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

The Journal of American Academy of Business, Cambridge is published two times a year, March and September.  The e-mail: drsenguder@aol.com; Website, www.jaabc.com  Requests for subscriptions, back issues, and changes of address, as well as advertising can be made via the e-mail address above. Manuscripts and other materials of an editorial nature should be directed to the Journal's e-mail address above. Address advertising inquiries to Advertising Manager.

The Financial Management of Military Pilot Training Costs: An Assessment of U.S. Navy and U.S. Air Force Pilot Training Attrition Rates

Albert Joseph Sprenger Jr., James T. Schultz, Ph.D., and Marian C. Schultz, Ph.D.

ABSTRACT

Obtaining aeronautical ratings can be extremely costly expensive. The U.S. Air Force and U.S. Navy have elected to send their pilot candidates to civilian flight schools prior to starting military training to insure they possess the basic capabilities to pilot aircraft. The Air Force and Navy programs differ in the number of hours students receive prior to starting military training; the Air Force program is 50 hours including receiving their Private Pilots rating, while the Navy program is 25 hours. This study examined the differences in attrition rates of Navy student pilots at U.S. Navy Pilot training, and Navy student pilots at U.S. Air Force Pilot training. The research hypothesis was that Navy students who train with the Air Force will attrite at a greater rate than students undergoing training with the Navy. The hypothesis based on a lack of experience of the Navy student, as compared to Air Force students, who begin training with a private pilot’s license. The research utilized the causal-comparative methodology. The hypothesis was tested utilizing a two-dimensional Chi-Square nonparametric test of significance, at the .05 level of significance. The research hypothesis was not supported; there was no significant difference in attrition rates between Navy students at Air Force Pilot training as compared to those attending Navy Pilot training.

Liquidity Provision in Informationally Fragmented Upstairs Markets

Dr. Orkunt Dalgic

ABSTRACT

The ability of upstairs market makers to observe certain important characteristics of their customers is a distinguishing feature that contributes to the quality of execution, i.e. liquidity, provided by these markets. One such characteristic is a customer’s likelihood of trading, also termed “unexpressed demand” by Grossman (1992). However, the existence of switching costs can lead to investors using the upstairs market to limit their trading relationships to a small number of market makers, and upstairs market search costs can reduce the potential number of trade counterparties contacted during searches. Such costs would cause at least some of the information about upstairs market investors’ trading likelihoods to remain privately known by individual market makers. This paper develops a general framework where information about investors’ trading likelihoods is split into private and public components. An increase (decrease) in the proportion of private information reduces (improves) upstairs market execution quality relative to Grossman's (1992) model, and relative to the downstairs market. Moreover, when the proportion of private information is larger, an increase in the competitiveness of upstairs market making may lead to a greater reduction in upstairs market liquidity.

Team Effectiveness and Leader-Follower Agreement: An Empirical Study

Susan D. Baker, Ph.D. and Daniel A. Gerlowski, Ph.D.

ABSTRACT

The role of teams in organizations has become a dominant theme in theoretical, applied, and empirical research.   This paper is grounded in the literatures of leadership, followership, and team effectiveness.  It builds on the work of Sundstrom, McIntyre, Halfhill, and Richards (2000), which called attention to the role of team composition in determining team effectiveness in the workplace.  Our research attempts to determine whether leader-follower agreement about leader and follower characteristics effects team effectiveness.  The role of teams in organizations has become a dominant theme in theoretical, applied, and empirical research.   Further, team abilities and skills represents an area that has reached into most business program curricula as well as becoming a standard skill set required in many occupations at multiple levels.  A related literature focusing on leadership developed over time, and more recently, this literature has been extended to include research on followership.

Improving IT Service Delivery Quality: A Case Investigation

Jihong Zeng, Ph.D., New York Institute of Technology, Old Westbury, NY

Abstract

In the e-commerce environment, business has increasing dependency on information technology (IT) to deliver services to customers. IT service availability has dramatic influence on customer satisfaction and corporate reputation of the enterprise. Consequently, the demand for 24 x 7 service availability is greater than ever. Information systems which provide information infrastructure for business applications have become a critical and integral component for business service delivery. System downtime means lost of revenue and competitive advantage for the business. The business requires IT service providers and information system managers to ensure that service-affecting incidents do not occur, or that efficient and effective remediation must be taken to provide high-availability services. A lot efforts and improvement have been made to ensure high-availability in each individual technology industry. However, not enough focus has been given on how to improve the overall end-to-end IT service availability from end-user’s perspective. Without visibility into the overall availability of underlying components including information systems, applications and operational processes, it is impossible to make informed business decisions about IT resources.

Relationship Between the Use of Internet Information for Health Purposes and Medical Resource Consumption for an English-Speaking Sample

Hager Khechine, Ph.D., Daniel Pascot, Ph.D., and Pierre Prémont, Ph.D.

Abstract

Many researchers in the fields of information systems and medical sciences are showing special interest on Internet use for health-related matters because the Internet is becoming an important source of information for patients and clinicians. Indeed, statistics reveal that almost 113 million U.S. citizens looked for health information on the Internet in 2006. The purpose of this research is to study the relationship between the use of Internet information by English-speaking patients and their consumption of medical resources. We perform a quantitative study based on a ten-item questionnaire. The sample is made of 120 patients suffering from a long-term disease and accustomed to the use of the Internet for health-related issues. Construct validity and reliability were ensured. Most items have loadings greater than 0.5. The path coefficient between the variables is significant and high. We conclude that the use of health information by patients is contributing to increase their healthcare resource consumption. This result can be explained by the fact that patients may misunderstand, be overwhelmed, or be confused by the poor quality of the information obtained from the Internet. We expect this study to have a theoretical and practical impact on the fields of management information systems and medical sciences. Indeed, we believe researchers should be concerned about the role that Internet information can play in the management of medical systems and about the design of health-related Websites.

Entropy in a Social Science Context

Joseph L. Moore, Ph.D.

ABSTRACT

The paper will give an overview of the Second Law of Thermodynamics, entropy, and relative entropy.  There will be a listing of areas where the latter two concepts are being employed today. The principle discussion will be in terms of the social sciences. The author will give brief examples drawn from prior research in economics.  However, the emphasis will be on the research technique employed. The hope is that others will be motivated to try the technique in their endeavors.  Entropy is a concept that is drawn from physics. In recent years, the notion has been applied to other areas, including most of the social sciences. Starting about 25 to 30 years ago, some economic research was done to employ this concept. Since that time, there has been a smattering of articles in economics. Nevertheless, in the opinion of the current author, the concept is not well understood.

Emergence of Customer-Centric Branding: From Boardroom Leadership to Self-Broadcasting

Mohammed M. Nadeem, Ph.D.

ABSTRACT

With increased global competition, it has become essential for leaders in every industry sector, from commodities to consumers packaged goods, to understand the new and emerging theory and practice of customer service for successful deployment of brands. The brand has become a strategic business concern for every senior corporate executive and board member. This research explores how a customer-centric approach makes a brand not only stronger but also on a path to profitability. This research mainly examines how successful boardroom leadership connects the customer to the brand through its motivated associates and all of its stakeholders. The purpose of this study is to demonstrate how emerging self-broadcasting customers become devotees of a brand by experiencing it on a deeply emotional level over time, and cementing their loyalty to the products and services of their choice. The final sections discuss the limitations of the exploratory study by providing conclusions, and ideas for future research for branding effectiveness.

Downsizing, Corporate Survivors, and Employability-Related Issues: A European Case Study

Dr. Franco Gandolfi

ABSTRACT

This research article examines the accounts of survivors of reorganization and downsizing processes of a large car manufacturer in Europe. It looks at how corporate downsizing survivors adjusted to meet the new reality and dynamics of the corporation and how individuals developed new skills and competencies for their new roles and responsibilities within the reorganized firm. The study also reflects upon issues relating to the motivation and attitudes towards employability and learning aspects of individuals. The research highlights the onus upon individuals to take responsibility for their own training and development needs and to initiate learning opportunities. The advancement of self-development skills was shown to be of particular importance in transforming a corporation successfully.  The occurrences of major organizational change, including restructuring and downsizing, represent some of the most profound (Gandolfi, 2006) and problematic issues facing modern-day corporations, non-profit organizations, governmental agencies, and global workforces (Carbery & Garavan, 2005). Corporate restructuring, or simply ‘restructuring’, is a relatively broad concept. Black and Edwards (2000), for instance, define restructuring as a major change in the composition of a firm’s assets combined with a major change in its organizational direction and strategy. The change management literature distinguishes between various types of restructuring. Heugens and Schenk (2004) present three forms of corporate restructuring, namely portfolio, financial, and organizational restructuring. This research paper is concerned mainly with organizational restructuring which is defined as a dimension with significant changes in the structural properties of an organizational entity (Carbery & Garavan, 2005).

The Move Towards Convergence of Accounting Standards World Wide

Dr. Consolacion L. Fajardo

ABSTRACT

This paper will discuss the theoretical bases for the move towards convergence of international accounting standards. It will look into the efforts of the U.S. Financial Accounting Standards Board, the International Accounting Standards Board, and the European standards setters to achieve the convergence of accounting standards world wide.  The benefits and the problems accompanying implementation will be addressed. The expectations is that establishing a common standards of accounting internationally will be beneficial to users and preparers by improving consistency, comparability, reliability, and greater transparency of financial information reported by companies around the world.  As a consequence, it is expected to increase cross-border investments, deepen international capital markets, and reduce costs of multinational companies who must currently report under multiple national accounting standards.

Human Resource Management and Strategy in the Lebanese Banking sector: Is there a fit?

Dr. Fida Afiouni

ABSTRACT

This article investigates the nature of Human Resource Management (HRM) practices applied in the Lebanese banking sector, examines the strategic nature of the HRM function, and sheds light on current problems that hold the human resource department back from properly implementing its practices. The case study method has been applied on 10 banks in Lebanon from different sizes and nationalities with the resource-based view (RBV) as a main theoretical framework. The dominant findings indicate that, out of the 10 banks studied, seven banks have in place HRM practices that are not aligned with the bank’s strategy. In those banks, the absence of top management’s support, the lack of cooperation of line management, and the low credibility of the HR function hinder the proper implementation of HR practices and keep the HR department from playing a strategic role.  The role of the HR department in many organizations is at a crossroads. On one hand, the HRM function is in crisis, increasingly under fire to justify itself (Schuler, 1990). On the other hand, organizations have an unprecedented opportunity to refocus their HRM systems as strategic assets.

Social Structure Characteristics and Psychological Empowerment: Exploring the Effect of Openness Personality

Dr. Sarminah Samad

ABSTRACT

The purpose of this paper is to determine the influence of social structure characteristics on employees’ psychological empowerment and whether openness personality plays a role in moderating the above stated relationship among Customer Marketing Executives of a telecommunication firm in Malaysia. Hierarchical regression analyses of 482 responses in the study revealed that all aspects of social structure (self-esteem, power distribution, information sharing, knowledge, rewards, transformational leadership and organizational culture) are important in determining employees’ psychological empowerment. Further, openness personality variable was found to be a moderator to the relationship between social structure characteristics and employees’ psychological empowerment. Theoretical and managerial implications of the findings and future research are discussed.

The Impact of the Asian Tsunami Attacks on Tourism-Related Industry Stock Returns

Dr. Chih-Jen Huang, Dr. Shu-Hsun Ho, and Chieh-Yuan Wu

ABSTRACT

The Indian Ocean experienced a devastating tsunami in Asia on the morning of 26 December 2004. This study utilizes a market-adjusted returns model of event study to analyze abnormal stock returns in Thailand’s tourism industry. The study differs from previous studies of market reactions to unanticipated events in terms of cross-country analysis. We investigate reactions of tourism-related industry stocks in the following markets after the Asian tsunami event: Taiwan, Hong Kong, New Zealand and Australia, from June 2004 to March 2005. In addition, this research compares differences of the abnormal returns in tourism and leisure, transportation and logistics, insurance, construction materials and construction development industries in Thailand from June 2004 to March 2005. We examine the stock market reaction for 135 days prior and examine four days and 15 days following the Asian tsunami event. 

The Relationship between Leadership Behavior and Organizational Performance in Non-Profit Organizations, Using Social Welfare Charity Foundations as an Example

Dr. Ruey-Gwo Chung and Chieh-Ling Lo

ABSTRACT

Although the main mission of an NPO is “not for profit,” it must still pay attention to effective management practices.  The current study took social welfare charity foundations as subjects and used a questionnaire to explore the effects of top managers’ leadership behavior on organizational performance.  We found that in all of the 77 valid samples, leadership behaviors in 10 social welfare charity foundations were “high transactional-low transformational,” 23 were “low transactional-low transformational,” 35 were “high transactional-high transformational,” and 9 were ”low transactional-high transformational.”  In addition, different leadership behaviors had obvious differences on internal communications and management and on finance structure.  From the perspective of full-time employees, top managers’ leadership behavior tends towards “low transactional-low transformational,” while the volunteers regard it as “high transactional-high transformational.”

The Virtual Student/Client Experience

Dr. Debra Hunter

ABSTRACT

This paper discusses a study completed in an attempt to integrate service learning in an online classroom environment. A hybrid of service learning and internet based classes may introduce a new motivation to e-learning while applying knowledge in a real world setting.  Instructors who teach in online environments will gain a better understanding of  “best practices” for conducting internet courses with virtual clients.  Academic service learning is a method of student learning through active participation in organized experiences that meet community needs (Perkins, 1994).  Bringle and Hatcher (1996) defined service learning as “credit bearing educational experience” in which students “gain further understanding of course content, a broader appreciation of the discipline, and an enhanced sense of civic responsibility.  Service learning requires the infusion of course assignments that give students the opportunity to apply knowledge and skills taught in the classroom to projects that benefit the community.   These efforts are coordinated among course instructors, students, and representatives of community organizations in a collaborative effort to address issues that impact society.

A Critical Process for Methods Selection in Organizational Problem Solving

Chia-Hui Ho, Far East University, Taiwan

ABSTRACT

This paper aims to explore a critical process for evaluating management methods. This paper also aims to discuss, from a critical systems perspective, how world views (which necessarily have ideological aspects to them) will influence method-users to choose particular methods for organizations. Thus, a new process called Participative Method Evaluation (PME) is established. PME is founded on the idea that a person's understanding of a method is influenced by his/her social ideology. The basic concern of the evaluation of method needs to be how method-users and organizational/environmental stakeholders can examine their ideological differences through processes of critique in order to make more informed choices.  PME embraces three stages: Surfacing, Triangulation and Recommendation. Surfacing aims to expose and explore the various assumptions about, and views on, the candidate method and the organizational situation.

Are Real Estate and Stock Markets Related? The Evidence from Taiwan

Dr. Ning-Jun Zhang, Dr. Lii Peirchyi, and Yi-Sung Huang

ABSTRACT

This paper studies the long-run relationship between real estate and stock markets, using both standard cointegration tests of Johansen and Juselius (1990) and Engle-Granger (1987) and fractional cointegration test of Geweke and Porter-Hudak (1983), in the Taiwan context over the 1986Q3 to 2001Q4 period.  The results from both two kinds of cointegration tests indicate that these two markets are not cointegrated with each other.  In terms of risk diversification, two assets should have been included in the same portfolio.  Knowing and testing the long-run relationship between real estate and stock markets are very important for portfolio investors who want to diversify in these two assets markets.  As we know that, if assets markets are found to have a long-run relationship then this would suggest that there may be little long-run gain in terms of risk reduction by holding such assets jointly in a portfolio.  Previous empirical studies have employed cointegration techniques to investigate whether there exist such long-run benefits from international equity diversification (see Kwan et al., 1995; Masih and Masih, 1997). 

The Effect of Convertible Debt Issuance on Product Market Competition

Jie Yang, Ph.D. Candidate and Dr. Xinping Xia

ABSTRACT

This paper investigates the effect of convertible debt issuance on Cournot game outcome. With the assumption of no default risk, compared with standard equity or debt financing, the conversion feature of convertible debt serves as a committing device for a conservative stance under the normal case of return, thus encourages an aggressive stance of its rival firm. This strategic disadvantage of convertible debt can explain the long-run underperformance after issuance.  This paper investigates the effect of convertible debt issuance on strategic output market behavior. The relationship between firm’s financing policy and its strategy in product market has been recognized since the innovative study of Brander and Lewis (1986). They point out that the Cournot firms subject to some market uncertainty will use the limit effect of debt to commit to increase output in an attempt to gain a strategic advantage. The basic point is that shareholders will ignore reductions in returns in bankrupt states, since bondholders become the residual claimants in this states.

Creating and Sustaining Competitive Advantages of Hospitality Industry

Hui-O Yang, DBA Candidate and Dr. Hsin-Wei Fu

ABSTRACT

This study provides a meaningful framework for the assessment on competitive advantage.  The main purpose of this study is exploring how to create and sustain competitive advantages of hospitality industry by scanning their business environment, including external environment and internal environment.  External environment factors contain country, industry, stakeholder, competitor, strategic networks, differentiation, and branding.  Internal environment factors include resource-based, human resource, and information technology.  Hospitality is the welcoming of strangers as guests into one's home to dine or lodge.  It provides both tangible and intangible goods to customers, such as products and services.  Adding values for customers, employees, and owners has become a central theme in strategic management for hospitality companies.  To create values for these stakeholders, a firm should achieve a competitive advantage over its competitors by adapting itself to the uncertain industry environment, understanding the changing needs of customers, and responding to new market entries (Byeong and Haemoon, 2004).  Achieving competitive advantage has been recognized as the single most important goal of a firm.  Without achieving competitive advantage, a firm will have few economic reasons for existing and finally will wither away (Porter, 1980).  It is generally accepted in the strategic management literature that those executives who are able to scan their business environment, including external environment and internal environment, more effectively will achieve greater success (Olsen, Murthy and Teare, 1994). 

Backward Integration and Risk Sharing in a Bilateral Monopoly: Further Investigation

Dr. Yao-Hsien Lee, Yi-Lun Ho, Sheu-Chin Kung, Ph.D. Candidates, and Tsung-Chieh Yang,

ABSTRACT

This paper investigates implications of the first-order conditions a la Lee et al. (2006) to show that the principal’s ordered quantity and profit-sharing ratio (i.e., backward integration) can affect the agent’s cost-reducing effort.  We also state the intuitions behind the propositions in the paper.  A considerable agency-theoretic literature has developed recently that addresses procurement of goods and services as often being characterized by bargaining and contracting between the government (principal) and a single supplier (or several suppliers, i.e. agent(s)). Papers focusing on this theme (see Baron and Besanko (1987,1988), Laftont and Tirole (1986) and McAfee and McMillan (1986)) study the purchase of a particular good within the framework in which uncertainty, asymmetric information, and moral hazard are simultaneously present.  In the context of bilateral monopoly contracting practices with uncertainty and asymmetric information, Riordan (1984) establishes necessary and sufficient conditions for the existence of contracts that are efficient and incentive compatible.

An Analysis of Contingent Contracting in Acquisitions

David R. Beard, Ph.D.

ABSTRACT

The literature has identified various motives for the use of earnout contracting in the acquisition of target firms.  In particular, Kohers and Ang (2000) and Datar, Frankel, and Wolfson (2001) contend that earnouts are relegated to mergers where problems of informational asymmetry and agency are so detrimental that this costly type of contacting must be employed to protect the interest of bidder shareholders and target firms.  This research examines a sample of acquisitions in which earnouts are used and contrasts that to a sample of “traditional” acquisitions to explore specific hypotheses concerning agency, informational asymmetry, and the use of an earnout as a means of financing.  Numerous contracting technologies have evolved to reduce some of the problems inherent in merger transactions.  For example, each party has incentives to propose a contract that overvalues itself and undervalues its opponent, thereby gaining a larger share of any benefits to the merger.  Another possible problem is that informational asymmetries between the two parties may be such that a quality target may not be identified or if identified may not be able to credibly reveal its value to the bidding firm.  Among the contracting solutions to these conflicts are the joint venture, the partial acquisition, and the earnout. 

Capital Structure in Taiwan’s High Tech Dot Companies

Hsiao-Tien Pao, Ph.D.

Abstract

This study investigates the important determinants of capital structures of the high tech dot companies in Taiwan using a large panel from the year 2000-2005. Three time-series cross-sectional regression models (variance-component model, first-order autoregressive model, and variance-component moving average model) and one multiple regression model  with 10 independent variables (seven corporation’s factors and three macro-economic factors) are employed. The variance-component model has the smallest root mean square error. This indicates that the time-series and cross-sectional variations in firm leverage are very important factors in model fitting. The major difference of determinant in high tech dot companies is business risk. It has positive and significant impact on capital structure. Because high tech is the more speculative industry, more speculation is associated with high risk and high investment opportunity. Firms with higher investment opportunity have higher demand for capital to sustain their investment. Therefore, business risk is positively related to debt ratio. Managers can apply these results for their dynamic adjustment of capital structure in achieving optimality and maximizing firm’s value.

“Using Consumer Panel Participants to Generate Creative New Product Ideas”

Jenny Clark, Clive Nancarrow, and Lex Higgins, Ph.D.

ABSTRACT

Organizations continue to attempt to identify new products and product features that will provide competitive advantage.  Globalization and technology development continues and many companies struggle to keep up with this rapid rate of change.  Creativity is often cited as a prerequisite to organizational success and management of most organizations realizes the present environment is one of ‘innovate or die.’  One’s cognitive style or ‘creativity’ style has been used many times as a tool to help categorize and better understand creative thinking.   We report the use of creativity style in a large consumer panel in Europe to generate new creative ideas.  Participating panel members tended to adopt one of four cognitive styles when assigned creative problem solving tasks.  We report a description of these cognitive styles and describe a categorization of the styles we identified in panel participants  Virtually everyone agrees that organizations must continually improve products and services to compete in today’s dynamic business environment.  Brook and Mills (2003) have pointed out that successful innovation within the organization requires an “aggressive and relentless thrust” toward new ideas for products and services.  However, the manner in which organizations can systematically envision and develop ideas for new products is often not clear.  

The Two-stage Optimal Matching Loan Quality Model

Chuan-Chuan Ko, Ph. D. Student, Tyrone T. Lin, Ph.D., Chien-Ku Liu, MS, and Hui-Ling Chang, MBA

ABSTACT

This study attempts to optimize the loan quality requirement objective of the depositor, financial institution and investment agent in a two-stage loan market. Assuming that the financial institution may completely or partially fail to discharge his/her responsibility for liability in which a loan claim occurs following each stage, mathematical analysis is employed to identify the threshold of required loan quality and optimize the allocation of loan amounts in this two-stage loan market.  This study defines the financial institution as the enterprise that is heavily reliant on manipulating financial leverage via minimum capital investment, and whose operating profit mainly derives from the interest spread of making loans with deposit volume; meanwhile, the depositor makes all deposits to obtain a steady stream of interest income. However, because of different lending criteria between the financial institution and the depositor, they have conflicting interests with each other. The financial institution wishes to increase loan credit, but loan volume is actually the balance held by the depositor. Therefore, the depositor asks the financial institution to rise up the loan credit to better guarantee his/her deposit. Furthermore, the securitization of financial assets has also provided the investor with an alternative financial commodity.

Study on the Motives of Tax Avoidance and the Coping Strategies in the Transfer Pricing of Transnational Corporations

Chen-Kuo Lee and Wen-Wen Chuang

ABSTRACT

As globalized production and management groups, transnational corporations tended to adopt related-party transactions (like transfer pricing) to reduce the overall tax burden, evade risks, and bypass control with tax avoidance as the main objective. Corporations could reduce the tax burden through related-party transactions, such as transfer pricing. Therefore, this paper conducted analyses by establishing a transfer-pricing model and verifying, with cases, the motives of tax avoidance in the transfer pricing of transnational corporations. Finally, we presented the coping strategies of tax avoidance in the transfer pricing of transnational corporations.  After World War II, along with the unprecedented rapid development of business activities, the international trade of transnational corporations was increasingly highlighted in the global trading market (Clausing, 2001, 2003). Moreover, plenty of international trade occurred among the inner member companies of transnational corporations (i.e. the related parties). The data of UNCTAD in 2001 showed that until then, international trade of transnational corporations occupied more than 70% of the world trade; about one-third of the world trade took place among transnational corporations and about 80% technology transfer fees were paid to the same companies. With the large scale, and the unique ways and features, the inner trade of transnational corporations was influencing the host country, the home country and the world economy (UNCTAD, 2001).

Target Costing: A Snapshot with the Granger Causality Test

Fernando Zanella, Ph.D.

ABSTRACT

The target costing strategy takes the market price of a product and goes all way back to the initial costs of its production to achieve the desired profit margin. It lies in sharp contrast with the traditional cost-plus margin. In this article we use the Granger causality test to identify the price-cost directional vector. Most of the Brazilian firms we analyzed did not show an identifiable pattern between price and cost. Target costing is shown in 15% of the total firms studied, and in 37.5% of the electric and utilities sector. There are two main reasons supported here. First, the sector works with a single homogeneous product. Second, it is a regulated sector; once its price is set by the regulatory agency, they can work backwards to reduce costs and achieve certain profit margins. The test used here proves complementary to more common surveys and case studies.  Target costing can be briefly defined as a strategy that takes the market price of a established product—or the estimated price of a would-be product—and uses it as a parameter that will define the feasible cost for a desired profit margin.

Teaching Tip: Structuring a Rubric for Online Course Discussions to Assess Both Traditional and Non-Traditional Students

Dr. Ruth Lapsley and Dr. Rex Moody

ABSTRACT

Online courses have become increasingly popular.  Students, particularly non-traditional, appreciate online courses because of the flexibility, including learning outside the normal classroom schedule constraints.  This paper discusses how a rubric for an online course was developed to capitalize on the motivated learning style of these non-traditional students.  When the same rubric was used for traditional students taking the class, the assessment did not adequately discriminate among different levels of effort, so modifications were made to the rubric.  It was subsequently used on both traditional and non-traditional students and provided an adequate assessment for both types of learners.  Non-traditional students, in particular, appreciate the flexibility of online courses that provide learning outside the normal classroom schedule constraints.  Non-traditional students are usually older, have job and family responsibilities, and prefer flexible curricula that allow them to use their computers and technology to enhance their learning skills (Nellen, 2003; Wooten, 1998; Wynd & Bozman, 1996). 

The Exchange Rate Exposure of Chinese and Taiwanese Multinational Corporations

Luke Lin, Dr. David So-De Shyu, and Dr. Chau-Jung Kuo

Abstract

This paper studies the sensitivity of the cash flows generated by Chinese and Taiwanese firms to the movements in a trade-weighted exchange rate index, as well as to the currencies of their major trading partners. To overcome the deficiencies in previous researches using variations of the market-based model, this paper adopts the polynomial distributed lag (PDL) model to investigate the relative importance of transaction exposure versus economic exposure by decomposing exchange risk into short-term and long-term components. In contrast to the existing market-based model, we find that PDL model is better in detecting exposures. Furthermore, our empirical results also indicate that a considerable exposure difference between Chinese and Taiwanese corporations under two types of exchange rate regimes.  With China’s entry into WTO, more and more Chinese firms participate in international business, and their understanding of the exchange rate exposure of their business becomes more important. Meanwhile, now most Taiwanese firms investing in China desire to use cheaper input factors and sell manufactured goods back to Taiwan’s trading partners. Such an investment decision has been establishing a close link between the two markets.

Investment Under Uncertainty with Stochastic Interest Rates

Cherng-Shiang Chang, Ph.D.

ABSTRACT

In recent years, the real options analysis developed to cope with an uncertain future is already having a substantial influence on corporate practice due to its offering new insights into corporate finance and strategy (Smit and Trigeorgis, 2004).  For the application of options pricing theory, unlike the works on the financial derivatives areas, most studies on the corporate finance and investment problems assume the underlying dynamics follow a geometric Brownian motion and the discount rates of the expected cash flows constant in order to obtain a closed-form solution.  In the real world context, however, the dynamics of the underlying usually track a product-specific lifecycle, in contrast to the one increasing versus time characterized by the geometric Brownian motion.  Further, it is obvious that the discount rates or the risk-free interest rates are not constant as well.  In this article, we relax the restrictions by employing the Ornstein-Uhlenbeck process for the underlying to meet the real product specific lifecycle.  Second, we setup the classical Vasicek (1977) model to describe the interest rate dynamics. 

A Research Study of Frederick Herzberg’s Motivator-Hygiene Theory on Continuing Education Participants in Taiwan

Ching-wen Cheng, Ph.D.

ABSTRACT

This study seeks to determine the factors motivating on-campus continuing education participants in Taiwan using Frederick Herzberg’s motivator-hygiene theory. Herzberg’s motivator-hygiene theory, also referred to as the two-factor theory, is commonly used in the academic area of organization management (Jones, George, & Hill, 2000). Due to costs involved and the study’s limitations, the research sample of the present study included students enrolled in the “2006 Human Capital Investment Plan” continuing education program at National Pingtung University of Education, a government plan that tries to improve Taiwanese laborers’ career competency by cooperating with higher education institutions (Bureau of Employment and Vocational Training, 2006). National Pingtung University of Education is a public education institution located in southern Taiwan offering bachelor, master, and doctoral programs. The purpose of this study is to construct a management opinion on adult learning motivation and provide the students’ motivators to the program administrators. The research determined that the major motivators of adult students’ participation are personal-advantage creation, personal-need recognition, learning enjoyment, program schedule, institution’s reputation, personal growth, and demand in the new economics.

Tax Burden Convergence in EU Countries: A Time Series Analysis

Dr. Tiia Püss and Mare Viies

ABSTRACT

Taxes are an important fiscal policy instrument and the main source of revenue for any country, which are used to regulate and influence economic and social development in the country. The EU has harmonized standards and regulations in numerous areas; however, there has been a lower degree of harmonization in taxation. Significant measures towards the harmonization have been raised strategically in the EU agenda. The aim of this paper is to analyze and compare the trends of the tax burdens in the European Union countries and test for convergence in taxation using the time series approach. We use harmonized data on the tax revenue and tax burden in the European Union countries collected by OECD and Eurostat in the period 1970-2004.  The issues of economic convergence have been in the focus of interest of many theoretical and empirical studies over the last two decades. Many concepts of convergence and different econometric methods for empirical analysis have been proposed.

Synergy in Business: Some New Suggestions

Dr. Vojko Potocan and Bostjan Kuralt

ABSTRACT

In the global competitive environment, enterprises can only survive (in the long term) by permanently improving their business. They have limited resources and they face very harsh conditions, therefore they can (significantly) improve their business results, if they organize their working better, e.g. by implementing potential/possible synergies. The concept of synergetic working is based (also, or even primarily) on the application of the process approach and of the (dialectically) systemic understanding of the enterprise as a business system (BS). Synergetic working enables BSs to attain the best overall results by harmonizing activities of all BSs' parts and considering the needs (and requirements) of the BSs' environments. This contribution deals with two theses: 1) Synergy is encountered and studied in various sciences; it is equally important in business sciences; 2) The process approach and (dialectically) systemic consideration enables us to define synergy in BS requisitely holistically (in terms of both contents and mathematics) and to use it for further consideration of BSs in business sciences.

Cross Analysis on the Contents of Children’s Television Commercials in the United States and Taiwan

Yi Hsu and Liwei Hsu

ABSTRACT

The influence of television programs toward children cannot be overlooked, TV commercials included.  This study is designed to examine the factors that are decisive for the marketing effects of children’s TV commercials.  The discussion about how the contents of Taiwanese children’s commercials differ from those of U.S. commercials and to explain reasons that cause these differences are the main themes of this research.  Six research hypotheses are tested and the results of the content analysis show that four of the six research hypotheses are accepted. The hypotheses on uncertainty avoidance and masculinity/femininity are not accepted by the statistical examination.  Television is a powerful socializing force for children, reaching them daily with extraordinarily high levels of exposure.  Children between six and fourteen years old watch approximately 25 hours of television weekly and view approximately 20,000 commercials annually (Moore et al., 2000).  In November 1999, the U.S. Kaiser Family Foundation published reports on children and teenagers exposure to television.  This investigation indicated that American children watched TV for an average of 2 hours and 46 minutes daily. 

The Technology Disruption Conundrum

Von Johnson and Pierre Ollivier

ABSTRACT

During the 20^th Century, the filmed entertainment business evolved from a regional studio factory system into the global media and entertainment industry we know today.  Once controlled by a handful of powerful and creative entrepreneurs (the studio ‘moguls’), the seven major studios are owned today by multi-national corporations, transformed into finance, marketing and distribution entities, content owners and licensors, network operators, recording companies and producers, Internet portals, game producers and publishers.  Some companies are vertically integrated in many or all of these businesses (e.g., Walt Disney, Time Warner, Viacom, NBC-Universal and News Corp.) Although they may differ in scale and corporate culture, the common thread among them is an economic model that relies on the ability to control levels of presentation quality, and when, where and how consumers access entertainment content. 

Improved Algorithms for Lexicographic Bottleneck Assignment Problems

Zehai Zhou, Ph.D.

ABSTRACT

The lexicographic bottleneck problem is a variant of the bottleneck problem that is in turn a type of the traditional cost (or profit) minimizing (or maximizing) assignment problems. In this paper, the author presents two polynomial algorithms for the lexicographic bottleneck problem. The suggested algorithms solve the lexicographic assignment problem with 2n nodes by scaling and/or sequentially solving a set of classical assignment problems and both algorithms run in O( n⁵ ). These algorithms improve the previous ones, devised by R.E. Burkhard and F. Rendl [3], by a factor of log n. In the special case where all the cost coefficients are distinct, an algorithm with run time O( n^3.5 log n ) is presented. A numerical example is also included in the paper for the illustration purpose. The cost (or profit) minimizing (or maximizing) assignment problem has been extensively treated in the literature and many polynomial algorithms have been devised to solve it [1, 8]. Several variations of the classical profit (cost) maximizing (minimizing) assignment problem have also been analyzed by researchers and efficient algorithms are readily available.

Do Employees Trust 360-Degree Performance Evaluations? (A research on the Turkish Banking Sector)

Assoc. Prof. Dr. Harun Demirkaya

ABSTRACT

Recently performance evaluation has been emphasized and systematized in businesses because the strategic importance of human resources in creating a high-performance organization is well understood. However, this has led to arguments, since both the evaluated and the evaluator are humans. The 360-degree evaluation, which was designed to settle those arguments and to provide an objective evaluation, is now widespread in Turkey.  Trust is one of the determinants of the effectiveness of performance evaluation. It is even more crucial in the 360-degree performance evaluation because so many evaluators are involved. This study tests the degree to which the employees of a bank trust the 360-degree performance evaluation.  A business corporation is a socio-technical system in which many people of different abilities, dreams, and creative skills come together. Three types of behaviors are required to make the system work well. First, people must be convinced to join and remain in the organization. Second, employees must perform their job responsibilities reliably. Third, they must voluntarily dedicate their creative and innovative skills beyond any sense of duty (Werner, 2000:4). This third expectation is indispensable for organizations aspiring to high performance.

Factors Influencing Sales Partner Control and Monitoring in Indirect Marketing

Prof. Dr. Roland Mattmüller, Prof. Dr. Ralph Tunder, and Dr. Tobias Irion

ABSTRACT

When selling their products, manufacturers of consumer goods are heavily reliant on the support of their sales partners as they act as gatekeepers for the end customers and thereby determine the extent and quality of the goods available to the customer. In order to ensure the desired market presence of their products, manufacturers are increasingly creating institutionalised structures for the continuous monitoring and control of their sales partners. Using a survey of 130 managers in various consumer goods sectors in Germany, the following investigation will clarify and empirically substantiate what the fundamental parameters are that shape the control of a consumer goods manufacture’s sales partners, and which factors influence the intensity of sales partner control.  In contrast to intraorganisationally orientated organisational and sales management literature, there are only a few empirical studies relating to interorganisational sales partner monitoring.   So even today, Frazier for example, still has to be endorsed, who in a meta-analysis of the contributions to knowledge in the field of distribution research comes to the conclusion:  “Despite the importance of monitoring, to the best of my knowledge, Bello and Gilliland (1997) are the first to explicitly examine it in a major channel study. Clearly much more has to be done.

Perceptions Affecting Employee Reactions to Change: Evidence from Privatization in Thailand

Dr. Chaiporn Vithessonthi

ABSTRACT

The focus of the present study is to test whether perceived participation in decision-making process and perceived change in power influence employee reactions to change (i.e., resistance to change and support for change) in a sample of 197 employees at a large state-owned organization in Thailand in the context of planned privatization. Using multinomial ordered probit regression, the results provide some support for the proposed hypotheses. More specifically, the level of perceived participation in decision-making process is negatively associated with the level of resistance to change whereas the level of perceived increase in power resulting from the change is negatively associated with the level of resistance to change and positively associated with the level of support for change.  During the past decade most state-owned enterprises in both developing and developed countries have come under increasing pressure to significantly improve their performance. In addressing this challenge, many state-owned enterprises have sought to go through a process of privatization, necessitating the implementation of organizational change. It has been argued that employee reactions to change, e.g., resistance to change and support for change, have critical implications for the outcomes of organizational change (Kotter, 1995). In a broader context, the attitudes and behaviors of employees have an impact on strategic implementation and firm performance (Becker, Huslid and Ulrich, 2001).

A Study of the Relationship of the Perception of Organizational Conflicts and Organizational Promises among Faculty and Staff Members in the Technical and Vocational Colleges

Hui-Chuan Tang

ABSTRACT

Colleges under the pressure of educational revolution need to constantly do something within their inner organization to cope with the changes of the society. In the process of transformation, many organizational conflicts occur both in the instruction and administration units. The reasons of such conflicts may be positive or negative. The former is helpful to enhance the members’ promises to the organization. Therefore, the primary purpose of this study is to understand the perception of technical and vocational college faculty and staff members’ organizational conflicts and promises, their relationship, and differences. Subjects are college faculty and staff members from technical and vocational colleges in central and southern Taiwan. Totally 720 copies of questionnaires are sent out, with 462 copies returned, of which 51 copies are invalid. Therefore, the return rate is 64% with 411 valid copies. The collected questionnaires are analyzed through One-way ANOVA and Typical Correlation.  The findings in the study are:

Mass Customization Manufacturing (MCM): The Drivers and Concepts

Dr. Muammer Zerenler and Derya Özilhan

ABSTRACT

Today’s business environment is characterized with extremely tight competition. Companies are forced to constantly reduce costs and outperform when pursuing efficiency. At the same time, companies are struggling to reach effectiveness to retain customer loyalty. Combining these two aspects is difficult at best and requires reasonable trade-off between variety, functionality, and price of the products and services. Mass customization relates to the ability to provide individually designed products and services to every customer through high process flexibility and integration. Mass customization has been identified as a competitive strategy by an increasing number of companies. This paper surveys the literature on mass customization manufacturing. Enablers to mass customization and their impact on the development of production systems are discussed in length. Approaches to implementing mass customization are compiled and classified.  Market and technology forces that affect today’s competitive environment are changing dramatically. Mass production of identical products—the business model for industry in the past—is no longer viable for many sectors. Market niches continue to narrow. Customer preferences shift overnight. Customers demand products with lower prices, higher quality and faster delivery, but they also want products customized to match their unique needs.