment on the European level in the new context of accession. This will help Romanian business to face the competition challenges within a more extended single European market, as an essential issue of the free market economy status recently granted, and accordingly to the most important EU objectives set up at Lisabon to become the most competitive economy in the world up to 2010.
On-Line Business: Is There Loyalty?
Dr. Mary Werner and Dr. Richard Murphy
Given the proliferation of on-line business, there is concern over whether the on-line customer is as loyal as the traditional customer. This is an important concern since obtaining and maintaining customer loyalty is an important strategic approach in the marketing of a product. Analysis of data from the 2006 Customer Loyalty Survey utilizing two-tailed independent samples t-test for comparison of means and the Levene test of variances as a test of standard deviations found no significant difference in loyalty outcomes between the on-line and the traditional consumers. It also found no significant difference between perceived value outcomes of the on-line and traditional customers. Creating loyal customers for an on-line business is an especially challenging situation, because in an on-line setting the customer is not only dealing with a service, but with a service that is based in technology. Services are in and of themselves difficult to market. There is interest in examining this area (Levenburg, 2005; Uslay , Malhotra & Citrin 2004). Retailers today are providing more customer service in support of relationship marketing strategic objectives, with the help of technology via e-service (Barnes, Dunne & Glynn, 2000; Mueter, Ostrom, Rountree, & Bitner, 2000).
The Role of the International Owner-Manager Identity in the Internationalization Process of SMES
Prof. Lutz Sommer, Susanne Durst, MSc., and Manuel Haug
This paper describes the findings of four case studies conducted in Austria and Switzerland to explore the role of the international owner-manager identity in the internationalization process of small and medium-sized enterprises (SMEs). This concept is based on the role-identity theory which says that an individual’s self consists of a set of different identities. By taking a qualitative approach, the paper seeks to understand the phenomenon of the owner-manager identity in more depth. Results from the study indicate that the international owner-manager identity provides a fruitful base for a better understanding of the owner-manager’s influence of the company’s internationalization process. The importance of SMEs to every national economy is widely acknowledged in literature (e.g. Kuratko/Hodgetts, 2004; Acs et al., 1997). SMEs represent the largest group of companies by a significant margin in literally every modern economy, they account for a large number of jobs; in some countries such as the US and China, they are the most important group in terms of job creation (OECD 2002, p. 7 et. seqq.). As for the question of how they perform on foreign markets, there exists a gap: while SMEs undeniably play a crucial role on their domestic markets, only a portion of them is operating abroad. Many studies have tried to explain why this gap exists and how the situation can be improved. Relatively little attention has been paid to the role identity of the owner and manager in the internationalization process, although some authors have analyzed the owner-manager’s unique position and, subsequently, his high relevance to the company. This paper will shed some light on the critical importance he possesses, not only with respect to ventures in general, but especially to the initiation and management of the internationalization process. The key aspect of this research is the role identity of the international owner-manager and its impact on the company’s internationalization.
Politics and Productivity in GCC Banking Industry
Dr. Saeed Al-Muharrami
The paper examines historic rates of productivity change in Arab GCC banks. Using data of 52 banks over ten years, Total Factor Productivity (TFP) changes were calculated using the Malmquist DEA. GCC banks had an overall TFP of 95% and needed a 5% improvement to achieve international best practice. The Malmquist DEA slight downward shift in average efficiency of the banks in the sector during 1993 to 2002, stemming from change in the technical efficiency of banks (catching up effect), and technology equally decreasing during the period. Looking at the political situation within study period and the behaviour of total assets, deposits, and loans, the results revealed that there was a downward trend in total of assets, deposits, and loans from 1993 to 2001. This phenomenon is followed by upward trend in total of assets, deposits, and loans after 2001. The political situation in the region could also be part of the productivity explanation. The banking industry in Gulf Cooperation Council’s (GCC) (1) countries has developed at a rapid pace, shifting from the domination of foreign banks to a free market system with many national banks. The changes have resulted in more even distribution of the industry’s output and higher competition in the sector. The GCC banking industry has been subject to an enormous degree of structural changes since the early 1970s. This structural change has been associated with: increasing competition, both within and across the banking sector; deregulation especially in Bahrain and UAE; increased diversification and merger activities. These trends have impacted forcefully on the GCC banking industry.
Testing of Random Walks and Market Efficiency in an Emerging Market: An Empirical Analysis of Karachi Stock Exchange
Arshad Hassan, Muhammad Shoaib Abdullah, and Zulfiqar Ali Shah, MS Finance
This paper examines the weak-form market efficiency of Karachi Stock Exchange. Daily, weekly and monthly returns for last 6 years in dynamic macro economic context are examined for random walks using Kolmogorov-Smirnov test , Jarque-Bera test, autocorrelation coefficient runs tests, Augmented Dickey-Fuller (ADF), Phillips-Perron (PP) and unit root tests and multiple variance ratio (MVR) tests. The results, which are in broad agreement across the approaches employed, indicate that none of the markets are characterized by random walks and hence are not weak-form efficient, Therefore technical analysis may helpful in forecasting markets behaviors at least in short run. The efficient market hypothesis (EMH) is one of the most important paradigm in modern finance. The concept of EMH in relation to security prices was developed after the seminal work of Fama (1965 , 1970). Since then it has been one of the core research area in financial economics. Concept of Market efficiency has served as basis of a number of financial models. The early empirical findings based primarily on the data of developed stock markets, implies that security prices reacted instantaneously to all publicly available information. These findings form the basis for the early definitions of “capital market efficiency”. Recent introduction of anomalies i.e day-of-the-week, January effects, size effect etc in stock prices behavior resulted in stronger qualification of economists views on capital markets. Thus the definitions of “market efficiency” generated debate. Informational efficiency deals with the relationship between market prices and information. EMH pertains to the third type of efficiency. Markets are informationally efficient to the extent that prices reflect information. The efficiency of capital markets has implications for the investment analysis and management of our portfolio. Capital markets should be efficient because numerous rational, profit-maximizing investors react quickly to the release of new information.
Impact of Macroeconomic Announcements on the Stock Prices: An Empirical Study on the Pakistani Stock Market
Syed Zulfiqar Ali Shah, Hassan Mujtaba, Arshad Hassan, and Muhammad Shoaib Abdullah
The study focuses to test the efficiency of the Pakistani stock market (kse 100 index) in terms of the monthly inflation announcement effect. Inflation effect has been categorized in three forms i.e. Good news, bad news and no news. Results suggest that the cumulative abnormal returns around inflation announcements are not significantly different from 0. Two approaches have been used to identify the relationship, adaptive approach and moving average approach. The results of the moving average approach are consistent with the adaptive approach as far as good news and bad news effects are concerned. But in case of no news it gives no result. Although the results of the robustness test are found to be supporting the original findings of the adaptive approach. Stock prices respond to the different informations flowing in the market is remained a debatable issue from a very large period of time. There are various studies which confirm the hypothesis. The response of stock prices to different informations is called the efficiency of market. The concept of efficiency is central to finance. Primarily, the term efficiency is used to describe a market in which relevant information is reflected into the price of financial assets.
A Study of the Modified Pecking Order Theory in the Korean Market
Dr. Doug S. Choi and Dr. Dean F. Smith
The purpose of this study is to examine stock market reactions to different types of new issue decisions, i.e., debt and equity in light of Myers’ modified pecking order theory. The results of this examination will reveal if the experiences of the U.S. firms hold true in the Korean financial community. The capital structure studies incorporating recent developments in Korean market are beneficial to U.S. as well as Korean firms since many U.S. firms have become heavily involved with many Asian firms through direct and indirect investment. The asymmetric information hypothesis, supporting Myers’ modified pecking order theory, can be tested by examining market reactions to the announcement of external financing decisions. Following the works of Modigliani and Miller (1958, 1977), the general view of capital structure has been the static-tradeoff theory. According to this theory firms’ optimal debt ratio is generally viewed as a tradeoff between the various cost of bankruptcy and financial distress. By definition, the static-tradeoff theory recognizes an optimal capital structure and rationalizes moderate levels of debt and equity. By the mid-1970s this theory became the general academic view of capital structure. Many studies find evidence that firms actively adopt financing policies to balance their leverage ratios to achieve their optimal ratios, and thus the deviations from target debt ratios have significant predicting power on firms’ debt-equity choices (Barnea, Haugen, and Senbet 1981; DeAngelo and Masulis 1980; Hovakimian, Opler, and Titman 2001; and Korajczyk and Levy 2003). Frank and Goyal (2003) support above positions using a large sample of U.S. firms. Recent empirical studies, however, suggest that some important financing behaviors are not explained by the static-tradeoff theory since there are wide variations in actual debt levels, even in firms with similar financial characteristics. These discrepancies have propagated several attempts to reconcile theory with perceived practices.
The Development of Inventory for Life Adjustment of Adolescent
Farn-Shing Chen, Ying-Ming Lin, Ching-Yuan Chen, and Chia-An Tu
In the process of educating adolescents, life adjustment is a significant factor for teachers to know. The purpose of this study was based on the early literature and questionnaire survey to determine life adjustment (LA). This study was based on a random cluster sampling of high school, industrial high school, and business high school students in Taiwan. The data analysis methods included literature analysis, content validity, factor analysis, Pearson correlation, t-test, and reliability analysis. Finally, the LA comprised five factors, i.e., family adjustment, peer adjustment, self-perception, self-awareness, and school adjustment. The coefficients of Cronbach’s alpha were from 0.695 to 0.893 for the five factors and 0.82 for the LA. The factor analysis of the total variance explained was 53.6 percent. School education puts more emphasis on learning knowledge rather than on students’ frame of mind. Yet, students feel nervous, anxious, frustrated, depressed, and abased when instructors ignore their emotions. If the students cannot receive timely guidance from school authorities, teachers, or their parents, or timely concern from their peers or siblings, then their unstable emotions may result in behavioral disorders. Furthermore, mental disorders can influence students’ academic achievements and life adaptation (Chen, Lin ＆ Tu, 2006). Therefore, adolescent students not only play the most important roles in the society, but also will be the most powerful sources in the future development of country. They have to face and challenge dramatic physical and mental changes in this period. Hence, for each student being educated, it is important for teachers to understand that student’s life adjustment.
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