Scholarly Journals




The Journal of American Academy of Business, Cambridge

Vol.  11 * Num.. 1 * March  2007

ISSN: 1540 – 1200     *     The Library of Congress, Washington, DC

All submissions are subject to a double blind peer review process.


The primary goal of the journal will be to provide opportunities for business related academicians and professionals from various business related fields in a global realm to publish their paper in one source. The Journal of American Academy of Business, Cambridge will bring together academicians and professionals from all areas related business fields and related fields to interact with members inside and outside their own particular disciplines. The journal will provide opportunities for publishing researcher's paper as well as providing opportunities to view other's work. All submissions are subject to a two person blind peer review process.

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The Crucial First Three Months: An Analysis of Leadership Transition Traps and Successes

Dr. Steven H. Appelbaum, Professor of Management and Concordia University Research Chair

John Molson School of Business, Concordia University, Montreal, Quebec, Canada

Miguel Valero, MBA, General Manager, UniFirst Canada Ltd., Montreal, Quebec, Canada



Transitions are critical time when small differences in the manager’s actions can have disproportionate impact on results. Leaders, regardless of their level, are most vulnerable in their first few months in a new position. Failure to create momentum during the first few months virtually guarantees an uphill battle for the rest of the manager’s tenure in the job.  A survey was conducted among 175 managers. The respondents were asked to rank Watkins’s seven common traps and seven principles for success by importance order. The results were not only analyzed for the overall group of respondent, but also, by position (manager vs. executive), by sex (male vs. female) and by years of experience (5 years and less vs. 6 years and more). The authors obtained a 38% response rate.  Sixty eight percent of the respondents were at the manager level while 32% were executives.  Overall and in every category of respondent, the mistake that ranked as the most important was “Being Isolated”. “Coming with the answer” ranked #2 in all category of respondent with the exception of the executives who ranked this mistake equally #1 with “Being Isolated”.  Most executive failures are not the result of commonly cited causes, such as insufficient intelligence, questionable motivation, dishonesty, or even lack of leadership capabilities. Most top executives actually have the intellect, skill, and experience to lead their companies through the inevitable challenges they encounter. It turns out that “softer” issues, such as communication mishap, misaligned expectations, and the notion that you have to be the savior are more often than not the real culprits, especially in the early days. In their research Neff and Citrin (2005) listed ten traps for new leaders. They are: 1) Setting unrealistic expectations. The most universal trap for a new leader wants to do so much so fast that you over promise and over commit. Setting unrealistic or unsustainable expectations is one of the most seductive and common pitfalls for new leaders. Real pressures lead to this, such as the all-too-human need to impress your higher authority.  2) Either making rash decisions or suffering from analysis paralysis. While it is encouraged to listening and seeking input, the new executive can’t engage in a study for too long or postpone a tough decision indefinitely. 3) Being a know-it-all. Another serious pitfall believes that you have all the answers. By not recognizing or admitting that you don’t have – and can’t possibly have – all the answers, you shut out new perspectives, as well as the possibility of getting the valuable information and input that may lead to new discoveries and answers.  4) Failing to let go of your past identity. Sometimes without even realizing it, the new leader simply talk about its former company or its past success too frequently, creating the impression that its former employer is better than its new one., or that he/she have remorse. In doing so, he/she disenfranchise its new organization or simply annoy people, undermining their ability to be effective in the first hundred days.  5) Sporting “the emperor’s new clothes”. If the new manager doesn’t get accurate feedback or honest advice because people around them don’t feel comfortable to do so, he/she will not be able to develop the best strategy. 6) Stifling dissent.. Executives who smother dissent cut themselves off from the chances to see and correct problems as they arise. They create an environment of fear and control that turns off the most talented employees and eventually drives them out the door. Hesitant employees are given a draconian choice: “It’s my way or the highway.” Usually only mediocre talent ends up submitting to work in such an atmosphere. 7) Succumbing to the savior syndrome. Trying to do it all alone is a serious trap. If you operate as a lone wolf who refuses to ask for help or involve others, you will cut yourself off from valuable input and feedback. Even if you are on the right track, you will invariably burn out, which will only further hurt the organization. 8) Misreading the true sources of power. One common attribute of the most successful business leaders is sensitivity to the unwritten rules of an organization, empathy Daniel Goleman popularized this attribute with the term emotional intelligence.  9) Picking the wrong battles. New leaders tend to want to focus on problem areas and figure out how to solve them. That’s commendable, but not if it comes at the expense of sustaining its success in existing areas of strength. There is a tendency in the beginning to think that it’s more important to be visible and out at functions rather than taking care of business. It can be the black hole for a person who’s new. 10) “Dissing” your predecessor. Under all circumstances, the new executive has to be respectful and sensitive of its processor’s position and tenure, regardless of how he/she feels. About everyone who is there when the new manager arrives has worked for the old manager and probably has some degree of loyalty to him or her (Neff and Citrin, 2005).


Balancing the Hybrid Self in the Competing Landscapes of Consumption

Kritsadarat Wattanasuwan, Ph.D., Thammasat University, Bangkok, Thailand



The paper explores how a group of provincial women exercise consumption to balance their hybrid identities when they move to study in the capital.  Ethnographic fieldwork is employed to achieve an insight of the group’s consumer acculturation processes.  The interpretations reveal the complexly dynamic and paradoxical selves of these informants.  Although they aspire to urbanise themselves in order to assimilate properly into the new consumption space, they still wish to persevere their ties with the provincial roots.  Evidently, they seem to emerge in the third space where they can metaphorically be in both side at once through everyday consumption. As migration fabricates hybridity of cultures and identities (Hall 1990), the self needs consumption practices tailored to the third space (1) (Bhabha 1990) in order to balance the hybrid self.  Indeed, the relationship between place, identity and everyday consumption is profoundly intertwined (Penaloza 1994; McDowell 1999).  The term ‘place’ which I discuss here does not refer to just a physical area, rather it embraces local ways of life such as customs, values and certainly consumption practices.  The notion of place also comprises symbolic meanings that we often incorporate into our identities. Thus, changing place (e.g. migration or even moving home) can frustrate and relocate our sense of identity.  In order to understand this complex relationship, I employ interpretive research via ethnographic fieldwork. Specifically I examined a group of six female students from rural areas who came to study at a university in Bangkok.  I explore how these informants employ everyday consumption to re-negotiate and re-settle themselves in a new spatiality, in this case, the cosmopolitan Bangkok.  The interpretations aim to convey insightful understandings of the interplay between the self, geographical identity and consumption symbolism that emerged from the fieldwork.  The interpretations reveal the complex dynamics and paradoxical selves of these informants.  Although they aspire to urbanise these selves in order to assimilate properly into the capital’s way of life, they still wish to preserve their ties with their provincial roots.  Accordingly, they engage in various symbolic consumptions to create, express, negotiate, and balance their hybridity.  The primary aim of my fieldwork is to explore the interplay between an attempt to negotiate the sense of self in a new cultural space and everyday consumption practices.  Principally, the data collection methods are observations, both non-participant and participant observations, and a series of ‘the long interview’ (McCracken 1988).  Auto-driving like collages as well as diaries are also used as supplementary methods.  Deliberately, I employ triangulation across methods not only to enhance the research creditability, but also to generate a multiplicity of perspectives on the behaviour and contexts of the phenomena (Elliott 1999).  The research informants were recruited from a friendship group of six female students, Bird, Nat, Da, Auan, Win and Nud (2), all of whom are about twenty years old.  Their majors are in business-related fields.  All of them are from the rural region, which is approximately two hundreds kilometres away from Bangkok.  Before attending university, they never lived in the capital.  Altogether the fieldwork was conducted over sixty weeks.  Bangkok, the capital of Thailand, is not only the ultimate example of the nation’s consumer culture, but also the national centre of everything.  Consequently, each year there are large numbers of people coming to Bangkok for employment and education.  Essentially, they need to acculturate Bangkok’s ways of life in order to settle down comfortably.  I use the term ‘to acculturate’, which generally refers to the general process of movement and adaptation to the cultural environment in one nation by persons from another nation (Penaloza 1994), in order to portray that moving from other provinces to Bangkok may be relatively equated to migrating to another nation.  As Bangkok is viewed as a first-world city in a developing nation (i.e. Thailand), its social life is much different from lifestyle found outside the capital.  Influenced intensively by multi-national capitalism, Bangkok becomes a cosmopolitan city bound up with globalisation and mediaisation.  While ways of life in many provincial areas are still simple, the social life in Bangkok is complex as it is loomed large by postmodern conditions.  To acculturate successfully into Bangkok culture, the provincial consumers need to acquire cultural capital and skills not only to urbanise themselves but also to cope with the threats posed by postmodernity.


Are Customers’ Dissatisfaction and Complaint Behaviors Positively Related? Empirical Tests

Dr. Godwin Onyeaso, Concordia College-University System, Selma, AL



A large number of studies on customer dissatisfaction and complaints behavior as well as other related consumer behavior studies are predicated on the belief that there is a statistically significant positive relationship between customer dissatisfaction and complaints behavior. Using time series panel data, this study tested this assumption and found that:  dissatisfaction and complaints have a stable long run equilibrium relationship which permits them to positively influence each other, that past dissatisfaction explains current changes in complaints, that past complaints explain current changes in complaints, and that current changes in dissatisfaction explain current changes in complaints. Finally, strategic services management implications of these results about how service managers can use them to leverage their organizational performance through superior complaints management programs were briefly discussed.  Empirical works on customer dissatisfaction and complaint behaviors have been growing (Crosby & Stephen, 1987; Goodman & Ward, 1993; TARP, 1981, 1986; Richins, 1980; Singh, 1990a,b; Bearden & Mason, 1984; Folkes, 1984; Singh & Wilkes, 1996; Peters, 1988; Granbois et al, 1987; Kim et al, 2003; Davidow, 2003, and Dellande, for a review) but shrinking recently (Lemmink, 2005). The major force behind the renewed interests in this area proclaimed that strategic market feedback benefits (Fornell & Wernerfelt, 1987, 1988) accrue to organizations when their managers maximize customer retention by minimizing customer dissatisfaction with better quality offering (Kim et al, 2003), and encouraging customers to voice out their complaints rather than exit (Peters, 1988) as prescribed by the defensive marketing strategy concept (Fornell & Wernerfelt, 1988). A common assumption underlying these works is that a positive relationship exists between customer dissatisfaction and complaints. The empirical validity of this assumption has not been tested. The purpose of this paper is to test this assumption. The bulk of the works in service management rooted in customer dissatisfaction and complaints behavior are predicted on the belief that there is statistically significant positive relationship between customer dissatisfaction and complaints behaviors. The genesis of this assumption can be traced to early research hypothesizing that the intensity of complaint behavior is directly proportional to the degree of customer dissatisfaction (Bearden & Teel, 1983). That is, the greater the dissatisfaction the more the complaints behavior. Therefore, consistent with this line of logic, there must be a positive relationship between customer dissatisfaction and complaints. Therefore, in line with this logic, some studies have been motivated by the presumption that customer dissatisfaction is the fundamental cause of customer defection (Crosby & Stephen, 1987; Goodman & Ward, 1993). Therefore, reducing customer dissatisfaction will reduce customer exist under the service failure recovery paradigm, so that boosting customer retention rates can leverage organizational revenue and profits in many firms in diverse industries (Hogan, Lemon & Libai, 2003; Reichheld, Markey & Hopton, 2000; Reichheld, 1996; Reichheld & Sasser, 1990). As a consequence, several studies on organizational complaints management are increasingly emerging (Andreassen 2001; Davidow, 2000; Liu, Sudharshan & Hamer, 2000; Maxham, 2001; Walsh, 1996; Tax & Chandrashekara; 1992; Smith & Bolton, 1998), more so because managers believe that the genesis of complaints is customer dissatisfaction on the presumption that customer defections are caused by dissatisfaction (Keaveney, 1995; Stewart, 1998).This line of reasoning would suggest a positive association between customer dissatisfaction and customer complaint behaviors. However, dissenting opinions of the positive relationship are emerging as discussed below. The validity of the assumption of positive relationship between dissatisfaction and complaints has been challenged on the grounds that it is not merely the intensity of dissatisfaction that proportionately translate into complaint behaviors because other factors beyond the intensity of dissatisfaction influence complaint behaviors (Best & Andreasen, 1977; Day, 1984). Second, consistent with this reasoning, research found that dissatisfied consumers do not usually complain even when they suffer huge losses in time and money (Andreason, 1988), which suggests that the relationship between dissatisfaction and complaints should be weak at best. Corroborating Andreason (1988), research found that “no-action or no-complaint” is one of several options dissatisfied consumers take (Day, 1980; Krapfel, 1985).Third, in line with above evidence, work by Andreasen and Best (1977:98) appears to suggest that the correlation between dissatisfaction and complaints is insignificant, statistically. Finally, evidence suggests that only about 5 to 10 percent of dissatisfied consumers decide to complain after service failures (Tax & Brown, 1998). Again, this suggests weak statistical relationship between dissatisfaction and complaint behaviors. Therefore, consistent with the preceding accounts, dissatisfaction has been called a trigger of complaints which is not sufficient in itself to cause complaints but must be present for complaints to occur (Volkov (2003:52). Clearly, the trigger concept suggests that the relationship between dissatisfaction and complaints will be minimal at best. But, how minimal is minimal? This empirical question is the purpose of the present study.


Real Estate Investments with Stochastic Cash Flows

Riaz Hussain, Ph.D., University of Scranton, Scranton, PA



This paper examines the ownership of real estate as a long-term, risky investment. Using stochastic calculus, the risk is analyzed by assuming that the cash flows in a property investment are growing as arithmetic Brownian motion with the possibility of becoming negative, while the value of the property is growing as a geometric Brownian motion. The analysis takes into account depreciation and taxes. The results are useful for a corporation or a long-term individual investor interested in real-estate investments. Both individuals and corporations invest in real estate. A family may invest in a home to live. A landlord will invest in a rental property to earn a living. A corporation can invest in a shopping mall on behalf of its stockholders. A university has to invest in a parking garage to alleviate the parking problem on campus. A real estate investment is usually considered to be a safe investment. A bank may lend up to eighty percent of the value of a house to a homeowner, but the stockbrokers can lend only up to fifty percent of the stock purchased on margin. The stockbroker can monitor the price of a stock every day and send a margin call as soon as the value of the stock drops below a certain level. A real estate holding should be a long-term investment for a firm or an individual. Brown and Geurts (1) investigate the holding period of real estate properties by individual investors. By analyzing the real estate transactions in San Diego, they find that the average holding period by the investors is somewhat less than five years. The investor behavior is contrary to the theoretical calculations in this paper, which demonstrates that the optimal holding period is much longer. In another paper, Brown (2) explores the reasons for owning real estate by private investors. In particular he examines the risk peculiar to real estate investments, including the entrepreneurial abilities of the owner. Geltner and Miller (3) look at the risk in the real estate investments for individuals and try to measure it in terms of CAPM. Their conclusion is that one cannot really do so. Some researchers focus on the institutional investors and their investments in real estate. Chun, (4) report that the institutional investors hold a surprisingly small fraction, perhaps 2 or 3%, of their investments in real estate assets. In their estimation, if CAPM is the proper model to assess risk, this fraction should be about 12%. French and Gabrielli (5) look at the overall concept of risk as applied to real estate investments. They consider the uncertainty in the valuation of British real estate. One simple way to assess the risk of real estate investments is to look at the beta of REITs. According to Corgel and Djoganopoulos (6), who examine the b of 60 REITs, the mean b is about 0.36, implying the relative safety of such investments. They also stress the special characteristics of REITS that contribute to their low betas. It is also possible to treat the uncertainty in the real estate valuation in terms of stochastic variables. For example, Buttimer and Ott (7) assume that the spot lease price follows a geometric mean-reversion stochastic process. The aim of this paper is to consider real estate as a risky investment. The risk is due to two factors: the uncertainty of the operating cash flows and also due to the unknown rate of growth in the value of the property. The analysis leads to an optimal holding period for a real estate, including the possibility of abandoning the property. To start, section (2) of the paper looks at a real estate investment with certain cash flows. Section (3) develops a theoretical framework to evaluate real estate investments under conditions of uncertainty, including the abandonment option. Finally section (4) has a discussion of the principal results of this investigation and some conclusions.


Mutual Fund Acquisitions and the Wealth of Target Shareholders

Dr. Xiyu (Thomas) Zhou, University of Alaska, Fairbanks, AK

Dr. Kevin C. H. Chiang, Northern Arizona University, Flagstaff, AZ

Dr. Craig H. Wisen, University of Alaska, Fairbanks, AK



The impact of mutual funds acquisitions on target shareholders’ wealth is an important topic considering the predominant role that mutual funds play as financial intermediaries.  The results of the present study indicate that while target funds experience lower distribution and operation costs in post-acquisition period, the overall impact of acquisition on target funds’ performance is negative.  These results suggest that mutual fund acquisitions destroy value in the long run.  This phenomenon is partially driven by an implicit desire to achieve diversification on the part of some bidders whose main businesses are not in the asset management industry. The notion of shareholder wealth maximization is often advocated in corporate governance and control literature (see Jensen and Meckling 1976).  Because of this emphasis, shareholder wealth has been extensively examined in the corporate merger and acquisition literature (see Becht, Bolton, and Röell 2002; Gondhalekar and Bhagwat 2003; Knapp, Gart, and Becher 2005).  Relatively few studies though have focused on target shareholders’ wealth within the mutual fund industry.  Jayaraman, Khorana and Nelling (2002) studied mutual fund mergers that involve the combination of two funds across fund families. (2)  They found that this type of cross-family mergers results in a reduction in expense ratios for target shareholders, but this restructuring does not lead to significant changes in post-merger performance.  Khorana, Tufano, and Wedge (2005) found that regardless of board structure post-merger fund performance and fees revert to the mean of the investment objective. An unanswered question within the mutual fund industry is whether fund acquisition in general improves the wealth of target shareholders.  Unlike conventional companies, a mutual fund is often externally managed.  In this case the fund and its investment adviser operate as separate units.  The sponsor/advisor has a controlling role in fund operation while shareholders are usually passive in corporate governance.  The fund and its sponsor/advisor are linked through service contract(s).  These unique features make the acquisition of service contracts a key to improving the understanding of how target shareholders’ wealth is affected during and after consolidation.   This study examines the effects of fund acquisitions on target shareholders’ wealth.  Specifically, this study focuses on the following type of events: fund company A acquires the right to provide advisory service to mutual fund i of fund company B, and fund i is kept as an independent entity, i.e., not merged with another fund of fund company A.   This framework for analysis allows for an incremental understanding in the analysis of acquisition effects since this paper does not study mutual fund mergers and because it has a distinct sample from that of Jayaraman et al. (2002).  This distinction is necessary because when a fund company acquires a fund, the company in essence controls the fund through selecting the manager and managing the underlying assets.  This control remains regardless of whether there is a subsequent merger.  This distinction also provides a clean setting in which one is able to measure the post-event performance of the target fund without an infusion of the acquiring fund’s assets.  We believe that this paper helps readers gauge a holistic view on mergers and acquisitions in the world of mutual funds. Examining mutual fund acquisitions is important for several reasons.  First, pension funds and other institutional investors are playing an increasingly active role in corporate governance.  This monitoring system is largely absent in mutual fund governance because mutual fund investors are mainly small investors.  This makes mutual fund acquisition a particular fruitful area for examining the issue of moral hazard.  Second, a mutual fund acquisition is different from a conventional corporate acquisition in that the bidder is after the contract rights for providing investment advice to the target fund’s shareholders for a management fee.  The bidder does not need to own or control the majority of fund shares.  The negotiation is between the bidder and the sponsor/advisor of the target fund.  This process does not involve the shareholders of the target fund.  Furthermore, consideration is paid by the bidder to the sponsor/advisor of the target fund.  The shareholders of the target fund do not receive any premium in the form of a higher mutual fund share price. It is not obvious whether the desire for shareholder wealth maximization plays a role in fund acquisitions.   Finally, an understanding of the impacts of mutual fund acquisitions on shareholders’ wealth should help regulatory agencies such as the Security and Exchange Commission (SEC) formulate their policies toward mutual fund governance and control.


The Iran - China Alliance

Kamrouz Pirouz, Ph.D. and Farahmand Rezvani, Ph.D., Montclair State University, Upper Montclair, NJ



The impact of China’s rapid economic growth in the last fifteen years has led to a substantial increase in its demand for energy. Iran’s ample supply of oil and gas and its need to counterbalance pressure from Europe and especially the US, have combined to  initiate an alliance between the two countries. Our position in this paper is that this partnership is extremely beneficial to both countries and it should be strengthened in the years to come. The recent rise in the price of oil which broke the $60 a barrel mark in late August of 2005 is due to underlying fundamentals. The combination of a strong  global demand, especially from China and India, coupled with tightness in supply and lack of excess capacity in refinery production worldwide, have been the main cause of the surge in oil prices. But political instability in the oil producing regions, especially the Middle East and Venezuela, and the resulting fear of supply disruptions have also added an element of unpredictability which becomes reflected in the price of oil. This paper, after considering the causes of the rise in the price of oil since 2005 seeks to examine the impact of China’s rapid economic growth on total world energy demand and the possibility of its alliance with Iran as a rich energy source to provide China with ample supply of oil as well as natural gas. A look at the history of oil price movement-  Crude oil prices behave very much like those of any other commodity.  They respond to shifts in demand as well as supply, which currently has two components, OPEC and non-OPEC production.  In this section we look at a brief history of oil price changes in international markets since World War II. Crude oil prices ranged between $2.50 and $3.00 from 1948 through the end of the 1960’s. However, when viewed in 2004 prices, crude oil prices fluctuated between $15 to $17 during the same period. From 1958 to 1970 prices were stable at about $3 per barrel, but in real terms the price of crude oil declined from about $16 to below $13 per barrel.  This decline in the price of oil in real terms was amplified for international oil producers in 1971 and 1972 due to the depreciation of U.S. dollar.  Throughout the post-war period oil exporting countries found increasing demand for their crude oil but a 40% decline in the purchasing power of a barrel of crude oil.  In 1960 OPEC came into existence with five founding members: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.  By the end of 1971 six other nations had joined the group: Qatar, Indonesia, Libya, United Arab Emirates, Algeria and Nigeria. (1)  In 1972 the price of crude oil was about $3 per barrel. After the historic meeting of OPEC in Tehran in January 1974, following the Arab-Israeli Yom Kippur war of previous year, the price of oil was quadrupled to over $12. During that war the U.S. and many Western countries showed strong support for Israel.  In retaliation, many Arab countries imposed an embargo on nations supporting Israel. The embargo reduced the oil supply in the international markets by 5 million barrels per day.  About one million barrels were made up by increased production in other countries.  The shortage of 4 million barrels a day in international markets was a clear indication  that the ability to control oil prices had largely passed from the United States to OPEC, even though it did not have a monopoly. From 1974 to 1978 world crude oil prices were relatively flat, ranging from $12.21 per barrel to $13.55 per barrel.  But events in Iran and Iraq led to another round of crude oil price increases in 1979 and 1980. The Iranian revolution resulted in the loss of 2 to 2.5 million barrels of oil per day between November1978 to June 1979.  In September 1980 Iraq invaded Iran.  By November the combined production of both countries was 6.5 million barrels per day less than a year before.  Worldwide crude oil production was now 10 percent less than what it was in 1979.  This shortage resulted in crude oil prices more than doubling from $14 in 1978 to $35 per barrel in 1981. (2) The rising oil prices in the early1980’s caused several reactions among consumers.  There was more insulation of new as well as old homes, more energy efficiency in industry, and automobiles with higher mileage.  These factors along with a global recession led to falling demand.  The higher prices of oil also resulted in increased exploration and production outside OPEC.  From 1980 to 1986 non-OPEC production increased 10 million barrels per day. These factors as well as shift to other alternative energy sources (e.g. coal and nuclear energy) led to falling demand and increased supply, and consequently a fall in the international price of oil. Between 1982 to 1985 Saudi Arabia acted as a swing producer, cutting its production to prevent further fall in oil prices.  But by mid-1985 the Saudis departed from this policy, and by early 1986 they increased production from 2 to 5 million barrels a day. The result was a drastic reduction in crude oil prices to $10 per barrel by mid 1986.


The Capital Allocation in Developing Economies and their Vulnerability to External Shocks

Vefa Tarhan, Ph.D.



 This paper investigates emerging market characteristics and whether or not emerging markets allocate scarce capital resources in an efficient manner.  One of the findings of the paper is that while there has been a steady improvement in these markets, there still are some distortions.  One of the significant problems is that the governments dominate the bond markets in these countries to the extent of completely crowding-out the private sector.  At the macroeconomic level, this in turn simultaneously encourages inflation and curtails economic growth.  At the corporate finance level, it forces firms to rely on short-term bank debt, exposing them to maturity risk, and also to borrow foreign currency denominated debt which exposes them to exchange rate risk.  Additionally, due to the volatility of these economies firms have higher betas and higher cost of equity than developed economies.  Using the events experienced during May-June 2006, the paper argues that these markets are susceptible to financial shocks created by hedge fund activities.  Finally, the paper provides a recipe for the measures that governments and other institutions can take for further development of these markets by broadening and deepening these markets.


Pricing American Options with Counterparty Risk

Lung-fu Chang, Ph.D. Candidate and Dr. Mao-wei Hung



 This article evaluates the impact of default risk on the prices of American options by the two-point Geske and Johnson method. Using the two-point Geske and Johnson method, we provide the analytical formula to assess vulnerable American options by pricing vulnerable European and multi-exercisable options under risk-neutral measures and employing Richardson’s extrapolation. To demonstrate the accuracy of our proposed method, we compare values of the vulnerable American option from our proposed method with benchmark values from the least-square Monte Carlo simulation method. Numerical evaluations illustrate the impact of counterparty risk on the prices of European and American options and demonstrate the accuracy of our proposed method.   Over-the-counter (OTC) markets have come into the limelight in recent years. In the OTC market, financial derivatives of all types are widely traded. Financial institutions and corporate clients are the main participants in the OTC market. In contrast to exchange-listed options markets, there is no organizing exchange in OTC markets requiring options positions to be resettled daily and sufficient collateral posted. Therefore, the holders of OTC options are exposed to possible defaults from their counterparties. The traditional option pricing formulas suggested by Black and Sholes (1973) or Merton (1973) do not take counterparty risk into consideration. Several studies have concentrated on pricing vulnerable options, which are private contracts with the option payoff but without the protection of counterparty risk, as described by Johnson and Stulz (1987), Hull and White (1995), Klein (1996), Klein and Inglis (1999, 2001) and Hung and Liu (2005).


A Structural Equation Model of Total Quality Management and Cleaner Production Implementation

Dr. Ming-Lang Tseng and Dr. Yuan-Hsu Lin

Dr. Anthony SF Chiu and Chi-Horng Liao



 A review of the literature revealed gaps in this area of organizational factors and cleaner production implementation, particularly inadequacy in this area of empirical testing of the organizational factors on cleaner production implementation. The aim of this study was to examine the total quality management elements and cleaner production implementation of numbers of manufacturing firm in order to determine the relationships among these variables. This research used of 267 Taiwan manufacturing organizations. The reliability (construct and item) and validity (convergent and content) of the constructs were evaluated. The result showed the Total quality management (TQM) elements were significantly and positively related to each other and cleaner production construct. A structural equation model constructed.


Evaluating the Decision to Adopt RFID Systems Using Analytic Hierarchy Process

Koong Lin and Chad Lin



 Interests continue to grow in recent years for the adoption of Radio Frequency IDentification (RFID) technologies due to their capability for real-time identification and tracking. A good example of this was when Wal-Mart asked its top 100 suppliers to use RFID tags in 2005. This had a profound effect on the projected growth of RFID technology as well as potential applications in industries such as defense, wholesale, and retail. However, there are some business and technical problems and issues with the use of RFID technologies (such as data accuracy, costs and benefits, and security and privacy) and these warrant further research. Thus, this research aims to establish a decision analysis mechanism that can assist organizations to judge if they are suitable to adopt the RFID systems. The AHP (Analytic Hierarchy Process) methodology is employed to analyze the RFID adoption decision processes of both RFID expert and industry evaluators.   Global spending on Radio Frequency Identification (RFID), according to Gartner, is likely to reach US$3 billion by 2010 (CNET, 2005). RFID can be used to integrate processes and technologies in order to conduct and manage global trade. Several major retailers such as Tesco in the UK and Metro in Germany are already rolling out large-scale RFID initiatives. For example, Wal-Mart asked its top 100 suppliers to use RFID tags by 2005 (EPCglobal, 2006).


Budgeting as a Competitive Advantage: Evidence from Sri Lanka

Siriyama Kanthi Herath, Ph.D. and M. W. Indrani



 This study empirically explores the roles of Budgetary Control Systems (BCS) as a component of the Management Control System (MCS) in creating and sustaining Competitive Advantage (CA). More specifically, it attempted to reveal the existing accounting control practices in a manufacturing firm in Sri Lanka; Harischandra Mills Ltd (HML). The study examined how the BCS assisted in satisfying the demand for Coffee and Noodles at a competitive price leading to higher sales volume creating and sustaining a CA. The study reveals the budgeting process at HML and recognizes a number of roles performed by the BCS and it concludes that regardless of the fact that a BCS can play a leading role in establishing an efficient MCS for creating a sustainable CA, budgeting will not function in isolation. Instead, it can be used more effectively by strategically joining it with emerging strategic oriented knowledge enterprises. The management accounting literature proposes that effective planning and control are crucial for achieving organizational goals and objectives. Effective planning ensures that goals are selected with care and effective control ensures that the selected plans are implemented appropriately. Budgets perform an important role both in planning and control in achieving organizational goals.


Education and Labor Market in Knowledge-Based Economy of Korea

Namchul Lee, Ph.D.



 The principal objective of this paper is to explore the reasons for male and female differences in participation rates in higher education and the labor market in Korea drawing on various aggregate data. Also, we compare to determine the relationship between education and labor market participation, and account for earnings inequality. More detailed attention is then given to issues concerning the changing composition of employment and unemployment in terms of occupation by gender.  The results suggest that the overall differences in higher education at the college level which has been a heavily male-dominated area and in the labor market are primarily due to differences in observed socio-economic factors, such as wage differentials and cultural characteristics.  Over the last forty years, education has been the main reason for the dramatic improvement the status of professional women. Educational attainment of the work force is a key development strategy aimed at promoting economic growth, and gender differences in education may be viewed as an important indicator of gender inequality (Mankiw etc, 1992). However, technology has proven to be an especially difficult area for women to penetrate professionally. They have been encountering very tough obstacles in the knowledge-based economy.


A Renewed Look at the Turnover Model for Accounting Knowledge Work Force

Yaying Mary Chou Yeh, CPA, DBA



 In an effort to understand the change dynamics on work attitudes and perceptions of the twenty-first century knowledge work force, this study explores a turnover model including organizational commitment, job satisfaction and turnover intent using accounting professionals as an example. Results from structural equation modeling (SEM) reveal that job satisfaction is the most important factor in determining employee propensity to leave for accounting knowledge workers. Organizational commitment is not critical in the turnover model for individuals with movement capital. Empirical test implies that firms should identify employees with different level of movement capital to design suitable retention programs. The conclusion of this study is also applicable to other high-level, service oriented knowledge employees in the age of knowledge economy.  Knowledge worker, as first coined by Peter Drucker in 1959, is one who works primarily with information to develop and use knowledge in the workplace. Accounting professional is one of such who accumulates intellectual capital and business intelligence through specialization and expertise. The management of accounting knowledge workers, especially in the aspect of human resource development, requires contextual and careful attention and connection. 


Market Controls on Corporate Social Responsibility:  An Exploratory Study of Banking & Investment Policies (1)

Breena E. Coates, Ph.D.



 Corporate fraud, managed mendacity and other crimes necessitated passage of the Sarbanes-Oxley Act of 2002 (2). This conceptual paper resumes the discussion of corporate social responsibility by analyzing market controls that could facilitate business ethics, such as the “Equator Principles” in Banking, Grassroots Participatory Lending and other mechanisms. It explores these devices via a constructivist-interpretative methodology, using content analyses of scholarly and practitioner literature to deconstruct and synthesize business strengths,  weaknesses, opportunities and threats over the last 20 years, and thus make policy-relevant recommendations for business and government.  This exploratory study will be  followed by an empirical analyses using survey research and statistical analyses of banking and investment loan evaluation procedures.  This conceptual study examines how market controls could be an avenue for facilitating corporate social responsibility (CSR). CSR is the expectation that companies see their corporate strategies and decision-making within a framework that includes sustainability of social and environmental resources, and a keener understanding of the negative externalities generated through business actions–and not just profit and loss considerations. (Deresky, 2006). Our current system of business accounting harks back to the industrial revolution which set forth business practices that were largely oblivious to their social and environmental impacts. One explanation given is that our gross domestic product, based upon the “national account” principles set forth by John Maynard Keynes, while useful in its exactitude for accounting for capital goods, is elusive and ambiguous in tracking the impact of business on social and natural resources.


A Factor Analytic Study of the Computer Anxiety Rating Scale: Evidence from an Egyptian University

Dr. Mansour Salman Mohamad. A. M. Lotayif  and Dr. Ahmed El-Ragal



 Computer Anxiety Rating Scale (CARS) has been a topic of interest in computer literature for decades. The current study is an endeavor in this perspective. It attempts to determine the number of anxiety’s constructs within Woszczynski’s 16-item CARS. The experience of 344 undergraduate students was utilized to achieve the current study aims. Through Explanatory Factor Analysis (EFA), CARS was loaded on four factors that represent four constructs: future ambition about computer, technical, personal, and experience anxieties.  Technophobia and computerphobic are two terminologies surface as consequences of massive usages of computer applications in most life aspects. North, and Noyes (2002); and McIlroy et al (2001) have defined technophobia is the anxiety about present or future interactions with computers or computer-related technology; negative global attitudes about computers, their operation or their societal impact.


Executing Strategies on Intellectual Capital: Case Study for Management and Corporate Governance

Jui-Chi Wang (Amanda)



 Skanida is the first company to report its valuable intangible asset on financial statement in the world and has made the distinguished contribution in intellectual capital (IC) development and affected greatly in today’s strategic management and business re-engineering practices. This case study first introduced the background of this Sweden company, and also its current financial performance.  Jan R. Carendi, former CEO of Skandia, had worked for Skandia for decades and contributed his initiative knowledge and vision to build the foundation of intellectual capital in Skandia.  Skandia Navigator was introduced to help the company to balance the financial and intellectual capital evaluation; therefore, the company’s successful factors can be visually seen and evaluated by quantitative ratios through the business development process. The strategic development and value creation as the hidden values of the company can be managed by utilizing the intellectual ratio and indicators.  The strategies for Skandia’s human capital, intellectual capital management and distribution channel were also discussed.  Furthermore, Skandia initiated extensive work on reshaping the group from a federative structure into a highly cohesive and uniformly governed group that makes effective use of operating synergies.  Finally, the key questions examined internally and externally would provide detailed analysis and suggestion in changing external business environment and competitive realities for Skandia. 


An Empirical Analysis Concerning the User Acceptance of E-Learning

Dr. Salih Zeki Imamoglu



 With the rapid change of traditional practices, technologies, skills and accelerated rate of knowledge creation and dissemination; lifetime learning has become inevitable both for everyone and for every organization. An e-learning system is a promising alternative in the current educational revolution that is taking us from a print to a digitized culture, with a corresponding demand to deliver knowledge to educate large numbers of people over vast areas without the boundaries of time and place. The increasing importance of e-learning has made user acceptance a critical subject for both academicians and practitioners. Accordingly, in this study the e-learning concept is described with a detailed literature review, and user acceptance, in terms of perceived usefulness, is empirically investigated.


International Reality of Internet Use as Marketing Tool

Maria Teresa Borges Tiago and João Pedro Couto, Ph.D.

Maria Manuela Natário, Ph.D. and Ascensão Braga, Ph.D.



 This paper analyzes the factors that are associated with success in using the Internet as a marketing tool. We administered a questionnaire to companies on three continents, considering six levels, which range from financial results and customer relations to buying efficiency. We divided the companies into three groups using cluster analysis and tested the nature of the companies in each group on two levels, one regarding firm’s characteristics and another considering the approach that firms took in the use of the Internet marketing tools. The results show that the benefits vary according to the way the Internet application are explored; that commitment level can affect the results and the impact is superior in the companies that explore the Internet potentialities in a wider perspective. These results demonstrate that the Internet is not only a means of sales promotion, but also relationship management and that companies who invest in an integrated perspective are more successful. As limitations of the study we consider the need for more research into the types of company activities that use the Internet as a fundamental component of the business. This paper contributes to the research on this topic with new evidence in a broad geographic sample.


Optimal Stochastic Production Entry and Exit Models

Chuan-Chuan Ko, MBA

Tyrone T. Lin, Ph.D.



 This study aims to evaluate the firm value by risk adjusted discounted factor with no leverage condition. The proposed model considers the market entry model with investment cost and the market exit model with exit cost simultaneously. The results of this study find out the hysteresis difference only accessed by production entry or exit model, and the threshold of production is more conservative than the traditional net present approach or real options approach.  The purpose of this work is to conduct study that when the project investment keeps out of debt, the anticipated rate of return on investment required by stockholders plus the risk premium shall be the revised risk discounted factor in order to measure the firm value. In addition, traditional financial management is based on the risk neutral approach to conduct measurement aiming at the stock price to convert into the firm value. That means the anticipated rate of return on investment is equivalent to the risk-free interest rate, which is accepted and identified by general finance scholars. However, when an enterprise is conducting real asset project investment consideration, if it utilizes the risk-free interest rate of the risk neutral approach as the anticipated rate of return on project investment, it will not be accepted by the practical sector.


Doing More Harm than Good: Unraveling the Mystery of Frustration Effects

Dr. Michael P. Lillis

Dr. Frank  J. Krystofiak and Dr. Jerry M. Newman



 In a management context, there is a strong belief that employees view outcomes more favorably when they result from fair procedures rather than unfair procedures. Yet academic and popular accounts indicate that some procedural enhancements have the potential to backfire – i.e. process improvements can unexpectedly bring about an increased sense of injustice, thereby doing more harm than good.  This study attempts to provide an integrative framework for understanding this so-called “frustration effect”: when does procedural justice enhance, and when does it diminish, distributive justice.  To better understand the occurrence of frustration effects, the authors focus on Referent Cognitions Theory (RCT).  Using structural equation modeling in a multi-sample framework, evidence suggests that the trigger for the so-called ‘frustration effect” depends on a belief in one’s entitlement to a preferable referent outcome. If outcomes are bad enough, and fail to meet individual expectations for a more desirable alternative, procedural fairness does little to enhance perceptions of distributive justice. The results are discussed in connection with practices used to allocate scarce goods and resources


Audience Attitudes Towards Product Placement in Movies: A Case from Turkey

Dr. Metin Argan

Dr. Meltem Nurtanis Velioglu

Mehpare Tokay Argan, Ph.D. Program 



The practice of product (or brand) placement in movies and other multimedia has been an important emerging area of marketing and advertising communication in recent years. Marketers and movie producers now frequently use placement as the basis for multi-million dollar promotional campaigns. This study describes the attitudes of a sampling of Turkish moviegoers towards product placement in movies and analyzes data to determine the effect of product placement on a Turkish population of moviegoers. In order to examine product placement from an audience’s point of view, the study investigated a sample of Turkish moviegoers. The findings indicate that while there is generally a favorable attitude toward product placement, extensive commercial usage of product placement in movies is perceived by moviegoers as ethically less acceptable. The findings also indicate that movie going frequency and the level of movie enjoyment affect the attention paid to product-placement, whereas gender, age, education and income level do not affect attitudes towards product placement. The results of this research have significant implications for both the practice of marketing as a whole as well as to how the movie audience interprets product placement practices in Turkey.


Management Education Reform in a Knowledge Management Environment

Satya P. Chattopadhyay, Ph.D.



 This paper seeks to link knowledge management (KM) principles to needs that businesses expect will be filled by trained management graduates.  Knowledge management is defined, and business tasks are mapped onto a knowledge management scenario.  The need to change the emphasis of present management curriculum to reflect the new realities is substantiated. Specifically, the components of a knowledge management system: knowledge acquisition, strategic sense making and communication are described.  Ultimately, the goal of business education is to develop decision-makers of the future who will be able to make better quality decisions more efficiently in what is at the core, a problem-solving environment.  The business world is the customer of trained professionals that academic programs seek to deliver, and it is increasingly vocal about the needs that it wants met.  With ever-increasing sophistication in conceptualizing and articulating these needs, they are able to clearly identify the specific areas where they seek fulfillment.  They are looking for individuals who will be able to hit the field running.  They seek to hire employees who are competent, productive, innovative and able to anticipate and respond to crises.  The academic programs seek to prepare their students so that they will be up to the task ahead.  The students are provided with a body of knowledge that is a varying blend of theoretical principles and practical applications as they pass through the system. 


An Evaluation of Time-series Operational Performance on the Non-profit Hospitals in Taiwan

Ching-Kuo Wei



 The purpose of this research is to study the operational performance of the non-profit hospitals in Taiwan from 2000 to 2004.  This study adopts the Malmquist Productivity Index (MPI) and Bilateral Model to analyze the operational performances of 72 non-profit hospitals.  The results show that the operational performances of these non-profit hospitals regardless of the attributes present a common tendency that the performances of 2001 and 2003 regressed as compared to the previous year, while that of 2004 has grown as compared to 2003.  In addition, the implementation of Taiwan’s Health Insurance Global Budget System has a greater negative impact to the public hospitals; therefore, based on the category of authorization and responsibility, the operational performance of proprietary hospitals is better than that of public hospitals.   Non-profit hospitals are quite popular in Taiwan and can be categorized into two forms, public and proprietary, by their characteristics.  The public hospitals are established by the government to provide the basic health care needs for the public and also take care of the minority patients’ health services.  The establishment of proprietary hospitals is mostly because of the tax reason and enterprise’s image, and most major business groups have set up hospitals. Moreover, they succeed to introduce the business management model to the hospital operation. 


Entrepreneurial Cognition and its Linkage to Social Capital

Janusz K. Tanas, Ph.D. Candidate and John Saee Ph.D.



 The main aim of this paper is to examine the cognitive and behavioral aspects of social capital and its influence on entrepreneurial development and economic growth. The paper presented is conceptual in nature with some support from secondary data assessment. Further, extant literature review seems to suggest that cognitive and behavioral aspects have received limited attention in the extant literature on social capital. The findings seem to suggest that cognitive and behavioral aspects are one of the main components of social capital which stimulate the development of trust, networking and relationships. Further, it is argued that cognitive coherence is a necessary catalyst for entrepreneurial development and thus economic growth.  Entrepreneurship is central to the development of the existing and the transitional economies (Aldrich 1999). Entrepreneurial activity serve as a vital component of national economic growth and development during transition as it encourages action, promotes job creation, consequently, improving well being of the entire country (Bednarzik 2000; Keister 2000). Entrepreneurial businesses form the nature of social and economic stratification in a transitional economy (Haltiwanger & Krizan 1998).


Chinese Management Philosophy – Study on Confucius Thought

Dr. Chiou-Hua Lin and Yuan-Kai Chi



 It has been more than 5,000 years of the history in China.  Though through many disorders, these chaotic situations could finally be settled and an orderly situation may then be developed.  What can be relied on mainly is the continued contribution of both wisdom and effort from the well-learned people, creating the best management philosophy.  Management is a kind of complicated development process.  It has such features as target, method, input, time & space and development, etc.  However, Chinese Confucianism has influences on the cultural development, social progress, international relationship and peace in China for several thousand years.  These thoughts have long integrated into the management process and denotation.  The Chinese Confucius management philosophy is: starting from management of oneself, then developing to the management of an organization, and further marching toward the “benevolence”, “loyalty & forgiveness” thoughts, as a management philosophy that concerns “life with focus on service as a goal”:


A Methodological Classification in ES Implementation Research

Mei-Hsia Chiang



 This paper classifies enterprise systems (ES) implementation research into variance research, process research and conceptual research with a methodological dimension. Classification in ES implementation researches can contribute to theory development and formulation in ES implementation literature. In addition, an ES implementation conceptual model is developed based on the hybrid of variance and process theory and the incorporation of some existing ES implementation researches. This conceptual model can guide future research by developing propositions to explain contradictory findings of business performance in ES implementation, to permit a generalization of findings to related phenomena and to put forward a research agenda. Overall, this paper is unique in two ways: first, a methodological classification in ES implementation researches is provided to facilitate a good theory-building procedure to improve theoretical development; second, a conceptual model of ES implementation is proposed to guide future research and practically successful ES implementation. Our analysis can add to knowledge accumulation and creation in the MIS academic and practical discipline.   Enterprise Resource PlanningERPsystems are variously called enterprise-wide systems or enterprise systems (ES). Enterprise systems are commercial software packages that enable the integration of transaction-oriented data and business processes throughout its entire organization, eventually to assist the inter-organizational supply chain (Markus et al., 2000b).


The Influence of Dimensions of Corporate Governance on Firm Values Using an Applied Structural Equation Model

Chung-Cheng Hsu



 This research was conducted mainly to study the influence of dimensions of corporate governance on firm values by applying a Structural Equation Model. This paper analyzes whether factors such as equity ownership structure, directors’ and supervisors’ structure, and information transparency are appropriate for studying corporate governance effects on firm value. Information transparency is the variable used to indicate the quality of a corporate governance mechanism. This study uses the index of the Securities and Futures Institute to divide the information transparency of a corporate governance mechanism into high and low groups. The results show that information transparency can profoundly influence the efficiency of corporate governance and  enhances firm values. also: (1) confirmed validity of the overall structural model; (2) showed that, once information transparency within a firm is established, the equity ownership structure and directors’ and supervisors’ structure have significant influence on the firm’s value; and (3) showed that a strong relationship exists between the composition of the board of directors and information transparency.


Gender Differences in Burnout among Life Insurance Sales Representatives in Taiwan

Dr. Chiang Ku Fan and Chen-Liang Cheng



 There is a paucity of studies in which the relations among work-related gender differences are examined. Business competition has heightened, which has also increased the stress of workers. Life insurance  is a vying business, but few studies have investigated burnout in this industry, particularly the relationship between burnout and the gender of sales representatives. Burnout was measured using the Maslach Burnout Inventory (MBI; Maslach & Jackson, 1986), which was the main measure of experienced job strain. The life insurance sales representative pool (N = 250) was selected using stratified sampling among employees in 29 life insurance companies in Taiwan. Mean scores were calculated for the three MBI subscales. Differences in mean scores were assessed using multivariate analysis of variance. Variables on which gender differences existed were selected as possible concomitant variables. Gender differences in burnout among Taiwan life insurance sales representatives were found to exist. However, our results indicate that underlying factors, such as working hours, have a profound effect on these differences.


Understanding E-learning Consumers: The Moderating Effects of Gender and Learner Diversity

Dr. Yao-kuei Lee



 Understanding consumer behavior is vital in formulating marketing strategies as consumer may form different perceptions due to individual differences for any given marketing stimulus. Using an e-learning acceptance model (Pituch and Lee 2006), a sample data of 259 Taiwanese undergraduates was used to investigate the effects of gender and learner diversity on consumers’ cognitive beliefs and intentions. The results revealed that the differences in construct means between males and females occurred at the front ends of the path model while those between nontraditional and traditional learners were at the opposing ends. It implied that different needs of various learner groups for e-learning, rather than academic discipline or gender seem to drive the differences in intention to use e-learning for distance education and for supplementary learning. In addition, gender and learner diversity moderated some of the model relationships. In particular, women’s adoption intention for distance education purpose was more strongly influenced by system interactivity and women’s perception of e-learning usefulness was negatively influenced by self-efficacy. System functionality predicted intention to use e-learning as a supplementary learning tool for traditional students, but not for nontraditional students, and perceived usefulness predicted intention to use e-learning for supplementary learning more strongly for nontraditional students than for traditional students. These findings help prioritizing the marketing efforts for different learner groups.


Re-innovation: The Redefined Definition

Chi-Jyun Cheng and Dr. Eric Shiu



 When redesigning a new product it is not only the time and the cost that are important, but also its characterization. While innovation has been much researched, re-innovation is essentially undefined and obscured. The authors attempt to illuminate the concept by reporting the insights obtained from their exploratory research. Eventually, this research provides a rigorous definition of re-innovation.  When facing with either decreasing customer loyalty or falling market share caused by rapid environmental changes, companies often provide new products to speedily deal with these changes (Lukas and Menon 2004). However, research has shown that it is not easy for some current customers to accept a new product which is based on breakthrough innovations (Treacy 2004). In addition, most new consumer products fail (over 90 % each year) one of the reasons being that they use radical technologies which do not meet consumers’ requirements (Christensen et al. 2005).  Conversely, companies can remain competitive by offering new products which are modified versions of existing products (Rothwell and Gardiner 1989). In fact, to constantly improve an existing product is a requirement of continued success for an organization (Rothwell and Gardiner 1983; Randal et al. 2005). This is partly because following this approach may not only reduce the cost of developing a new model but also decrease the lead time in bringing it to the market (Zangwill and Kantor 1998). Another possibility is that new product uncertainty could decrease (Song and Montoya-Weiss 2001). It is also possible that existing customers are more accepting of redesigned current products, because of the use of incremental technologies (Treacy 2004).  Finally, perhaps this new model with slight changes would fit a company’s strategy regarding its competitors (Lin 2003).


ABC Joint Products Decision with Multiple Resource Constraints

Li-Jung Tseng

Dr. Chien-Wen Lai



 Owing to capacity constraints, the companies that produce joint products have to assess the economic desirability of further processing joint products beyond the split-off point. This applies especially in a situation where market demands exceed the company’s production capacity. In order to maximize total profits, these companies must learn how to utilize the limited resources efficiently. The aim of this paper is to develop an ABC approach for the further processing decision of joint products, with multiple resource constraints. With the approach presented in this paper, companies producing joint products could consider the process costs and the limited resources simultaneously and determine which products provide the higher unit profit per constrained resource. By applying this approach, companies producing joint products could utilize constrained resources more efficiently and this would lead to an optimal further processing decision for joint products with multiple resource constraints.


TCE Mode Selection Criteria and Performance

Dr. Lisa Y. Chen



 The concept of transaction cost economics (TCE) has been frequently used to analyze the determinants of entry mode choices. Throughout the literature, TCE has been used in many empirical studies to identify several crucial factors. This study, with grounding in the theoretical basis of TCE, investigates the factors that comprise multinational firms’ decisions to operate in foreign markets, with a view toward predicting performance. With a cross-sectional descriptive survey research design, a survey was developed for this study, in order to test the hypothesis and measure the variables. The survey was mailed to executive officers of U.S.-based small, mid-sized, and large multinational companies. The results of this study demonstrate that the effects of TCE variables were significant predictors of entry mode choice decisions and that the degree of control afforded by each entry mode choice had significant influence on mode performance.  The cost of implementing a particular mode of entry is an important consideration in the choice of entry mode (Rajan & Pangarkar 2000). Recently, researchers have stressed the need to supplement efficiency considerations of the transaction cost model with strategic issues concerning entry modes (Aulakh & Kotabe 1997). Firms are expected to choose the governance or entry mode that minimizes the costs of carrying out particular transactions. In application, transaction cost economics (TCE) is concerned with comparing different institutional arrangements for carrying out economic activity (Burgel & Murray 2000; Williamson 1985).


Cross-Cultural Leadership Behavior Expectations: A Comparison Between United States Managers and Mexican Managers

Dr. Sergio Matviuk



 In the present global market, cross-national operations are common, which increases the interaction and relationships between people from different national cultures. The success of these cross-cultural business operations depends on the ability of the parties to understand and predict their counterpart’s behaviors. This ability is impacted by the people’s behavior expectations regarding how their counterpart’s should behave; because, if the behavior expectations do not match with the observed behavior, then the probability of conflicts and misunderstandings increases exponentially. This study focused its attention on the cross-cultural business relationship between the United States and Mexico and investigated if there were significant differences in leadership behavior expectations between a group of U.S. American managers and a group of Mexican managers. This study was cross-sectional and field-based, using a survey instrument to gather data. The Leadership Practices Inventory (LPI, Kouzes & Posner, 1997), adapted to define an ideal leader, was used to determine the leadership behavior expectations of each group. The results indicated that the U.S. American group had significantly higher leadership behavior expectations than its Mexican counterpart for all assessed leadership behaviors, which is helpful to anticipate potential sources of conflict when people from these countries interact. Results also suggested that variables such as education, gender, age, and their interaction had significant effect on participants’ leadership behavior expectations.


An Experimental Approach to Test Theories on Time Pressure in Online Time-Limited Promotions

Dr. Ching-I Teng, Li-Shia Huang, and Wen-Chun Yeh



 Previous research on online time-limited promotions rarely considered the influence of time pressure using an experimental approach (except for Lin & Wu, 2005). By using an experiment, this study examines several theories on time pressure and finds the limitations of previous theories: (1) time pressure increases choice deferral tendency, contradicting the findings of Dhar and Nowlis (1999), (2) time pressure both directly and indirectly influences total purchase amount, contradicting the findings of Herrington and Capella (1995) and (3) the construct of ‘perceived fulfillment of the shopping plan’ both directly and indirectly influences revisit intention, extending the findings of Teng, Huang and Chang (2006). Finally, implications and future research opportunities are discussed.  What are the benefits of stores imposing time pressures on shoppers? What are the influences of time pressures on shoppers? Do the effects of time pressure vary according to the products being purchased? Previous studies did not fully answer these questions.  This paper contains three contributions by remedying the shortcomings of the literature. First, past works rarely examined the influence of perceived time pressure on choice deferral in online time-limited promotions while only Lin & Wu (2005) pioneered to explore the impact of moderate time pressure.


Is there a Dividend to an Institution for having an Accredited College of Business?

Dr. Antonina Espiritu



 The main purpose of the study is to determine if there exists a significant difference in full-time retention and graduation rate between institutions with and without accredited business schools. Using a sample of higher educational institutions in the far west region of the United States, the empirical results of the cross-sectional regression analysis indicate that on average, accredited institutions enjoy 23% higher graduation rate and about 15% higher full-time retention rate than non-accredited institutions. Even after controlling for other relevant institutional factors and student characteristics, the positive result of having the Association to Advance Collegiate Schools of Business accreditation or AACSB remain robust and statistically significant. Therefore, resources devoted by higher educational institutions to achieving, if not maintaining, high quality academic standards in Business and Management education through AACSB accreditation will and no doubt pay-off not only to the institutions but more importantly and consequently, spill-over to all major stakeholders.  In the United States, the Council for Higher Education Accreditation (CHEA) serves as the national organization that coordinates the accreditation of universities and colleges. CHEA serves as the main voice for voluntary accreditation and assurance of quality to the Congress and Department of Education ( 


The Development of a Competency Ontology

Jui-Hung Ven and Chien-Pen Chuang



 We first explore the competency standards systems of America, England, and Australia. We find that they all emphasize on professional competencies instead of general competencies. Hence, we propose here a competency ontology structure, from the viewpoint of competency standards, which uses the domain ontology as the stem and competencies or skills as the branches. In other words, all competencies or skills are directly linked to the concepts of the domain ontology and are described as instances with the format "action verb + object + condition." The competency- or skill-related knowledge, the performance criteria, and the needed abilities are attached to the skills. We also use slots to give synonymous meanings to each concept and skill to enrich their semantic meanings. Based on the proposed competency ontology structure, we construct a software competency ontology to be used in our future researches.  Ontology, with a big O, is a branch of philosophy that studies the nature of being. An ontology, with a small o, is an explicit specification of a conceptualization in a particular domain (Gruber, 1993). Hence, Ontology is a philosophical theory allowing us to construct an ontology or ontologies (Guarino & Giaretta, 1995; Guarino, 1997). In addition to concepts and relationships, ontologies have other terms to describe their properties, constraints, and instances.


Subsidiary Initiatives in Subsidiary Role Changing: In the Case of the Bartlett and Ghoshal Typology

Tzu-En Lu and Lu-Jui Chen and Wen-Ruey Lee,



 In this study we develop a model of subsidiary evolution about the conditions that drive the role of subsidiary changing by subsidiary initiatives. We see subsidiary initiatives as entrepreneurial processes that find out the new way for subsidiary to expand resources and to cultivate corporate capabilities. Bartlett and Ghoshal’s typology of subsidiary is our basic frame of reference to infer to the effect of subsidiary initiatives causes. Subsidiary role’s changing is a function of subsidiary initiatives and initiatives make subsidiary for local learning and global integration. Our provisional conclusion is that MNE subsidiaries not only contribute to firm-specific advantage creation, subsidiaries also drive the evolutionary process by their own distinct initiatives.   Operating only in the home market may allow an enterprise to survive in a primarily domestic industry, but moderate international expansion often brings current benefits and provides a base for future success should the enterprise become more global (Mitchell et al., 1993). Past literatures argued that business opportunities are embedded in the worldwide market and those make MNE to capitalize on. However, operational troubles and local market barriers hinder MNE from reaping profits. A central theme of recent literatures focused on the various roles played by subsidiary companies (Bartlett and Ghoshal, 1998; Birkinshaw and Hood, 1998).


The Effect of Business Cycles on Transition Probabilities in the Labor Market

Dr. Ben-David Nissim



 In the theoretical model presented here, people choose between two economic states: being out of the labor force or searching for a job, i.e. being unemployed. Searching for a job enables them to move into a new economic state, which is being employed. Firms will offer vacancies as long as their economic value is positive. If they find a worker they get the economic value of an occupied job.  In this economic environment, the transition probabilities between these two states play a central role in determining the economic value of each state for the firms and the agents.  The wage rate is determined by comparing the economic value of being out of the labor force with the economic value of being unemployed.  In equilibrium wage rate, transition probabilities and the unemployment rate are determined simultaneously.  Changes in exogenous variables such as productivity, searching cost, government benefits to people out of the labor force or unemployment benefits, would lead a change in transition probabilities, the unemployment rate and the vacancies rate.   The labor market is characterized by large flows of workers in and out of employment. The transition of workers in and out of employment is connected to the rates of job creation and job destruction. When more jobs are created the flows into employment increases and when jobs are destroyed the flow out of employment increases. 


Market Orientation Strategies and Business Performance: Evidence from Taiwan’s Life Insurance Industry

Dr. Yuan-Hong Ho and Dr. Chiung-Ju Huang



 A comprehensive measure of insurance company's market orientation which includes customer orientation, distributor orientation, competitor orientation, environment orientation and, inter functional coordination was developed. The relationship between the degree of market orientation and the objective business performance of insurance companies in Taiwan was examined. The results of this study indicate that the degree of market orientation between companies is insignificant, and there is no empirical support for the existence of a positive and significant relationship between a company's business performance and its degree of market orientation. Further study on different type of company indicates that the relationship between the market orientation and business performance is significant in the newly established branches of foreign companies.  Ever since Taiwan’s insurance market first opened its doors for American companies in 1987, the market has further expanded and encouraged development of both domestic and international insurance companies. By the end of 2005, Taiwan’s insurance market consisted of thirty independent insurance companies (domestic and international). More specifically, by the end of the fiscal 2004, financial assets held by insurance companies had represented 16.02% of the total value held by the nation’s financial institutions. The strong growth in this sector has given the insurance market a substantial control over Taiwan’s financial stability. However, because insurance coverage represents an intangible good, insurers are aware of the importance of differentiating on service, quality, and customer orientation. Currently, insurance companies in Taiwan enjoy high potential growth because the ratio of the number of life policies to total population is relatively lower than those in the United States and Japan.


Impact of Cultural Barriers on Knowledge Management Implementation: Evidence from Thailand

Tanin Kaweevisultrakul and Dr. Peng Chan



 Today, knowledge management (KM) is widely regarded as an imperative tool to maintain and enhance a company’s core competencies. Although many companies had begun initiating KM program, little emphasis has been put to address the cultural barriers that may hinder the effectiveness of the program. Existing scholarly and professional works have pointed out that cultural barriers are among the major obstacles to the successful implementation of any KM program. The purpose of this research is to identify and examine the type of cultural barriers that affect the implementation of KM program in Thailand.   Presently, knowledge management (KM) is regarded by many as an important tool to maintain and enhance a company’s core competencies and competitiveness. Disappearing boundaries, globalizing competition and rapid changing technology and business life – all these factors lead the economy to a knowledge-based direction.  Keskin (2005) stated that, “…firms have become much more interested in stimulating knowledge, which is considered as the greatest asset for their decision making and strategy formulation”.  In this sense, knowledge is a key resource bestowing a competitive advantage for entrepreneurial firms. 


A Study of Human Resource Development and Organizational Change in Taiwan

Dr. Min-Huei Chien



 Management of change in organizations has been one of the most important concerns of professionals in the recent times. This paper provides an understanding of human resource management (HRM) practices for organizational change,  explores the development of HRM in the organizational culture context, and provides some disciplines for business that wish to develop an in-depth knowledge of organizational change. Mainland China’s economy has developed very fast and has a huge domestic market. Many of Taiwan’s companies have invested in China, which has  caused a lot of organizational change. With the rapid rise of organizational change in Taiwan, understanding the dynamics of change is most frequently confronted with questions, such as what is the concept of change? How to decide what to change, and then how to change it? Is implementation of change always painful? What one needs to keep in mind while implementing changes in organization?  The Human Resource Development (HRD) issues and challenges for employers and their organizations in the world and in Taiwan play an important role in business success. HRD, in an integrated sense, also encompasses health care, nutrition, population policies and employment. This paper covers the development of people through education and training in a national context as well as within enterprises and will conclude with a reiteration of the importance of HRD to enterprises and countries..


Non-Parametric Versus Parametric Methods for Testing Means Equality. The Case of Stocks Means

Dr. Paraschos Maniatis



 The scope of this paper is twofold: a) to compare the stock closing prices in the London Stock Exchange of two relative sectors- that of the food processing industry and the food-retailing branch and b) to investigate in each branch the possible existence of strong correlation between closing price and size of the firm. To this end we have employed the appropriate statistical tools- the test of means equality and the correlation coefficient. The first problem relates to the hypothesis that the stocks of homologue branches as these of food processors and food retailers should behave in the same manner in the stock exchange. The second problem is of the same nature but concerns each sector separately, namely if the closing prices are in any identifiable relationship with the particular firm’s size.  In order to research the relationship between stock market price and sizes four separate measures of size were taken – total value (capitalization), total assets, turnover and gross profit. A set of data was obtained by taking randomly two sectors in the London stock exchange market: one consisting of 21 food-processing companies (Group B) and the other consisting of 16 food retailer firms (Group A). The Money World Stock Sectors was used to obtain the data concerning gross profits and total assets and turnover for both types of firms.


An Examination of the Education Requirements to Become a CPA

Dr. Robyn Lawrence and Dr. Ronald J. Grambo



 In 1988 the American Institute of Certified Public Accountants called for each state to require 150 credit hours of education, in addition to passing the national examination and meeting experience requirements, to become licensed as a certified public accountant (CPA).  Over the ensuing years, a majority of the states passed some form of 150 hour requirement for licensure.  The current study analyzed the diversity that exists in education requirements to sit for the CPA examination and become licensed as a CPA in each of the fifty states.  Based upon this analysis, a minimum set of courses to meet the requirements of all of the states, as well as, a minimum set of courses to meet regional requirements were identified.  This analysis is relevant given that the state education requirements ultimately affect the quality and quantity of CPA-related services available to users of such services.  The variability in state requirements poses extra challenges for accounting educators, prospective students of accounting programs, accounting professionals, state accountancy boards, and clients of CPA-related services.  In the United States, all certified public accountants (CPAs) are examined, licensed and regulated under individual state accountancy laws and regulations.  However, consistency across the various states and other jurisdictions is enhanced through the Uniform Accountancy Act (UAA) which was first introduced in 1984 by the National Association of State Boards of Accountancy (NASBA) and the American Institute of Certified Public Accountants (AICPA). 


Descriptive Analysis of Social Standards for Suppliers in Top 100 Fortune Global 500 Companies

Dr. Deniz Kagnicioglu and Dr. C. Hakan Kagnicioglu



 Nowadays, the social responsibilities of companies are gaining importance based on globalization. Companies develop codes of conduct to define social factors in their national and international activities. In the international context, codes are instrument companies can use to ensure the enforcement of minimum social standards within their area of influence. Codes of conduct also cover supplier practices. This can ultimately improve employee working and living condition as well as company success. In this study, top 100 Fortune Global 500 companies are analyzed for 8 social standards of suppliers. These social standards are based on ILO Conventions and Declarations. These 8 social standards are examined according to region (America, Asia, and Europe) of the companies and sectors (manufacturing, service, finance and technology) and results are commented. Social responsibility is one of the most popular concepts of today. As the firms getting bigger, effect areas of them are also getting wider. Competition and globalization force the firms to have international investments and it is difficult for the government to intervene these international firms day by day. The economics of globalization emphasizes competition, capital investment, free trade, growth and the transformation of markets. Too much has been made of the phenomenon of globalization in its economic dimensions.


Analysis on the Evolutionary Game of Innovative Financial System

Chen-Kuo Lee



  A financial system refers to a set of rules abided by human beings in their interactions over the years. These rules are formed via a dynamic game and are the innovative process of financial system. An innovative game is jointly created by innovative thoughts and game theories. Game theories are a critical analysis tool for evolutionary economics and are sufficient to interpret the process of innovative financial systems. Therefore, this study intends to discuss the innovative process of financial systems via revolutionary game theory. The research results indicate that, as far as the innovative process of financial systems is concerned, the trans-industry management system is an important innovative system in relation to intra-industry management system.  Financial liberalization has accelerated since the 1980s. As a result, information technology and new markets have developed rapidly, causing all economies to rely on one another more than ever. Consequently, financial globalization has become an irresistible trend for both developed and developing nations. Financial globalization refers to a process and status in which financial activities have moved across boundaries and combined with other nations’ financial activities, including the internationalization of financial institutions, financial markets, financial tools, financial assets and revenue together with the unification of financial enactment, trading patterns, and international practices (Niehans, 1983; Podolski, 1986; Miller, 1992; Merton, 1992; Levine, 1997; Mantel, 2000; Mantel & McHugh, 2001).


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