The American Academy of Business Journal
Vol. 11 * Num.. 2 * September 2007
The Library of Congress, Washington, DC * ISSN: 1540 – 7780
Online Computer Library Center * OCLC: 805078765
National Library of Australia * NLA: 42709473
Peer-Reviewed Scholarly Journal
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Leveraging Generational Differences for Productivity Gains
Nancy Patota, Iona College, New Rochelle, NY
Dr. Deborah Schwartz, e-TECHknowledge, Armonk, NY
Dr. Theodore Schwartz, Iona College, New Rochelle, NY
Much has been written to describe generational differences in today’s workforce, including the problems of managing a team of multi-generational workers. These differences are often a source of conflict among employees but they could also be a source of strength. Often, the strengths and weaknesses of one generation complement another generation. Prescriptive approaches to dealing with this reality are lacking. Our prescriptive approach involves identifying necessary competencies and the related strengths and weaknesses of each generation by competency. This tool allows managers and employees to work with multigenerational teams who complement each others’ skills, values and beliefs to meet team/project objectives. We provide examples of typical business situations and show how this tool can be used to leverage generational differences. Today’s workforce is unique because there are four separate, distinct generations working side-by-side, frequently each with a different approach to their company, their co-workers and the work itself. This is not the generation gap of the past, where a generation grows up and becomes their parents. Instead, it is a convergence of four generations, where each one may be substantially different from the others and each is often on an entirely different path in work and in life. A good example of this phenomenon is shown in the novel, Generation X. It depicts three alienated Gen Xers dropping out of the rat race in rebellion against Baby Boomer values [Coupland, 1991]. The four generations in today’s workforce include: Traditionalists: life experiences formed by the Great Depression and World War II; Baby Boomers: influenced by economic prosperity and the Viet Nam War; Generation X: attitudes formed by instability of society’s institutions such as marriage (and divorce) and corporations (and downsizing); Millenials: key life experiences revolve around technology and a world where everyone is always “connected” through the Internet, cell phones, iPods, etc. For managers, the challenge is improving productivity of individuals and teams in a multi-generational workforce. Each generation has different life views and responds to different motivations. For employees, the challenge is to work effectively with members of other generations. With an appropriate mindset, the potential areas of conflict could be viewed as a source of a rich and rewarding work environment. Both perspectives involve the realization that there are generational differences which are not necessarily good or bad, but simply exist. Misunderstandings and strife often results between members of different generational groups because of the differences.
Contextual Barriers to Strategic Implementation: An Examination of Frontline Perspectives
Dr. Karen A. Meers, Western Connecticut State University, Danbury, CT
Frontline employees are a valuable asset to many firms, but have been overlooked as a resource for strategic implementation. This study measured the effectiveness of a newly implemented account management telemarketing program and asked frontline associates to identify the barriers to successful implementation of the initiative. The sample consisted of 68 customer service representatives from a Fortune 500 company in the United States who had telemarketing calls added to their existing job tasks as a strategy to improve customer satisfaction ratings. Effectiveness ratio data were collected twice over an eight week period to determine changes in telemarketing performance. Interview data were collected to determine the participants’ perspectives on barriers to the successful implementation of the program. The participants revealed that job-reality mismatches were responsible for the four contextual barriers that hindered implementation success: 1) telemarketing was viewed as a low priority by the customer service associates in direct opposition to the perceptions of the management team; 2) stress and overload resulted from interfering job tasks and time pressures; 3) managers and associates lacked telemarketing experience; and 4) telemarketing was resisted. Practical implications for utilizing frontline feedback in the strategic process to proactively address job-reality mismatches and implementation challenges are discussed. Throughout the years, strategic implementation has been an area of study that has been cause for debate and concern. A cross-industry survey published in 2004 found that only 43 percent of executives rated their companies as having been “successful” or “very successful” at executing strategy initiatives (Economist Intelligence Unit, 2004: 254). The results revealed that one in three executives rated their performance management systems and processes as effective. According to Roney (2004), there are no authoritative references or sources of generally accepted principles to guide management in strategy implementation. The flaw that has made strategic management unsuccessful on so many occasions is not in the existing theories of strategy, but in the methodology for implementation, or rather the lack of such methodology. In a literature review of 227 strategy-process articles published in research journals, Hutzschenreuter and Kleindienst (2006) found that strategic implementation received only limited attention. They noted that the studies in this area focused predominantly on planning (Gottschalk, 1999; Grundy & King, 1992) or middle-management involvement (Floyd & Wooldridge, 1992).
The Impact of Inventory Reductions upon Cash Balances
Dr. Richard Skolnik, State University of New York-Oswego, Oswego, NY
Innovations in operations and distribution have resulted in a reduction in the inventory to sales ratio. Contemporaneously, the financial asset to sales ratio has increased. Existing research has shown that management discretion results in higher than optimal cash balances. This study investigates whether a reduction in inventory requirements results in greater management discretion and an increase in cash balances. A regression model with quarterly data from the Federal Reserve Flow of Funds balance sheet accounts finds a negative relationship between inventory and financial asset balances. The results suggest that reductions in inventory requirements lead to slightly higher cash balances. The model also finds that the financial asset to sales ratio is negatively related to economic growth. Increases in economic growth correspond to lower levels of financial assets relative to sales. Technological advances and investment in operations management have led to decreases in inventory levels necessary to support sales (Irvine, 2003). Since the beginning of the 1980s, aggregate and industry-specific inventory to sales ratios have declined; however, data from the Federal Reserve Flow of Funds and Outstanding Balances (Federal Reserve Board of Governors, 2005) indicate that decreasing inventory requirements have been accompanied by increasing cash balances. Does a decrease in inventory requirements lead to higher cash balances? Research by Opler et al. (1999) finds that managers maintain higher cash balances when they have increased discretion to do so. This paper uses a regression model to test whether the increase in the financial asset to sales ratio is linked to the decrease in the inventory to sales ratio. The paper is organized in the following manner. Section I surveys the literature on inventory and cash levels; Section II describes the data and trends, Section III develops a model and reports on statistical tests. The economic impact of inventories has been studied on both microeconomic and macroeconomic levels (Blinder and Maccini, 1991). Microeconomic studies focus on optimal inventory levels for profit maximization. Firms hold inventories for a variety of purposes which include work in progress, production scheduling optimization, stockout cost minimization, price speculation, price hedging and delivery cost reduction. More efficient use of inventories can increase financial performance through impacts on both the income statement and the balance sheet. On the profitability side, increased inventory efficiency can lead to lower storage costs per unit, increased sales, and lower scrap and obsolescence (Inman and Mehra, 1993).
Teaching Customer Value Analysis to Business School Students
Dr. Gene Milbourn, Jr., University of Baltimore, MD
This paper will provide an outline on structuring a consulting project for business school students on the topic of Customer Value Analysis (CVA). It will suggest a step-by-step program providing students with a methodology whereby they can manage “perceive” quality rather than relying on the traditional conformance criteria. Specifically, the paper will assist students in identifying what quality is to customers; which competitors are performing best on each aspect of quality; and, how customers select among competing suppliers. The seminal work of Buzzell and Gale (1987) and Gale (1994) on linking customer perceptions of quality to market performance is featured. During the late 1980s and into the 1990s, businesses around the world added capacity in response to increased demand. This movement inevitably led to increased competition to improved quality in both products and services through improved organizational processes. Programs such as reengineering, TQM, just-in-time inventory control, quality circles, and work process engineering were popular and had a positive impact on organizational functioning. Tom Peters (1982; 1985) contributed for more than a decade improving quality in the service area through his many books including In Search of Excellence and A Passion for Excellence. Scholars and practitioners are indebted to Deming (1986) for his 14-point program for transforming organizations and to Garvin (1988) for this work identifying the eight dimensions of quality. Parasuraman, Zeithaml, and Barry (1986) have identified the factors which are critical to outstanding services quality. Exhibits 1, 2, and 3 in the Appendix show the factors which were important to these researchers. However stellar the above contributions were to the quality movement, none address the main concerns of CVA--improving market position relative to that of key competitors through providing increased customer value. Often quality management programs do not to take into account the quality of service provided, the likelihood of flawed original specifications, and, --most importantly—the nature of buyers who instinctively compare products and services. All of these negate the efficacy of static conformance standards in solely managing our quality programs and argue for a more dynamic approach. While the customer value concept is central to the marketing concept, customer value research is in its initial stages with early work provided by Band (1991), Ullage (2003), Woodruff (1997), and Bowman and Ambrosini (1998). In general, the thrust has been toward a more market-oriented organization which can become profitable through providing value to the customer through its core processes.
Standby Letters of Credit and Loan Sales; Joint Products?
Dr. Vassilios N. Gargalas, Herbert H. Lehman College, Bronx, NY
In their traditional function, commercial banks make loan sales with recourse to free capital while they evaluate the credit-worthiness of their clients and also take a position of risk. However, government regulations prohibit banks from taking full advantage of this activity. Loan sales with recourse are treated as on balance sheet items, which requires additional reserves with the Fed, higher FDIC premiums, as well as increased capital requirements. At the same time, SLCs (standby letters of credit) and loan sales without recourse are off balance sheet items not subject to the above regulations. Using the time-state preference model, this paper shows that the cash flow structures of loan sales with recourse can be replicated by portfolios consisting of SLCs and loan sales without recourse. In this fashion, SLC and loan sales without recourse become joint or complimentary activities. Since these portfolios are in principle less expensive, one will expect banks to substitute these portfolios for loan sales with recourse. Bank managers that are aware of the above relationship can make a more efficient use of bank resources. In the last two and a half decades loan sales experienced an unprecedented increase. In 2004, the volume of loan sales reached 260.4 billion dollars and the volume of SLCs 210.6 billion dollars. This increase raised the question among financial economists of whether traditional banking was being transformed into something new. Indeed, loan sales with recourse, as explained below, can be easily seen as instruments of traditional banking, since banks not only perform the credit analysis but also undertake the risk of lending. However, if one takes a closer look at the data, will realize that the vast majority of loan sales are made without recourse. This, in turn, makes banks simple loan brokers and as such they would deviate from their traditional role. In this paper, we will deal with the above issue by engaging two of the most prevalent off-balance sheet instruments, standby letters of credit and loan sales, and we argue that banks remain the traditional houses we’ve come to know. The explanation of the above phenomenon lies into the parallel increase of standby letter of credit volume. The model we develop demonstrates that banks create synthetic loan sales with recourse by combining portfolios of loan sales without recourse with portfolios of standby letters of credit. In doing so, banks avoid the “regulatory taxes,” to be explained below. In this fashion, banks, in an indirect way, still deal in loan sales with recourse and, therefore, their activities remain within their traditional scope. The implication for banks is that once this relationship is clear, bank managers can actually pursue and implement the strategy rather than letting it occur passively. In the process, banks will become more efficient and adapted in the challenging financial environment of our days. Loan sales may be made without recourse or with recourse.
The Connecticut State Income Tax: Progressive, Regressive and Proportional
Dr. Gary M. Crakes, Southern Connecticut State University, CT
Dr. Melville T. Cottrill, Southern Connecticut State University, CT
The State of Connecticut enacted legislation in 1991 to establish a state income tax on wage and salary income. Over the past sixteen years it has been characterized as a progressive income tax up to the point of the threshold income levels where the maximum tax rate applies, and proportional thereafter. However, when effective marginal tax rates are analyzed a more complicated pattern emerges revealing fluctuating ranges where the Connecticut state income tax is proportional, progressive and regressive. Since the Connecticut State income tax on wage and salary income was implemented in 1991, it has been identified frequently as both a proportional and a progressive income tax; proportional, since the tax rate is constant at 5.00% above threshold levels of income when exemptions and credits disappear, progressive, since some analysis has shown that the top 50% of filers account for 86.50% of all income and pay 95.80% of the income tax. (1, 2) In fact, it can be demonstrated that over some ranges of income the Connecticut state income tax is actually regressive. The purpose of this paper is to present the effective marginal tax rates under the Connecticut state income tax and to discuss how this rate structure performs under the interpretation of the equal sacrifice rules of tax equity. John Stuart Mill was the first to discuss the equity issue of taxation in terms of an equal sacrifice prescription. Taxpayers are considered to receive equal treatment if their tax payments involve an equal sacrifice or loss of welfare. (3) Assuming that welfare is a function of income, that sacrifice is measured in terms of the loss of utility which is associated with the loss of income paid in tax. Two important criteria exist for evaluating equity. The first, horizontal equity, maintains that equal sacrifice will be attained if individuals of equal taxpaying ability are taxed equally. This criteria is consistent with the principle of equality under the law. The second, vertical equity, states that to equalize sacrifice, individuals with unequal taxpaying ability should be taxed unequally. This criteria is also consistent with the legal principle of equal treatment, but is based on the premise that the tax burden is measured in something other than dollars, namely the utility associated with those dollars. Therefore, under the equal sacrifice rule and vertical equity, the tax burden of individuals with dissimilar incomes will be equalized by paying different dollar amounts of tax but equal amounts of utility. Application of the criteria of vertical equity typically requires both the acceptance of the principle of diminishing marginal utility of income and the willingness to make interpersonal comparisons of utility. Under the criteria of vertical equity the determination of the appropriate income tax rate structure is, in theory, dependent upon the rate at which marginal utility of income diminishes. It is frequently assumed that only progressive taxes satisfy the aforementioned criteria.
What Local Responsiveness Really Means to Multinational Corporations
Dr. Stephanie Hurt, Meredith College, Raleigh, NC
The concept of local responsiveness offers a potentially effective lens through which to view the internationalization process of firms and the management of multinational corporations (MNCs). However, the last two decades of business internationalization suggests that the concept of local responsiveness as it has usually been applied does not help us understand the difficulties of firms’ forays into foreign waters. We feel this is due to an insufficient consideration of the difficulty and importance of transferring managerial practices during the internationalization process. In this paper, we attempt to re-invigorate the concept of local responsiveness by demonstrating how the concept has been too narrowly interpreted in terms of product/market similarities and suggesting that true responsiveness should include adaptation to the very different mindsets of the host country nationals to be managed. he global integration-local responsiveness model (GI-LR) (Prahalad & Doz, 1987; Barlett & Ghoshal, 1989) has been a very influential framework dealing with international business strategy and management relationships and control within MNCs. Essentially, it points out that MNCs need to organize and manage in light of the importance of integrating their operations for global efficiency and the importance of responding to the various local environments in which they operate. Barlett and Ghoshal (1989) extended this approach to proposing a typology of international strategies to follow and of MNC organization: a global strategy, a transnational strategy and a multi-domestic strategy. The framework is depicted graphically in Figure 1. Research off-shoots have largely concentrated on issues of strategy formulation and management, organizational structure and subsidiary characteristics in general. Given the original bias on strategy formulation and management as well as organizational structure, much of the literature has focused on top managers (Murtha, 1998). This was favored by Barlett and Ghoshal themselves from the outset (1990). Other off-shoots have focused on relative degrees of subsidiary independence (Harzing, 2000), including subsidiary innovation capabilities and entrepreneurship (Birkinshaw, 1997).
Modeling Purchasing Power Parity Using Co-Integration: Evidence from Turkey
Dr. Cem Saatcioglu, Istanbul University, Istanbul, Turkey
H. Levent Korap, Marmara University, Istanbul, Turkey
Dr. Ara G. Volkan, Florida Gulf Coast University, Fort Myers, FL
In this study, we construct a co-integration model of the Turkish economy using high frequency data to examine the validity of the purchasing power parity (PPP) theory. The ex-post estimation results derived from the analysis of monthly observations for the January 1987 – December 2004 period generally support the use of the PPP theory in predicting the movement of currency values in the Turkish economy. The methodology developed in this study can be used in other countries to ensure the success of economic policies that depend on the existence of PPP relationships. During the 1990s, the Turkish economy endured a highly unstable growth performance with chronic double-digit inflation that impacted the course of many domestic macroeconomic aggregates (Ertuðrul and Selçuk, 2001: 13-40; Korap, 2006; and Saatçioðlu and Korap, 2006). Figure 1 below indicates that, beginning in 1989 when capital account liberalization was completed, to 1999, large differences between the domestic and foreign inflation rates existed, along with parallel movements between currency depreciation rates and domestic inflation. Given the observed behavior of the data in Figure 1 for DEPRECIATION (the annualized depreciation rate of nominal exchange rate of Turkish Lira (TL) / US$) versus the DOMESTICINF [the annualized inflation rate based on consumer the price index (CPI)] and WORLDINF (the representative annualized CPI-based world inflation) an argument can be made for the existence of PPP relationships in the Turkish economy. The data for domestic variables originate from the electronic data delivery system of the Central Bank of the Republic of Turkey (CBRT) and the sources for world price level and inflation are the IMF-IFS CD-ROM data base. Given the behavior of the variables in Figure 1, it is warranted to examine whether PPP relationships hold in the Turkish economy. To empirically analyze this proposition, we apply contemporaneous estimation techniques If the results of our analyses are positive, policy makers can be confident of the success of economic programs they devise to manage domestic currency values and domestic inflation. In the following sections an economic model is developed and used to empirically reveal the existence of PPP relationships in the Turkish economy. Finally, we present our conclusions and discuss future research opportunities.
Do Investors Over- Or Under-React? Evidence from Hong Kong Stock Market
Jianzhou Zhu, University of Wisconsin - Whitewater
Using daily data on Hang Seng Index over the sample period of December 31st, 1986 to October 6th, 2006, we investigate the behavior of Hong Kong stock market following extraordinary price movements in a single trading day. We find evidence that investors in Hong Kong stock market tend to underreact to good news and overreact to bad news. The finding is consistent with the uncertain information hypothesis which states that investors tend to err on the side of caution when they are uncertain about the information they received. This behavioral tendency on the part of investors causes stock prices overshoot at arrivals of bad news and undershoot at the arrivals of good news; a phenomenon more likely to be observed in markets where quality of information is generally poor and lack of precision. In this study we examine the behavior of Hong Kong stock market returns following extraordinary price movements in a single trading day. Efficient market hypothesis posits that investors respond rationally to news arrivals and all relevant information is incorporated into stock prices fully and rapidly as it becomes publicly available. Adjustment of prices from one equilibrium fundamental value to another is accomplished in one single movement and leaves no opportunity for abnormal returns based on publicly available information. According to this hypothesis, price changes of any magnitude would not generate any predictable patterns of equity returns in either immediate or distant future. Recent developments of behavioral finance, however, have given rise to alternative hypotheses about behavior of stock returns that are contradictory to the efficient market hypothesis. For example, the overreaction hypothesis states that investors tend to overreact to new information and generate price movements beyond the new equilibrium level justified by the news. As investors realize later that they have overreacted to the information and take correction actions, price changes in the opposite direction of the initial movement will be observed. On the other hand, the under-reaction hypothesis argues that investors consistently overweight their prior beliefs and thereby under-react to new information.
The Classification and Evaluation Model for Product Bundles
Dr. Tsuen-Ho Hsu, National Kaohsiung First University of Science and Technology, Taiwan
Kuei-Feng Chang, National Kaohsiung First University of Science and Technology, Taiwan
In the previous literatures on bundles, most scholars focused on the pricing strategies of product bundles. However, the characteristics of bundles and their consumer evaluation factors were seldom mentioned. This study based on literature review to classify four types of product bundle (Integrated, Co-existing, Conceptual and Random) by two dimensions: degree of functional integrity and degree of symbolic increase. Besides above, this study start with consumers’ satisfaction to find those factors which influence purchasing and construct a product evaluation model for bundles. Finally, this study utilizes the above results and the complementary relationships shown by Oxenfeldt (1966) to explain four different types of bundle and submits the implications of their marketing. Bundling of products is widely practiced in today’s marketplace. Marketers utilize the joint pricing for the sale of two or more products and/or services in a single package (Guiltina, 1987; Kaicker et al., 1995; Stremersch and Tellis, 2002). Based on an economic viewpoint, the research focus on bundling has concentrated on the pricing strategy of bundling in most of the previous literature (e.g. Guiltina, 1987; Venkatesh and Mahajan, 1993; Johnson et al., 1999; Soman and Gourville, 2001; Chung and Rao, 2003; Janiszewski and Marcus, 2004). From an economic principle, if two products and /or services have a complementary relationship, the reservation price (the maximum amounts buyers are willing to pay) for a bundle may exceed the sum of the reservation prices for the individual component and produce a high consumer surplus (the amount by which the individual’s reservation price exceeds the actual price paid) for consumers (Adams and Yellen, 1976; Telser, 1979; Guiltina, 1987). On the other hand, Harlam et al. (1995) utilized the value function of prospect theory (Kahneman and Tversky, 1979; Thaler, 1985) to examine how consumer evaluate the outcomes of component as well as bundle pricing and make a purchase choice. They found bundles composed of complements have a higher purchase intention than unrelated components. Besides the above, Yadav and Monroe (1993) basing their views on transaction utility theory considered consumers’ perception savings when they evaluated a bundle offer.
Relationships Among Service Orientation, Job Satisfaction, and Organizational Commitment in the International Tourist Hotel Industry
Yi-Jen Chen, Chaoyang University of Technology, Taichung, Taiwan
Research in service orientation, job satisfaction, and organization commitment suggests that service orientation is indispensable for the successful management of the service industry. Furthermore, job satisfaction among employees contributes to the enhancement of employees’ commitment to their organizations. This study used a questionnaire survey to investigate the relationships among service orientation, job satisfaction and organizational commitment of employees who have worked at least one year in international tourist hotels. Hotels in the tourist industry adequately represent the service industry in Taiwan. For this study, a total of 1,100 questionnaires were sent to major hotels in early June of 2005. The human resource departments of these hotels distributed the questionnaire to their employees. At the end of December 2005, 350 responses were collected, accounting for 31.8%.of the total survey. The collected data were analyzed through LISREL (Linear Structural Relationships), and resulted in the following hypotheses: (1) service orientation is positively correlated with job satisfaction; (2) service orientation is positively correlated with organizational commitment; (3) job satisfaction is positively correlated with organizational commitment; (4) service orientation is positively correlated with organizational commitment due to job satisfaction. Implications of the study, drawn from a reflection of related theories and empirical studies, serve as a credible reference in future management practices of the international tourist hotel industry. Data released by the World Tourism Organization (2004) show that in comparison with the growth ratio of tourism regions in 1984, the growth of tourism among Southeast and Northeast Asian regions was as high as 33%. Compared with the growth ratio below 20% in other areas, the achievement of East Asia is deemed significant. The World Tourism Organization, based on its 1995 data, predicted that by the year 2020, the number of global tourists will reach 1,561,100,000. Among them, the top three markets worldwide are: 717 million in Europe (45.9%), 397.2 million in the Asia-Pacific Rim (25.4%), and 282.3 million in the Americas (18.1%).
The Joint Effect of Competition and Managerial Ownership on Voluntary Disclosure: The Case of China
Dr. Jianguo Yuan, Huazhong University of Science and Technology, Wuhan, PRC
Dr. Huafang Xiao, Huazhong University of Science and Technology, Wuhan, PRC
Drawing on prior empirical research examining the determinants of voluntary disclosure separately, this paper empirically investigates the joint effect of managerial ownership and competition in the product market on the levels of voluntary disclosure of listed Chinese companies. Using an aggregated disclosure score to measure voluntary disclosures, the results indicate that managerial ownership is negatively associated with the extent of voluntary disclosure when the degree of competition the company faces is low; this relationship does not exist when competition is high. In addition, firms with lower competition and higher managerial ownership are less likely to make additional disclosures. Since the Asian financial crisis of 1997-1998, both regulators and members of the business community in East Asia have called for greater corporate transparency. The low level of corporate disclosure has been identified as one of the factors that not only contributed to the Asian financial crisis, but was a stumbling block in the regional economic recovery (Berardino, 2001). Although China was not seriously affected by the Asian Crisis, Chinese companies were criticized for a lack of financial reporting transparency. Chinese regulators have recognized that equity markets require more disclosure in order to function more effectively, and have been actively improving voluntary disclosure in recent years. In particular, Chinese regulators have drawn attention to corporate governance and share structure in the poor level of corporate disclosure and have called for more disclosure in the annual reports of listed Chinese companies. These concerns prompted the “The Code of Good Corporate Governance” (2001) and the “share structure reform” in 2005. Since many studies have examined the impact of corporate governance on voluntary disclosure in China, we focus on the effect of share structure reform on voluntary disclosure, especially managerial ownership reform, in the unique Chinese product market environment. In order to deepen the state-owned enterprise (SOE) reform and explore the implementation of incentive and discipline mechanisms, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) issued “Provisional regulations on the property rights of enterprise state-owned transfer to management” in 2005 and “Implementation guidelines on further criterion the state-owned enterprise reform (draft)” at the beginning of 2006. The managerial ownership incentives in these two regulations exclude management stock compensation.
The Effect of Wage Differences on the Cyclical Behavior of the Two Genders in the Labor Market
Dr. Nissim Ben-David, University of Haifa and Emek Yezreel Academic College, Israel
During prosperous periods, which are characterized by an increase in productivity and in wages, the rates of separation from occupied jobs decrease while the probabilities of finding a new job increase. Thus, unemployment rates fall. Empirical observations however, indicate that the magnitude of this decline is not the same for both genders. This paper investigates the effect of the business cycle on the probabilities of transition between employment and unemployment for men and women. It provides a possible explanation of how different changes in variables, such as wages or productivity of each gender, would effect the separation rates and the probabilities of finding a job for each gender, and thus, determine differences in the magnitude and the direction of the change in the rate of unemployment. The rate of unemployment tends to fluctuate between periods of economic prosperity and recession. The causes of these fluctuations in unemployment are changes in the flow of workers in and out of employment as a result of changes in the business cycle. The magnitude of these changes, however, differs between the genders. There is very little recent literature on gender gaps in unemployment rates. There was literature on the subject in the United States in the 1970s and early 1980s (see, e.g., Barrett and Morgenstern (1974); Niemi (1974); Johnson (1983) but few recent papers-perhaps because female and male unemployment rates in the United States have converged. However, this convergence has not happened in all Organization for Economic Cooperation and Development (OECD) countries. The gap in unemployment rates (measured as the female rate minus the male rate) is very large in Mediterranean countries (Spain, Greece, Italy, and France). Next come the Benelux countries (Belgium, Netherlands, and Luxembourg), then the Germanic countries (Germany, Austria, and Switzerland), then Nordic countries (Sweden, Finland, and Norway), and, finally, Anglo-Saxon countries (United States, United Kingdom, Ireland, Australia, Canada, and New Zealand). In a number of the Mediterranean countries, the unemployment problem is largely a problem of female unemployment. The matching function with two-sided search (developed by Pissarides (1984), Mortensen (1982), Diamond (1982) and others) is central to the theoretical literature on unemployment.
Optimization of IC Manufacturing System by Using SPC/EPC Model
Dr. Jui-Chin Jiang, Chung Yuan Christian University, Taiwan, R.O.C.
Feng-Yuan Hsiao, Chung Yuan Christian University, Taiwan, R.O.C.
As semiconductor manufacturing decided to make effort on the improvement of the process control capability, process control techniques such as statistical process control (SPC) and engineering process control (EPC) are becoming very popular in IC industry. There is a growing need to construct the rapid-response-to-variation process control system in the future when the customer satisfaction comes from the high-quality product. This research provides an integrated concept of SPC/EPC model to simultaneously monitor, analyze, feedback, adjust, and confirm the IC manufacturing system. An application of the contact etch procedure is discussed. Through an implementation procedure, the prevention by prediction control system is approved to get the more stability and lower variation product quality. Recently, the semiconductor industry in Taiwan grows up very rapidly, and plays the key role in the global market. The 0.13μm manufacturing technology has approved in the production line. And the twelve-inch fabrication also gradually replaces the eight-inch fabrication to be the next generation production trend. In the past quality improvement emphasized process detection and elimination of sources of defect and variation. Elimination starts once assignable causes are found to increase process variation. However, process output usually has significant shift and takes time to identify sources of variation before effective elimination. It usually fails to take immediate and effective process compensation and to respond to system information, so system gets shut down. To build up an effective process control system, it not only needs to effectively eliminate sources of variation but also respond instantly with system feedback information and process control. SPC (Statistical process control), commonly used in the IC manufacturing, is the tool for the process control, and the product quality improvement. Statistical control chart are useful to detect the assignable causes, when the process is out of control. Then give the signal to the engineer to eliminate the assignable causes to improve the process. However, SPC is the kind of “passive” type control chart, because it do not “control” the process, or identify the types of disturbance. This causes some weakness in using SPC in the IC manufacturing, because it is a high-competition, and high-unit-price industry. EPC is designed not to monitor a process, like SPC, but rather to help compensate for the effect of the disturbance. The disturbance is from the uncontrollable or unwilling-to-control parameter or symptom.
Game Theory Analysis on Market Efficiency under Corporate Strategic Alliance
Dr. Chen-Kuo Lee, Ling Tung University, Taiwan R.O.C.
Wen-Jun Yang, Ling Tung University, Taiwan R.O.C.
The study on corporate strategic alliance is becoming more and more important to the academic community. However, most researchers developed their theorems from social, behavioral, and managerial aspects. Few researchers have studied corporate strategic alliance from an economic, especially industrial organizational, standpoint. Therefore, this study intends to implement an OEM alliance model based upon game theory so as to analyze the market efficiency under a cooperative production organization, thereby demonstrating the contribution made by corporate strategic alliance to social benefits. This study indicates that the cooperative organizations will upgrade social benefits by sharing resources and reducing costs, provided that such cooperative organizations are not designed to restrict production and prices. In short, corporate strategic alliance is more efficient than a complete competitive market as far as resource allocation is concerned. Facing the tremendous pressure imposed by globalization and technological innovation, more and more corporations in Europe and the United States (particularly information technological industries) have adopted a corporate strategic alliance to compete in the international market since the 1980s. These developments seem to be contradictory to the traditional economic theorems regarding competition and monopoly. At the time that Taiwan joined the WTO and globalization was spreading all over the world, corporate strategic alliance has drawn more and more attention in Taiwan and, meanwhile, an increasing number of Taiwanese corporations were attempting to eliminate market risks via strategic alliance, thereby upgrading their competitiveness (Harrigan, 1985; Porter and Fuller, 1986; Contractor and Lorange, 1988; Bronder and Pritzl, 1992; Grandori and Soda, 1995; Glaister, 1996; Eisenhardt and Schoonhoven, 1996; Lin and Darling, 1999; Saffu and Mamman, 2000). Apparently, corporate strategic alliance has drawn more attention than ever and, at the same time, have been well accepted in recent years in consideration of risk elimination (Devlin and Bleackley, 1988; Saffu and Mamman, 2000), risk-sharing (Contractor and Lorange, 1988; Saffu and Mamman, 2000), functional supplementation (Contractor and Lorange, 1988; Saffu and Mamman, 2000), and readiness for the market (Contractor and Lorange, 1988). Apparently, corporate strategic alliance is an optimal solution under the current business environment. As a result, a number of corporate strategic alliances have been established (Lung-yi Huang, Yin-shan Huang, Chun-sung Wu, 2004). According to the latest issue of Harvard Economic Review, 200 American corporations have founded 1,592 alliances in 1993 – 1997, of which 48% have ended in less than 24 months (Dyer, Kale and Singh, 2004). In the past years, corporate cooperation and competition have not been treated as a main topic in the dominant economic theorems (Osborn, 1997).
Ship Mortgage and Vessel Arrest Laws in Mainland China, Hong Kong and Taiwan: A Comparative Analysis
Dr. Felix W. H. Chan, The University of Hong Kong
Bank and other financial institutions providing ship finance require legal protection just as much as other entrepreneurs. When a bank finances the purchase of a ship, the borrower has to execute a ship mortgage in favour of the bank. By definition, a ship mortgage is a security over the ship which enables the bank, on default by the borrower, to take possession of the ship and sell it to discharge the debt. In order to enforce the ship mortgage, the bank may ask a maritime court to arrest the ship and, through judicial procedure, sell or auction it. This paper comparatively explores the legal and practical issues regarding the nature and the enforcement of ship mortgages in Mainland China, Hong Kong and Taiwan. When a bank finances the purchase of a ship, the borrower has to execute a ship mortgage in favour of the bank. By definition, a ship mortgage is a security over the ship which enables the bank, on default by the borrower, to take possession of the ship and sell it to discharge the debt. In order to enforce the ship mortgage, the bank may ask a maritime court to arrest the ship and, through judicial procedure, sell or auction it. Ownerships and mortgages of ships may be registered with any registries located in jurisdictions such as Panama, Liberia, Bahamas, Vanuatu and the Marshall Islands. These registries are often referred to as the “flags of convenience”. As these countries depend significantly on income from shipping, they open their registers to non-nationals. Anyone can register a ship on one of these open registers, and a link between the nationals of the flag state and the ship is not required (1). On the other hand, a ship is a highly mobile vehicle of carriage. It may not return to its home base nor visit the same port again. It is a well-established international shipping practice that ship mortgages can be enforced world-wide, regardless of where the mortgages are registered. This paper comparatively explores the legal and practical issues as regards the nature and the enforcement of ship mortgages in Mainland China, Hong Kong and Taiwan. The introduction of laws on ship mortgages and registration were prompted by the China’s need to purchase more vessels and obtain shipping finance through various finance structure such as equity, debt or charters that are consistent with international standards. In fact, most major shipping companies in China expand their fleets by adopting these types of financing structures or arrangements. The Rules of the People’s Republic of China Governing Registration of Ships came into force on 1st January 1995 (the Registration Rules).
Human Resource Management and Knowledge Management: A Road Map Toward Improving Organizational Performance
Dr. Fida Afiouni, American University of Beirut, Beirut
The revolution of information technology is currently breaking organizational hierarchy, boosting communication, and creating a new art of production. Globalization is leading to increased competition, and customer satisfaction is the key word to ensure survival and competitiveness. In this context, knowledge management (KM) has become a must to ensure organizational effectiveness. The knowledge management literature has currently reached the point of acknowledging the importance of people management themes, but has not made the next step of investigating and theorizing these issues in detail. These two fields of human resource management (HRM) and knowledge management are still somehow disconnected. This paper argues that combining human resource management initiatives with those of knowledge management will help improve organizational performance. Drawing on the resource-based view (RBV) of the firm, this paper combines the advances from three different areas of research – intellectual capital, knowledge management, and human resource management – in order to uncover a more holistic perspective on organizational performance. This paper argues that not enough attention has been paid to human capital and its role in the competitive advantage of business in today’s knowledge economy. While much of the early knowledge management literature was heavily focused on technological issues, this has changed, such that the importance of human and social factors has been increasingly recognized. Paradoxically, however, while the importance of these issues has been widely articulated, people management perspectives have yet to be fully developed, and the KM literature has made only partial and limited use of human resource management concepts and frameworks. Drawing on the resource-based view of the firm, the aim of this paper is to draw a road map toward improving organizational performance by combining HRM and KM initiatives. The paper examines the literature of three perspectives from the strategic management literature – knowledge management, intellectual capital, and human resource management – in an attempt to integrate those three fields to improve organizational performance. We will first expose the resource-based view of the firm and discuss it from a human resource management perspective. We will then articulate the knowledge management literature with that of human resource management and intellectual capital and discuss how the combination of those three different fields can improve organizational performance. We conclude that knowledge management initiatives converge with the management of people toward developing intellectual capital and boosting a firm’s performance.
Using the E-CRM Information System in the Hi-Tech Industry: Predicting Salesperson Intentions
Feng-Cheng Tung, Diwan College of Management, Tainan, Taiwan
With the rapid development of Information Technology, and the increase in different Internet user populations, electronic customer relationship management (e-CRM) plays an ever-more important role in the development and improvement of competitiveness within enterprises. This research combines innovation diffusion theory, the technology acceptance model and also adds two new research constructs, namely, trust and perceived information quality. Thus we set forth a new hybrid technology acceptance model to use the Hi-Tech industry in Taiwan as the focus of research in order to study salespersons’ intentions to use the e-CRM information system. Based on 285 questionnaires collected from 45 electronic corporations in Taiwan, the research finds that studies strongly support this new hybrid technology acceptance model to predict the salesperson intentions to use the e-CRM information system. With the rapid development of Internet, e-Commerce is now being widely accepted among enterprises and the changing trend is very clear. An enterprise’s profit comes from the customers, and customers are the foundation for the basic operations of the life of enterprises. The management of customer relations is a new marketing tool for the new era. Further, electronic customer relations management (e-CRM) allows enterprises to understand customer behavior more specifically than before and anticipate customer needs through online tracking and analysis. Bayon et al. (2002) point out that electronic customer relations management (e-CRM) mainly relies on Internet-or web-based interaction between firms and their customers. It utilizes the web to initiate, negotiate, and finally execute business transactions online. For an enterprise, effectively applying information science and technology to support the e-CRM information system is an imminent and important task to promote that enterprise’s competitiveness and profitability. As the e-CRM information system is growing in importance in enterprise development and business competitiveness, we tried in this reserach to combine innovation diffusion theory (IDT), and the technology acceptance model (TAM) and use the electronic industry of Taiwan as the research focus to study salesperson intentions after putting forward a new hybrid technology acceptance model of the e-CRM information system. IDT has been widely used for relevant information technology (IT) and information systems (IS) research (Karahanna & Straub, 1999). T
Valuing Pilot Projects in a Learning by the Finite Difference Method
Dr. Cherng-Shiang Chang, China University of Technology, Taipei, Taiwan
By using the real option approach, Errais and Sadowsky (2005) value the pilot phase of a project requiring N stages of investment for completion as a compound perpetual Bermudan option. Further, both market and technical uncertainty are incorporated into the dynamics of revenues and costs of the pilot project in the model of Errais and Sadowsky. By applying an approximate dynamic programming algorithm, Errais and Sadowsky value the option to invest as well as the optimal exercise policy. They implement the algorithm for a simplified version of the model in which the revenues are assumed to be constant. However, this approach may suffer some difficulties: (i) if the dynamics of the state variables do not follow the geometric Brownian motion and (ii) the joint probability density function must be calculated in the case of multiple state variables. In this article, we solve this problem by employing an alternative approach: the finite difference method. The partial differential equations (PDEs) for the dynamics of the value function are derived and the solution algorithm is presented in details. To validate the solution algorithm, we solve the simplified version of the model as proposed by Errais and Sadowsky for illustration. The results show in good agreement with those obtained by Errais and Sadowsky using the approximate dynamic programming approach. An R&D investment opportunity depends upon on the resolution of several sources of uncertainty. The technical uncertainty may be the key component concerning the outcome of each firm’s R&D effort in early stages. Later on, the market demand uncertainty may be dominant once the product is launched in the market. The investment decision of the firms would be significantly influenced by both of these uncertainties (Smit and Trigeorgis, 2004). To study the issues of optimal R&D investment, the real option approach has become the main stream among the methodologies in recent years. As acknowledged by Schwartz (2004), patents and R&D projects can be regarded as a complex option on variables underlying the value of the project. Majid and Pyndick (1987) use contingent claims analysis to derive optimal decision rules and to value such investment. They also determine the effects of time to build and opportunity cost on the investment decision but there is no learning involved. Pyndick (1993) is probably the first to take the technical uncertainty exogenously for randomly advancing through stages of the project. However, he doesn’t differentiate the development phase and the commercial phase of a project.
Investigation of the Returns of Contrarian and Momentum Strategies in the Taiwanese Equity Market
Yi-Wen Chen, Hsing Wu College, Taiwan
This study examines the application of momentum and contrarian trading and portfolio strategies by investors on the Taiwan stock exchange (TSE), to determine if a combined momentum and contrarian strategy can produce better returns than either a pure momentum or a pure contrarian trading strategy. The momentum trading strategy is based on the assumption that markets are relatively rational, and that earnings and price momentum for a stock tend to persist over time until an event, such as a change in earnings, alters the momentum. The contrarian trading strategy involves the creation of a portfolio of low momentum stocks based on the assumption that momentum and price will (inevitably) increase over time. There have been a large number of previous investigations of issues involved with the development of momentum and contrarian trading strategies in other stock markets. However, there have not been extensive investigations of the TSE, with the possibility that the TSE has characteristics that result in different levels of effectiveness for these trading strategies. The present study developed 2 hypotheses based on some of the models used by previous researchers, and tested these hypotheses using data drawn from the TSE reports between January 1990 and December 2005. The findings of the study indicate that momentum strategy was not prevalent in the TSE. The momentum strategies were only in existence in the longest holding periods K=60 regardless of ranking periods. As a result, the hybrid strategy is most effective for portfolio holding periods that are 12 months in duration or less regardless of the ranking period that is used in portfolio formulation. In the short run, the inherent volatility of the TSE often produces price movements that are opposite to those predicted by either the momentum or the contrarian approaches. They hybrid approach to strategy tends to provide a portfolio with a greater degree of flexibility to respond to unexpected movements in the markets. In the long run, the inherent trend of the market towards momentum equilibrium tends to smooth out the returns from the momentum or contrarian aspects of the hybrid portfolio. As a result, the pure momentum or pure contrarian approaches to strategy provide a better return in these longer holding periods than the hybrid strategy.
The Corporate Growth of the Firm: A Resource-Based Approach
Francisco Javier Forcadell, Universidad Rey Juan Carlos, Madrid, Spain
In this paper I analyze corporate growth from a resource-based view, based on a review of the literature on different aspects of growth. As a result of the review, I propose an integrated framework, stemming from the idea that all strategic alternatives available to the firm require and generate resources, in such a way that strategy influences firm resources and firm resources influence the strategy developed. According to this idea, this paper aims to integrate and systemize the different corporate strategy decisions addressed by the resource-based literature, with special emphasis on diversification strategy. In this paper I carry out a review of the literature (mainly from resource-based literature) on corporate growth based on a framework that endeavors to integrate the different corporate strategic decisions. Growth is a dynamic resource-based process with its origin and effect in the resources possessed by the firm. The firm uses its resources to implement strategies and the results of its strategies determine the extent of its resources (quantity, nature and strategic value), which subsequently provide the basis for future strategies. An integrated perspective of strategic corporate decisions may help to highlight the coherence of the studies carried out on different aspects of corporate strategy from a partial perspective, given that all decisions relating to growth must be made after taking impact and implications on the creation of value into account. Thus, for example, the most studied topic in corporate strategy is the relationship between diversification and performance, for which there is no clear cut answer (Palich, Cardinal & Miller, 2000). This could be due, among other things, to the existence of different factors and decisions that influence the relationship and that must be taken into consideration. On the other hand, an analysis of a firm’s boundaries is an area in which the resource-based view (RBV) has scarcely been focused, having been studied mainly in transaction cost economics (Poppo & Zenger, 1998). The aim of the RBV is to provide an answer to the key question of why firms are different and how firms achieve a sustainable competitive advantage (Hoskisson, Hitt, Wan & Yiu, 1999, 437), firms being understood as a combination of resources (Wernerfelt, 1984). There is an area of research that uses the RBV to define development and growth of diversified firms (Mahoney & Pandian, 1992, 367). An explanation of growth from this perspective begins with the structure of resources controlled or possessed by a firm (Kochhar & Hitt, 1998).
Antecedents of Learner Satisfaction toward E-learning
Dr. Yao-kuei Lee, Tajen University, Taiwan
Shih-pang Tseng, Tajen University, Taiwan
Dr. Feng-jung Liu, Tajen University, Taiwan
Dr. Shu-chen Liu, Mingdao University, Taiwan
E-learning represents a paradigm shift in learning enabled by new information technologies. Since it heralds a radical change in educational method, learner satisfaction must be re-examined so the benefits of using new technologies can be maximized. Based on prior theoretical and empirical research, this study proposed a research model to explain student satisfaction from using e-learning (distance education) as a stand-alone educational method. Sample data were collected online from 3713 students enrolled in a southern Taiwan university’s continuing education division’s distance education courses. The proposed model was supported by the empirical data, and the findings revealed that factors influencing learner satisfaction toward e-learning were, from greatest to least effect, organization and clarity of digital content, breadth of digital content’s coverage, learner control, instructor rapport, enthusiasm, perceived learning value, and group interaction. Implications to learning quality and teacher’s role in the e-learning context were discussed. With the ever-increasing popularity of the computer and the Internet, e-learning has become an important educational tool and method for the global society. More foreign students obtain their degrees through online courses, and online education, as a business block, has shown one of the largest growth cycles on the Internet (Huynh, Umesh, and Valacich, 2003; Symonds, 2003). In Taiwan, well known educational web sites such as EDUCITY (www.educities.edu.tw) and the e-learning national project (elnp.ncu.edu.tw) indicate that e-learning has certainly gained public attention. E-learning can be used as a supplementary learning tool for face-to-face instruction or as a stand-alone distance education method. When used as a supplementary learning tool, its purpose is to improve students' learning efficiency and effectiveness under the conventional teaching paradigm; but when used as a stand-alone distance education method, its purpose is to offer an alternative educational outlet which goes beyond simply promoting learning efficiency and effectiveness. In line with the new trend, the university under study began using e-learning as a supplementary tool in 2000 and, in 2003, the institution advanced its use of e-learning into distance education in the continuing education division.
Corporate Governance around the World: An Investigation
Dr. Masrur Reaz, North South University, Dhaka, Bangladesh
Mohammed Hossain, The School of Management, University of Liverpool, Liverpool, UK
Corporate Governance has received much attention due to Adelphia, Enron, WorldCom, and other high profile scandals happened during the last decade. The study is a comparative study of corporate governance around the world. The scholars have echoed their voice for four systems of corporate governance, such as Anglo-Saxon System, Germanic System, Latin System, and Japanese System. The study indicates that the developing economies are clearly less advanced in the area of corporate governance and need a more stringent focus on their practices as their corporate sector characteristics greatly differ from those in the industrial world. Hence, it is not wise to completely replicate western governance practices in the developing countries. Rather, a detailed picture of their corporate governance scenario would pave way to develop a prudent governance framework by identifying the underlying problem areas. The foundations of modern corporations can be traced back to the 19th century when entrepreneurs, encouraged by new legislation defining corporations, founded some great companies. The key concept of this legislation was the creation of an entity with its own legal base (Mallin, 2000), being regarded as separate from the owners, yet holding many legal property rights, such as the ability to sign contracts, to sue and be sued, to own property, and to employ. The consequence was the spectacular growth of business, and the development of ideas regarding the proper management of these corporations. In this respect, there are indications that while management theories regarding what to do have developed, strategies on how to render managerial duties in a way that ensures the best interest of all the concerned parties, have been lacking. Researchers have placed importance in management and organization theories with a lesser focus on actual roles, behavior and accountability of managers. In all senses, the issue of corporate governance has been ignored until comparatively recently. However, recent developments in the business and financial sectors have brought this issue into focus and evidence for a relationship between sound governance and economic potential has been demonstrated by several researchers (Feinberg, 1998; Johnson and Neave, 1994). It is, therefore, appropriate to consider what the term ‘Corporate Governance’ actually means, and this is considered in the following section. Corporate governance is a practice that deals with concerns that one or more parties involved with organizational decision-making may not behave in the best interest of the organization and associated parties. Over two centuries ago, probably without using the term ‘corporate governance’, Adam Smith (1776) expressed worries that the level and quality of vigilance demonstrated by managers would be far less than displayed by the partners of a firm.
Measuring the Efficiency of National Innovation System
Ta-Wei Pan, National Defense University, Taiwan
The present study applies the data envelopment analysis (DEA) approach, using the traditional DEA, slack-based measure (SBM), and free disposal hull (FDH), respectively, to combine multiple outputs and inputs in measuring the efficiency of National Innovation System (NIS) among a sample of 40 countries. The results indicate that the overall technical inefficiencies of a country’s NIS are primarily due to pure technical inefficiencies rather than scale inefficiencies. Regardless of which model was used—DEA, SBM, or FDH—the best-practice calculations indicate that six countries—Japan, South Korea, New Zealand, Romania, Russia, and Taiwan—operated at the top level. Empirical results also indicate that the SBM model can provide DEA efficiency ratings more clearly. Finally, the Tobit regression reveals that the total expenditures on research and development, literacy, and national productivity significantly influence the efficiency of NIS in 44 countries belonging to the Organization for Economic Cooperation and Development. In global e conomics, the core factors of production have changed from land, natural resources, and human capital to technology and intellectual capital. In the 1980s, Freeman and Lundvall founded the National Innovation System (NIS), providing a way to analyze industrial structures, national resources, development dynamics and cooperation, inputs in education, and the manpower of a country. NIS is the flow of technology and information among people, enterprises, and institutions and the key to the innovative process at the national level. This development in innovation and technology is the result of a complex set of relationships among actors in the system, including enterprises, universities, and government research institutes. Applying the concepts of NIS, Freeman (1988) described and explained how Japan became the most successful country in post-war economics in the first paper addressing the concepts of NIS in the literature. In the last decade, the Organization for Economic Cooperation and Development (OECD) continued to study the influences of NIS due to its importance to create national competitive advantages. Whereas the early literature in the NIS field focused on testing the relationship between selected inputs on selected outputs (e.g., Pavitt, 1985; Evenson, 1991), the present study explores the elements of a country’s socio-economic structure that impact the inputs and the outputs. The data envelopment analysis (DEA) method has been broadly used in previous studies focusing on technical change and innovation in general and on NIS in particular. This method can be applied in a non-parametric way. Moreover, versions of the DEA method are usually utilized in economics when no market prices of inputs and/or outputs exist.
Ownership Structure, Board of Directors, and Information Disclosure: Empirical Evidence from Taiwan IC Design Companies
Dr. Yue-Duan Guan, Ming Chuan University, Taiwan
Dr. Dwan-Fang Sheu, Takming College, Taiwan
Yu-Chin Chu, Deloitte, Taiwan
The demand for information disclosure stems from the information asymmetry and agency conflicts existing between the management and the stakeholders. The solution to agency conflicts lies in the ownership structure and the function of board of directors. This study uses the 2003 annual report of IC design companies in Taiwan and their website information as subjects of evaluation, exploring the impacts of ownership structure and corporate board on the information disclosure level. The study result shows an insignificant negative association between managerial ownership and disclosure level. Secondly, blockholder shareholdings are negatively associated with disclosure level which implies that less information disclosure is required as share ownership is concentrated. Moreover, the qualified foreign institutional investor (QFII) ownership is associated with increased disclosure, indicating QFII playing an active role in the promotion of information transparency. Finally, the results show director ownership has a significantly positive impact on corporate disclosure, suggesting board acts as an effective internal corporate governance mechanism. A series of financial statement frauds (1) have been occurred in recent years. To protect investors’ rights and enhance information transparency, the regulatory authorities of securities markets (2) and information intermediaries (3) have exerted great efforts to advocate corporate governance in a hope to lessen the occurrence of adverse selection and agency problems as a result of information asymmetry. Therefore, Taiwan Stock Exchange(TSE) promoted the establishment of independent directors and supervisors in 2002 and Securities and Futures Commission (SFC) set up the Information Disclosure Assessment Committee to assess information disclosure (4) of the listed and OTC companies in Taiwan. However, only the names of the top one-third (5) of the companies in terms of transparency were published. Due to different degrees of competition, information disclosure environments and regulations in different industries, it is difficult for the results of the joint-evaluation to be directly cited for examination of the causes and consequences of information disclosure. Akerlof(1970) theorizes that the transparency of corporate information can reduce the adverse selection and moral hazard caused by information asymmetry, which in turn can enhance the liquidity of stocks and reduce the cost of equity capital and debt capital(Welker 1995; Botosan 1997; Sengupta 1998).
The New Techno Culture in the Workplace and at Home
Dr. Richard Gendreau, Bemidji State University, Minnesota
The new culture of technology started in the last decade of the 20th Century with e-mail and progressed through cell phones, high-speed networks, wireless platforms and iPods. This techno culture brought the workplace and worker’s home into the digital age. New technology was not only entering the workplace and home at a faster pace, but it was changing at an increasing pace. Just after learning how to utilize a new technology an updated version infiltrates the workplace and home. This paper will explore how workers cope with technology and all the complications it causes. The author’s adventure with new technology will look at technophobia, information overload, multitasking paradox, uninvited e-mail, and technostress. The paper concludes by exploring ways to manage technology in the workplace and at home. New Technologies create cultures of use around themselves. One should distinguish between society and culture, i.e., society refers to the community of people while culture refers to the systems of meanings which govern the conduct and understanding of people’s lives. In reading the lecture, the distinction between society and culture is often unclear and the terms are sometimes used interchangeably (American Anthropological Association and Computing Research Association, 1995). Because technology and its mutual interactions with both society and culture are rarely addressed, this paper will focus on the effects of technology on culture and/or society as there can be no argument that both are affected (Murphie and Potts, 2003; and Long and Post, 2006). Technologies create new ways of doing things that were unthinkable prior to the technology (Barnet, 2006). Since authors (Kroeber and Kluckhohn, 1952) have developed hundreds of definitions of culture, this paper will settle on the following definition - “Culture is defined as the benefits, values, behavior, and material objects that constitute a people’s way of life” (What is culture? 2006). The world has more technology then ever before with technological changes increasing at an increasing pace. The change can be both stylistic and structural. Technology is inflecting a profound and rapid change on everything including people, governments, and art, making a deep penetration into our social life (The Center for the Study of Technology and Society, 2006).
Digital Music Pirating By College Students: An Exploratory Empirical Study
Dr. Harrison Green, Troy University, Westfield, IL
This paper addresses illegal music downloading by college students. A survey was administered in three consecutive semesters. Results indicate that males download more songs illegally than females who tend to have more respect for copyright laws. Information Systems majors download more songs illegally than other majors but do not differ in respect for copyright laws. In general, students tend to be undecided with regard to the legitimacy of copyright laws and the legality of file sharing. No clear trend has been established with respect to the quantity of songs downloaded illegally. There is some evidence that attitudes toward illegal downloading are influenced by legislation and prosecution. Illegal music downloading is a common ethical problem encountered by college-age students. College students typically have little money and like to listen to music frequently. Universities have complained that music downloading clogs the network bandwidth and slows down other processing. The number of lawsuits against illegal downloaders has rapidly increased within the last year. Within the last couple of years, pay-per-track sites have become more prevalent with broader and broader selections. Most students at our university have been very wary about trying the pay-per-track services. In my information systems classes, we normally have discussions on issues such as music downloading. The overwhelming majority of these students do not appear to have any ethical problems with peer-to-peer (illegal) music downloading. Most of them have either engaged in this practice or benefited from someone else who has done it. They claim that CD’s are too expensive and that record companies already have a lot of money. Some claim that there is no distinction between recording music from the radio and downloading it from another user without paying for it. Attitudes toward peer-to-peer music downloading might be indicators of questionable ethical approaches to more important business issues. Most likely many of them would take the same attitude toward the illegal copying of computer software or even stealing copyrighted materials or trade secrets. According to recent statistics, illegal downloading is a widespread problem. Estimates from a website monitoring peer-to-peer usage support this assertion . In the United States, the average number of users at any one time during April 2004 was 4,688,988; during October 2004, there were 4,771,060 users. Worldwide there were 7,639,479 users in April 2004 and 6,729,450 in October 2004. Although the exact figures are disputed, it is certain that file sharing on this scale has a financial impact. The Associated Press cited a 7.6% drop in music sales in both 2002 and 2003 .
Exploring the Impact of Ethnicity on Conflict Resolution in Joint Purchase Decisions
Rina Makgosa, Ph.D., University of Botswana, Botswana
The literature of family decision making contains studies that have investigated differences in relative influence across ethnic groups. The research reported in this paper concentrates on conflict resolution in joint purchase decisions across ethnic groups. Specifically, it investigates a mix of conflict resolution strategies used by husbands and wives from three ethnic groups in Britain — British Whites, Indians, and African Blacks in joint decisions to purchase major household consumer durable products. Results demonstrate that husbands and wives use several mixes of strategies when resolving conflict in joint purchase decisions. Specifically, it was found that a majority of British White husbands and wives use bargaining more than Indians and African Blacks. Additionally, compared with the British White husbands, both Indian and African Black husbands tend to combine bargaining, assertiveness, and playing on an emotion or all the conflict resolution strategies, whereas British White and African Black wives use all the four strategies more than Indian wives. Overall, results from our study show that ethnicity plays an important role in the understanding of the means of influence in joint purchase decisions. A majority of consumer purchase decisions are made by the family rather than an individual, which is commonly regarded as the critical decision making and consumption unit (Ndubisi and Koo, 2005). A bulk of the literature that has investigated the degree to which husbands and wives independently or jointly participate in activities that contribute to the decision making process (e.g., Martinez and Polo, 1999; Yavas, Babakus, and Delener, 1994) classified family purchase decisions into three categories of husband dominant, wife dominant and joint purchase decisions. However, the area of joint purchase decisions remains relatively under researched. Research into joint purchase decisions is a critical area of study in consumer behaviour because family decisions for most major household durable products are made jointly by husbands and wives rather than dominated by a single spouse (Ndubisi and Koo, 2005). For instance, joint decisions have been reported for most major household purchases including domestic appliances, entertainment equipment, furniture, automobile, vacation, and house (e.g., Ganesh, 1997; Martinez and Polo, 1999).
The Empirical Study on the Effect Factor of Top Management Remuneration in China
Dr. Jianjun Zhu, Huazhong University of Science and Technology
This paper covers the research on the effect factors of top management compensation of Chinese enterprises. We adopted the data based on 986 listed companies from 2004 and 2005. We examined the following: business performance, scale of the company, the corporation governance structure, the number of top management, and the registration area of company. The results are as follows: (1) There is a positive relationship between top management remuneration and return on equity (ROE), the total assets, and the number of top management; (2) There is a negative relationship between top management remuneration and the stock-holding ratio of controlling stockholders; (3) Top management remuneration of the eastern area is apparently higher than that of the central and western regions; (4) Top management remuneration is more closely relevant to 2004’s performance than 2005’s. An interesting public sentiment exists regarding CEO compensation (Offstein and Gnyawali 2005). Accompanying the rise in CEO compensation is a corresponding ascension in managerial and academic feelings ranging from curiosity to downright hostility (Nichols and Subramaniam 2001). The phenomenon stands out in the U.S. due to CEO compensation, which on average, is 209 times greater than that of an average factory worker (Nichols and Subramaniam 2001). In China, the disparity of compensation between top management and employees isn’t as great, which has a direct correlation to the history of Chinese economic evolution. Before carrying on market-based reform, state-owned enterprises in China carry out the principle of distributing according to work. There are two types of distribution —currency and non-currency, of which the non-currency distribution takes a considerable proportion, and is mainly based on the principle of average allocation. As for currency distribution, in general, it chiefly adopts the single salary form. In the same enterprise, the top manager’s salary and the ordinary staff’s salary are pretty much the same, which has seriously dampened the enthusiasm of top managers. At present, people carrying on the market-based reform using the distribution system, have broken the former distribution principle of equalitarianism. This paper attaches great importance to the research of the factors, which influence top management of Chinese enterprises.
Optimizing Investment Portfolio by Applying Return Factor Model: A Case Study for the Mechanical Device Industry of China
Dr. Chung-Chang Lien, Leader University, Tainan, Taiwan, R. O. C.
Dr. Chie-Bein Chen, Takming College and National Dong Hwa University, Taiwan, R. O. C.
Ming-Ju Wu, National Dong Hwa University, Taiwan, R. O. C.
The stock market of China developed very fast in recent years. In 1990, there are only 10 A-share stocks, and the A-share stock rose to 720 at the end of 1997. Stock investment has been a common financial activity and it is also a good outlet for investment. In this study, an investment framework is established for the China listed A-share companies’ stock of mechanical device industry. This study selects two return factors (book-to-market ratio and momentum) to be the input of DEA-BCC model while the return on stock set as output. Applying the DEA-BCC model, it is easy to evaluate the stock’s relative efficiency value and to choose several good performance stocks to construct our investment portfolio. Finally, this study use Markowitz’s mean-variance theory to decide the optimal investment weights for the portfolio. “Efficient Market Hypothesis” (EMH) defined that a financial market can be seen as efficient if the market utilizes all available information in setting the prices of assets. This will also result in no existence of excess normal-return on the financial market. However, uncertainty and information asymmetry always exist in realistic world. And the higher uncertainty and information asymmetry, the more difficult for individual investors to make their investment decisions. Although many scholars use various types of technical analysis to forecast the stock price, forecast and realistic are often inconsistent. Even the same technical analysis may cause different results because that different scholars use different time period to analyze a same problem. Thus, stock investment return to fundamental analysis seems to become more important because it emphasizes the management for companies and it also reflect long-time stock market price. Stock is a good outlet for investment but stock market always exist uncertainty and information asymmetry. Individuals who hold the information of companies and the stock market are always being limited. In order to solve this problem, this study proposes an approach based on factor theory and DEA (Data Envelopment Analysis) model for investors to know which stocks owns good efficiency on performances. Let investors know what stock is worthy to invest. And then, this study takes the Markowitz’s M-V theory as a foundation to determine the optimal weights for these stocks under the requirement of specific return. In this study, investment analysis is not constrained on short-term transactions (e.g. daily transaction), but monthly investment.
Implement Business Strategy via Project Portfolio Management: A Model and Case Study
Dr. Du Lan-ying, HuaZhong University of Science and Technology, Wuhan, China
Shi Yong-dong, HuaZhong University of Science and Technology, Wuhan, China
This paper provides an approach to translate business strategy into projects successfully via project portfolio management. It reviews the failure in strategy implementation and limitations of the previous solutions, and compares main differences between “project-based company” and “product-based company”. A complete model is developed based on the theory of project portfolio management and personal experiences in consulting engagement. A case study within China Construction Third Engineering Bureau verifies the model and presents as a good example for application. The model is helpful and valuable for top managers as well as researchers and consultants in strategic management. It is the bad execution that often damages the success of deliberate strategy. Top managers have more deliberate strategic options that yield less value. A study of 275 professional portfolio managers reported that the ability to execute strategy was more important than the quality of the strategy itself (Mavrinac and Siesfeld, 1998). Strategy implementation was the most important factor shaping these portfolio managers' assessment of management and corporate valuations. In the early 1980s, a survey of management consultants reported that less than 10 percent of effectively formulated strategies were implemented successfully (Kiechel, 1982). A 1999 Fortune article, in a cover story of prominent CEO failures, concluded that the emphasis placed on strategy and vision created a mistaken belief that the right strategy was all that was needed to succeed. The authors concluded that “in the majority of cases - we estimate 70 percent - the real problem isn't bad strategy, it's bad execution.” (Charan and Colvin, 1999) A recent survey on “Strategy implementation of Chinese enterprises” reported that 81.4% of informants believed strategy implementation was the most important factor, while only 18% of informants thought formulated strategies were implemented effectively (Wei hua-ning, 2005). Scholars have created a great deal of approaches, methods, and frameworks for strategy implementation with the development of strategic management theory. For example, The Plan School had advocated plan control system, which was adopted by GE (General Electric) but finally abandoned. Michael E. Porter, the leader of the Position School, concluded three general modes which focus on the transition from corporate strategy to business strategy, but lack practical guidelines in the process of implementing business strategy into operations. Consultants developed an integrated opinion in practice, which synthesized kinds of research work and apply it flexibly.
The Choice between First-Price and Second-Price Auction by an Informed Seller
Shih-Chung Chang, National Taiwan University, Taipei, Taiwan
Chih-Hsiang Hsu, National Taiwan University, Taipei, Taiwan
Ming-Sung Kao, National Taiwan University, Taipei, Taiwan
This paper analyzes how an informed seller determines the optimal auction format. Standard first- and second-price auctions are considered in this model. Since the seller has superior information about the object, selection of an auction reveals the seller’s private information, which influences bidding strategies. Our main finding is that an informed seller will hold only a second-price auction. The intuition is that bidders’ strategies in each auction format have different sensitivity to the information revealed by the seller. When the seller announces that he will hold a first-price auction, it signals to bidders that they have overestimated competitors’ valuations, and this leads to a lemon problem. Thus, bidders bid the lowest value in the first-price auction. On the other hand, Bidders’ strategies in the second-price auction are independent of the information revealed by the choice of auction format, so revenue in the second-price auction is higher than in the first-price auction. Traditionally, papers concerning auction theory assume an uninformed seller facing a set of bidders with private information. However, the assumption that the seller is uninformed is unrealistic given that he owns the object for a period of time. For instance, the seller may at leasthave more information about the object’s quality than the bidders do. Milgrom and Weber (1982) first note this problem and argue that it is better for a seller to reveal his or her private information. (1) However, they do not address how to verify the seller’s information. When the auction format can be selected by a seller freely, the seller’s private information may be revealed inadvertently by his choice on the auction format. The information effect may result in a great difference compared with the traditional auction environment, and few papers in the past take notice of this issue. Therefore, in this paper we consider how the effect of information influences a seller’s decision on the auction format. In this environment, we consider an extreme case where the seller has full information about the value of the object, while each bidder receives only part of the information about it, and information is independent among bidders. The standard first-price and second-price auction are considered in the model. In Milgrom and Weber’s (1982) affiliated environment, both auction formats generate equivalent revenue for a seller when bidders’ signals are independent (2).
The Role and the Ambit of Corporate Governance and Risk Control Frames
Dr. Marco Taliento, University of Foggia, Italy
The following brief notes deal with the two principal corporate governance frames/models (once considered core norms, key concepts and regulative principles for business administration, management, control), as observed in the major countries: (i) the Anglo-Saxon/American system, that is “market based” and “shareholder-oriented” and (ii) the Latin-German-Japanese paradigm, that is “credit based” and “stakeholders-oriented”. The specific attempt of this study is to highlight the best international theories and practices about modern corporate governance processes, drawing attention to their role and ambit, and, on the other hand, to the need of suitable risk control mechanisms. In particular, it is possible to ascertain the new role played by the risk-variable in businesses, previously considered within internal control scheme, then as a tool of a wider management philosophy (enterprise risk governance). A “sound” corporate governance system is a fundamental premise to the achievement of general objectives as (1) economic-financial returns, (2) going concern condition (or firm’s survival), (3) growth. The critical choice about such a system is not plausible without considering the peculiarities of a given company and, on the other hand, the overall economic, political or social variables characterizing the "macro-environment". In general terms, international business literature identifies two main corporate governance styles: the Anglo-Saxon/American paradigm, that is market based and shareholder-oriented; the Latin-German-Japanese paradigm, that is credit based and stakeholders-oriented. It is not unlikely that a company would gain different levels of results and performance if different governance rules were adopted: the reason can be found in the capability of governance determinants to increase corporate wealth, even through equity markets dynamics estimate (e.g., think of G-index or Tobin’s Q studies, findings, and also Basel II enforcement or Standard&Poor’s corporate governance scoring, etc). The recent practice of calculating a “score” for corporate governance models hides aspects of great significance and produces a deep impact on modern companies’ decisions, since precious judgment of shareholders, investors and other stakeholders becomes ever growingly based on extra-accounting issues. Corporate governance valuation regards, in synthesis: board of directors, auditing, charter/by-laws, anti-takeover provisions, ownership, executive and director compensation, progressive practices, education (1).
Application of the Grey Prediction Theory Compared with OtherStatistical Methods on the Suitability of Short-term Forecast: Outbound Visitors from Taiwan
Dr. Ching-Yaw Chen, Shu-Te University, Taiwan
Dr. Pao-Tung Hsu, Shu-Te University, Taiwan
Chi-Hao Lo, Shu-Te University, Taiwan
Yu-Je Lee, Takming College, Taiwan
Che-Tsung Tung, Takming College, Taiwan
The Grey Prediction Theory is aimed at the system model under condition of uncertainty, information integrity, and it needs a minimum only four datum to forecast. It can obtain good predictive results in short-term forecasts. Therefore, we use the Grey Prediction Model to predict the number of outbound visitors. The number of outbound visitors from Taiwan is the data obtained from the Taiwan Tourism Bureau, and is compared for accuracy and error rates with other forecast models. These results can hopefully provide subsequent researchers with references in related topics, and provide related agencies, local governments, and related planning departments in private enterprises with references to Taiwan’s future tourism demands in policy setting and tourism market sales and management strategies. Prediction primarily involves finding possible patterns among existing historical data and using objective and scientific methods and functional relations of variables established from numerical models to perform predictions on uncertain trends. The emphasis is on the selection of the most appropriate forecasting techniques for different forecasting targets, variable relationships, forecasting time lengths, and organization targets. However, facing future uncertainties and incomplete information, forecasted values will likely differ from actual values. In terms of short-term forecasting, in order to effectively reflect market trends, forecasting precision is of the utmost importance because accurate forecasts are a technique and management method that can effectively assist decision -makers in making appropriate judgments and support the reliability of decision -making (Bernstein, 1984; Lewis, 1982). Furthermore, on cost considerations, we still need to scrutinize gathering of information and related costs of time placement. These are all topics that need to be addressed. Currently in the research of tourism demand forecasts, the foundation for modeled predictions are based primarily on establishing quantified mathematical models through single- and multi-variable explanations. For example, Chu (1998) combined seasonal and non-seasonal ARIMA models and sine undulation nonlinear regression forecast models to project the number of visiting international tourists. Generally, analyzing the single variable of time series is done through quantifying and assessing developmental trends of events that have occurred in different time periods among existing historical data. The types of time data are further divided into trend, cycle, and seasonality for further investigation. Multi-variable analyses seek to find the effects of possibly independent variables on forecasted variables, and the factors of influence are also decided through Grey correlation analysis, AHP, Fuzzy AHP, etc., to select the most influential factor of influence to refine the forecasts. Traditional forecasting methods, e.g., the regression model, require large volumes of historical data as a model foundation, and have to fulfill related statistical evaluations.
Productivity Growth, Human Capital and Technical Efficiency
Dr. Yahn-Shir Chen, National Yunlin University of Science and Technology, Taiwan
Chao-Ling Lin, Chang Jung Christian University, Taiwan
From the perspectives of structure-conduct-performance model and resource-based theory, this study employs the data envelopment analysis (DEA) and Malmquist productivity index to estimate the production performance of audit firms in Taiwan. Production performance assessed in this study includes productivity change, technical change, and technical efficiency change. In addition, effects of human capital embodied in partners on technical efficiency of audit firms are examined. A balanced panel of data from 45 public accounting firms is obtained from the 1996-2001 Census Report of Public Accounting Firms in Taiwan. Empirical results reveal that, on average, audit firms experienced a productivity growth of 27% and a technical progress of 31% but a 5% decline of relative efficiency during the sample period. We also report a positive relationship between technical efficiency of the firms and human capital embodied in partners. The environment in which auditors operate has been drastically reshaped by the events taking place in the business world during the first few years of this new century. After Enron, more regulations, including legal liabilities and services offered, impose on audit firms. For example, in the United States of America, the passage of Sarbanes-Oxley Act of 2002 takes from the public accounting profession the major portion of its self-regulatory authority (Whittington and Pany, 2004). Moreover, many clients of audit firms are proceeding with the strategies of globalization and e-commerce for competitive advantages in the changing market. Public accounting profession is obliged to invest a large amount of resources to upgrade their audit technology and to expand their service scope. It is therefore foreseeable that the operating cost of audit firms will rise significantly to meet the new requirements. Under the new economic landscape, how can audit firms survive and grow? One cost-effective and feasible way is to improve their production performance by hiring professionals with advanced education level and more experience as well as by enhancing their employee’s accumulation of intellectual capital. Hence, firstly, this study aims to address the behavior of audit firms responding to the changing environment during our sample period. Using the panel data of 45 partnership audit firms, we employ the data envelopment analysis (DEA) and Malmquist productivity index to estimate the production performance of audit firms during 1996 to 2001. Specifically, we assess the productivity change, technical change, and technical efficiency change of audit firms over time.
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