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.

Uncorrelated Emerging Equity Markets

Tulin Sener, Ph.D.

ABSTRACT

Most of the emerging markets recently have high returns with high volatility and low correlations with the World Index.  They have high potential to improve the return and risk performance of global equity portfolios. In global investing, geographical factors remain dominant for emerging markets.  This study shows that, at the outset of regional analysis, it is a good approach to find uncorrelated emerging market classes. Consistently, the uncorrelated emerging market classes justify the regional effects. Further, this approach contributes significantly to the regional analysis in several ways. The purpose of this study is to develop a strategy that might be helpful for global portfolio managers to find out uncorrelated country or region classes, as well as to evaluate the contributions of emerging market diversification to global equity investing. It is widely known that the diversification benefits to global equity investing are time variant over countries and are declining through time.  For the global equity investors and managers of the new century, the controversial question is whether diversification benefits will continue.  What is the relative importance of emerging markets for global diversification? Are geographical effects still important for global investing?

Lean Operations Management:  Identifying and Bridging the Gap between Theory and Practice

Dr. Daniel L. Tracy and Dr. John E. Knight

ABSTRACT

The lean management philosophy is at the forefront of advances in the practice of operations management today.  Lean principles meanwhile are built upon solid academic operations management theory.  Both academicians and practitioners can benefit more fully from understanding both the practice of lean management and theory of operations management by combining them into an integrated management philosophy.  This paper examines the gap between operations in academe and managers in the marketplace, the problems caused by that gap, and the potential benefits that could be realized by bridging that gap.  In addition, effective avenues for bridging the gap are suggested for marketplace managers, faculty, authors, and publishers.  Lean management is philosophically grounded in traditional operations management theory and models, and subsequently has been applied in today’s marketplace by non-academic practitioners in virtually every industry.  Although much of the progress in lean management has come from the manufacturing sector, explosive growth in lean management is now occurring in the service sector as well.  The driving force behind lean management is continuous process improvement through the elimination or reduction of non-value-added waste.  “The driving force for waste elimination is improved customer value and increased profitability in the products and services offered by an organization.” (Burton, 2003, p. 99-100) 

Banking Industry in Spain: Trends in Securitization of Loan Portfolios

Dr. Phani Tej Adidam

ABSTRACT

In the current booming Spanish economy, banks are enjoying tremendous growth and profitability. Not only is the housing market growing exponentially, the small and medium businesses are also seeking higher amounts loans for their working capital needs. With such ever-increasing demands for loans, banks are looking for innovative methods of generating liquidity for not only offering loans to their current customers, but also to expand into more lucrative markets along the Mediterranean coast. Increasingly, banks in Spain are securitizing their loan portfolios. This paper investigates such trends, and compares the same to the banking industry in the European Union.  Spain boasts one of the fastest growing economies in the European Union, and economic growth has steadily increased above the Eurozone average over the past decade. A construction and housing boom contributed to a decline in the unemployment rate and the rise in household wealth, creating overall positive economic conditions and tremendous growth opportunities for financial institutions. Demographic statistics indicate that 40.4% of the 44.7 million inhabitants in Spain are between the ages of 20-44. With a large young-adult population and growing immigrant population, banks have a sizeable target audience for origination of loans. They are prime candidates for loans as this population enters the workforce, establishes consumer credit, purchases a vehicle, and takes out a mortgage. The savings/investment rate in Spain is 10.4%, which has led to a decline in deposit funding, and an increased need for capital markets funding by financial institutions.

Investment Decision Making in an Entrepreneurial Firm: An Application

Prakash L Dheeriya, Ph.D.

ABSTRACT

This paper is a case study of a capital budgeting decision made in a small manufacturing plant in Torrance, California. The firm manufactures generic type of laser cartridges for use in monochromatic laser printers and has a distribution network all over the United States. The firm is considering the purchase of automation equipment which will increase its production three-fold, and will use the excess production to serve the Latin American markets, including Mexico. It has been in operation for over 4 years and has experienced substantial growth since prices of laser printers have fallen. The data represented in this case study is from the 2006-2007 fiscal year and is used to show the benefits of implementing good capital budgeting techniques in a small, rapidly growing entrepreneurial firm. This paper will discuss the current capital budgeting process, problems, and proposed solutions in the framework of entrepreneurial finance.  Small entrepreneurial firms are typically run by single owners who may lack financial expertise to evaluate investment proposals. They may rely on their personal accountants, tax advisors, bankers to provide key input in the capital budgeting process. Many studies have been undertaken to evaluate methods used in capital budgeting in small firms.

“The Relationship Between a College’s Success in Sports to Applications, Enrollments and SAT Scores”

Dr. Chaim Ehrman and Dr. Allen Marber

INTRODUCTION

The relationship between a college’s success in sports to applications, enrollment, and SAT scores can be viewed as a research study, trying to identify several trends. If a college is successful in sports, especially football and basketball, does it reflect that success in more students applying to that particular institution? In addition, what is the impact of success and the increasing number of applications? How will this increase in applications reflect on enrollments? Will the college’s policy towards enrollments change? Finally, how will a successful sports program which generates a larger applicant pool impact on the average SAT scores of the incoming freshman? There is a strong, enthusiastic feeling among College students and Alumni regarding Varsity Sports. There is a quote from Bobby Knight, a famous, well known Coach. He said that if the Dean were to ask him to raise $50,000 for the University Library, it will take him at least 3 months to raise the money, and he is not sure if he will meet his quota. If, however the dean were to ask him to raise $50,000 for a new Sports Arena for the Varsity Team, he will have the funds ready by the next day!

Comparison of Existing and New Tax Burden and Tax Effort Measures:  Evidence from the Southeastern United States

Dr. Sanela Porča and Dr. David S. Harrison

ABSTRACT

Economists and policy analysts frequently use the concept of tax burden to compare the effect of state and local tax policies on residents’ economic well-being over time or between states.  There are a number of methods to measure tax burden, and none can be considered perfect. Which measure to use depends on the question a researcher is trying to answer?  One has to keep in mind that different measures of tax burden have strengths and weaknesses.  Therefore, the results should be carefully reported and interpreted for the readers.  The current study compares the existing tax burden and tax effort measures and introduces a new, simplified Representative Tax System measure.  Economists and policy analysts frequently use the concept of tax burden to compare the effect of state and local tax policies on residents’ economic well-being over time or between states.  There are a number of methods to measure tax burden, and none can be considered perfect.  Tax burden represents a loss of economic well-being that arises from state and local government taxation. Knowing how a proposed tax change can affect the state and local tax burden is essential for assessing changes in adequacy, efficiency, and equity. A satisfactory measure of tax burden would take into account all taxes imposed by state and local governments and would indicate how tax changes alter the economic well-being of residents and the profitability of business firms. When tax burdens are measured as a percentage of tax capacity, the resulting number is know as tax effort.

CEO Annual Bonus Plans:  Do Performance Standards Influence the Association between Pay and Performance?

Aamer Sheikh, Ph.D.

ABSTRACT

This paper provides evidence on the effect of internal versus external performance standards on the association between CEO annual bonuses and firm performance.  It is the first paper to provide large-sample evidence on whether the type of performance standard influences the association between CEO annual bonus awards and firm performance.  Using a sample of 754 firms for the years 1992-2005,  I find that CEOs of internal standards firms have a lower sensitivity to accounting earnings than CEOs of external standards firms.  The sensitivity to firm stock returns does not differ between internal and external standards firms.  These results are robust to the inclusion of various control variables and alternative specifications of the regression model.  Virtually every for-profit corporation uses annual bonuses to award its Chief Executive Officer (CEO).  In light of the recent corporate scandals (Enron, WorldCom) which many attribute to the proliferation of stock options in CEO pay in the nineties, bonuses are likely to become an even more important component of CEO compensation (Leonhardt, 2002; and The Conference Board, 2002).  Tony Lee, editor-in-chief of CareerJournal.com, the Wall Street Journal’s executive career website notes that  “we’re seeing a rise in incentive plans that pay bonuses in place of stock options” (ERI/CareerJournal.com Executive Compensation Index, 2002).

A Means-End Approach to the Analysis of Visitors’ Perceived Values of Leisure Farms in Taiwan

Yueh-Yun Wang

ABSTRACT

The domestic agricultural industry faces the challenge of internal competition since it has joined the World Trade Organization (WTO).  In order to help farmers, the Council of Agriculture of Taiwan has started to promote agricultural tourism.  This study conducted an analysis of visitors’ perceived values toward leisure farms from the perspective of their experiences.  With a Means-End Chain (MEC) approach, the results of this study revealed that the concept of experiential marketing is applicable to the leisure industry.  Both the experiential modules, FEEL and SENSE, were considered to be most important from visitors’ viewpoints. The perspective of FEEL was formed by the results of relaxing, scenery, atmosphere of rural living, artificial Landscape.  Based on these findings, we conclude that the attributes of scenery, artificial landscape and the atmosphere of rural living are essential for leisure farms to attract visitors.  SENSE was derived from the results of feelings of appreciating natural beauty.  Furthermore, the attribute contributing to the formation of appreciating natural beauty is scenery.  As leisure farms are a newly developed industry in Taiwan, there has been little research in this field.  This study could be of practical reference to marketing leisure farms and be an example of researching related industries. 

Mergers & Acquisitions (M&As) As the Micro Effect of Globalisation and Turkish Insurance Sector

Suna Oksay, Ph.D.

ABSTRACT

From 1980s, we see the influences of globalisation in all over the world. With globalisation, countries in several parts of the world with different rules and regulations, eliminate their current rules and liberalise their markets (de-regulation) and organise them with the rules similar to other markets (re-regulation). Consequently, as financial markets in the world are regulated with similar rules, the players (buyers and sellers) of different markets can easily operate in all markets. From 2000s, the effects of globalisation began to be seen in financial and insurance markets. It is clear that they appear intensively in Europe as well. As the macro effect of globalisation, European countries have come together, established the European Union and begun to use single currency. In this context, it is also decided to have a single insurance market. On the other hand, as the micro effect of globalisation, in Europe, from 1990s, the number of mergers and acquisitions (M&As) significantly increased in order to increase the competitive power. This paper will elaborate the issue of mergers and acquisitions in Europe, as the micro effect of financial globalisation and the results of the mergers and acquisitions.

 Strategic (Big Picture) Technology

D. Keith Denton, Ph.D.

ABSTRACT

The problem for an organization or even a group is that this individual thinking and behavior are frequently at odds with other well-meaning and purposeful behavior.  When we do have a moment to lean back and ponder, there is no system to help us understand where we are headed, where we are at, or how we are doing.  Creating an effective work system entails linking strategy to operation objectives.  A good system of performance measurement and feedback should facilitate a broader understanding of how the pieces fit together.  This performance measurement and feedback system should address three critical concerns.  There is help today and it is coming from a most unlikely source.  Intranet technology can help groups improve their teamwork and performance by cutting through the details to reveal the connections and relationships at work.  New use of intranets can be used to track and display the relationships between key outcomes and processes that lead to those outcomes.  The intranet and supporting software has the capability to integrate outcome issues, like profitability or service concerns, with those processes that lead to those outcomes. Intranets can be used to integrate disconnected metrics to create a more realistic picture of what is really going on within the organization.  Key objective measures of performance, like financial performance, could be compared to important subjective concerns, such as the degree of teamwork or perceived group effort.

Fostering and Funding Entrepreneurship (Innovation and Risk-Taking) in the Biotechnology Industry

Dr. Sumaria Mohan-Neill and Michael Scholle

ABSTRACT

Entrepreneurship, through innovation and risk-taking, has driven the recent phenomenal growth in the biotechnology industry.  However, due to the very sophisticated technologies and processes required to accomplish innovations in biotechnology, it is a very capital-intensive industry. Sources of both human and financial capital are critical components for the survival and  the eventual success of biotech companies. This paper explores the sources of funding in the biotechnology industry.  It argues that biotechnology companies are more entrepreneurial, productive and innovative than larger pharmaceutical companies, and it predicts that mergers and acquisitions (M&A activity) will continue to accelerate, as larger and less innovative firms use more entrepreneurial firms to supplement their technology and product pipelines.  However, the challenge is how to maintain innovation and foster the entrepreneurial spirit of a smaller biotech company after it has been digested by a larger entity.  There are certain types of industries in which entrepreneurship and innovation do not require significant investment of financial and human capital; biotechnology is not one of those industries. The knowledge base and skill-set required to innovate require a very sophisticated understanding of science and technology.  Furthermore, in addition to the investment in human capital, financial capital is required to provide the resources which facilitate the research and development activity by scientists.  Ultimately, both financial and human capital is required to compete in this very sophisticated industry and marketplace.

The Antecedents and Outcomes of Union Commitment in Turkey

Dr. Tunc Demirbilek and Dr. Ozlem Cakır

ABSTRACT

The concept of union commitment is becoming increasingly important because of the decreasing number of union members in recent years. This paper presents findings of a study which examines the antecedents and consequences of union commitment on Turkish workers.  The research is carried out by the members of a union established on oil and chemical plants located in the Aegean Region of Turkey. 461 respondents from 8 private sector firms are used as samples. Hypothesis about union commitment and normative approach, instrumental approach, attitudes toward industrial relations, attitudes toward unionism, socio-psychological support are confirmed. The findings also support the hypothesis regarding the relationship between union satisfaction, union participation and union commitment.  Since 1980s, behavioral researches have focused on the attitudes of both current and potential union members. These researches have examined members’ attitudes in a wide range. The attitudes in question are depicted respectively as: general attitudes toward unions, union instrumentality perceptions (i.e. members’ degree of belief in unionism about succeeding in considerable subjects – such as salary, job safety), satisfaction about union performance and union-member relations, members’ feelings about their initial experiences in union (member socialization), comments about making use of grievances procedures and its effectiveness, and opinions about leadership skills of union stewards and union officials.

Intellectual Capital and the Perceived Relevance of the Balance Sheet as a Value Measure for Corporations

Dr. Shaniz Khan

ABSTRACT

This paper investigates the impact of Intellectual Capital and its components on the perceived relevance of the balance sheet as an indicator of corporate value. It represents an attempt to integrate previously fragmented literature on Intellectual Capital to a single framework while providing an empirical examination on the effects of Intellectual Capital components. Results from the study have demonstrated that the balance sheet was indeed perceived to be irrelevant as an indicator of corporate value and was significantly associated with the level of investment in Intellectual Capital. This association was largely contributed by the Human Capital component. Thus, organizations that fail to disclose Intellectual Capital will find their balance sheets no longer perceived relevant as an indicator of their corporate value. Further, in disclosing Intellectual Capital in the balance sheet, more attention needs to be given to the Human Capital component.  Assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events (Statements of Financial Accounting Standards 3, 1980). These future economic benefits give every asset a value (Bernstein, 1993). Therefore, assets owned or controlled by corporations collectively determine the entire value of organizations (Edvinsson & Malone, 1997).  Since the balance sheet is a financial statement that captures organizational assets, it becomes an important tool used by companies to measure and communicate their value (Edvinsson & Malone, 1997; Hopwood, 1976; Cheney, 1995; Jones, 1995).

The Evolution of Sea Navigation between the Two Sides of the Taiwan Strait

Ya-Fu Chang, and Dr. Chuen-Yih Chen

ABSTRACT

Direct navigation between the two sides of the Taiwan Strait has been disrupted since 1949 as a result of political confrontation between Taiwan and Mainland China. However, with the increasing civil exchanges and trade activities and the rapid growth of foreign trade volumes at the harbors of Mainland China in recent years, the policies and approaches regarding direct navigation by the governments on both sides of the Taiwan Strait have given rise to concern by international shipping companies, whose vital business interests are closely connected with East Asian shipping lines. This paper analyzes the evolution of policies regarding direct navigation and shipping modes adopted by governments on both sides, particularly the content of and differences in restrictions on containership shipping lines. Recommendations for improvement of these policies are also provided.  Since 1949, as a result of civil war in China, the governments on the two sides of the Taiwan Strait have prohibited cross-strait maritime exchanges and trade, despite increasing demands for an end to restrictions on such activities. Accordingly, seaborne cargo had to be unloaded and transshipped from third places, such as Hong Kong. Taiwan began to allow residents to visit relatives on the Chinese mainland in 1987, and Hong Kong was returned to Chinese sovereignty in 1997. Anticipating the loss of Hong Kong’s role as a third place apart from the two sides, Taiwan introduced an Offshore Shipping Center strategy in order to maintain its “no contact, no negotiations” policy toward Mainland China.

Mergers and Operational Efficiency in Taiwan’s Audit Firms

Tsung-Yi Tsai and Dr. Chung-Cheng Yang

ABSTRACT

This paper uses Data Envelopment Analysis (DEA) to assess the cost efficiency, the technical efficiency, and the allocative efficiency of audit firms, and applies Tobit censored regression model to examine the relationship between operational efficiency and audit firms’ mergers. Estimation of the model uses a balanced panel data for 120 audit firms for the period 1997-2001 in Taiwan. The empirical results indicate that the effects of mergers on scale economies effects are larger than cost effects, justifying recent merger activities in the public accounting industry. In the knowledge-economic age, audit firms’ professional services play a key role in the capital market. Different types of fraud within the audit profession have increased, and many countries have tightened legal restrictions on audit firms, including prohibiting them from providing some non-audit services. These difficulties have been compounded by market competition and other pressures related to the development of audit firms, so the question of how audit firms can survive in this changing environment is worth analyzing.  For a long period of time, merger has been an important strategy adopted by audit firms to facilitate growth. At the end of the 1980s, the Big-8 audit firms began to merge, and the Enron scandal in 2002 led to the dissolution of Arthur Anderson. These events resulted in the Big-8 becoming today’s Big-4 audit firms. In the past, the research on mergers often concentrated on the auditor concentration, market power, market share, audit quality, profit margin and audit fees (Lee, 2005; Minyard and Tabor, 1991; Owen, 2003; Payne and Stocks, 1998; Tonge and Wootton, 1991; Wootton et al., 1990, 1994).

Users’ Perception of Entities’ Performance: Risks Arising from Implementing the Revised Version of IAS 1

Dr. Alessandro Mechelli

ABSTRACT

This paper deals with the issue of performance reporting by entities, an old issue that has interested academics and users for a long time.  A recent standard (the revised version of IAS 1) issued by the International Accounting Standards Board tries to improve this reporting, attempting to bring IAS/IFRS standards into line with Statement of Financial Accounting Standard 130, Comprehensive Income.  This standard, being only a segment – called segment A – of the whole project, does not deal with defining concepts on the basis of every kind of result, limiting itself to ordering that all non-owner changes in equity recognized in accordance with current standards be presented in one or two statements. We will show that these innovations put financial reports on the right track, but do not help users to understand the clear meaning of different kinds of results recognized in financial statements. The revised version of IAS 1 could have the result of affecting the users’ perception of entities’ performance, without defining the concept of performance that entities should show – a concept that, perhaps, will be explained in segment B.  This approach could create a clouded situation in the interpretation of an entity’s performance and, consequently, in using the entity’s performance to make economic decisions.

Health Insurance: Do You Know What’s in Your Policy?

Marsha R. Lawrence

ABSTRACT

According to the U.S. General Accounting Office (as cited in Thomasson, 2003), 95 percent of working Americans, under age 65, receive health insurance through their employers.  Health insurance through employment is the number one method of paying for healthcare related expenses, but do people really understand health insurance and how it works? According to Employee Benefit Research Institute (EBRI) President Dallas Salisbury, “ . . . many Americans are not able to identify their health care plan, making a difficult issue more complicated by this lack of knowledge” (Latest survey, 1999). This is a quantitative study that seeks to examine if patients understand health insurance and its processes including why some services are paid and some services are not.  The findings of this study are contradictory to the EBRI statement, in that the participants were able to identify their health care plan.  Other significant findings include the fact that participants were satisfied with their health plan but they were not sure what is in their plan. Lastly, they read their Explanation of Benefits (EOB) but were not sure why services are often denied.  According to the U.S. General Accounting Office (as cited in Thomasson, 2003), 95 percent of working Americans, under age 65, receive health insurance through their employers.  Health insurance through employment is the number one method of paying for healthcare related expenses, but do people really understand health insurance and how it works? According to Employee Benefit Research Institute (EBRI) President Dallas Salisbury, “ . . . many Americans are not able to identify their health care plan, making a difficult issue more complicated by this lack of knowledge” (Latest survey, 1999).

The Role of Trust in Joint Venture Control: A Theoretical Framework

Samson Ekanayke

ABSTRACT

This paper develops a theoretical framework and a number of propositions for systematically studying the role of trust in the control and performance of Joint Ventures, a prominent form of inter-firm alliance.  The proposed framework is more complete than the frameworks available in the extant literature because it incorporates both transaction related risks and the partner related risks which are likely to impact on the reliance on particular control patterns. Partner-related risks in joint ventures are represented by the level of inter-partner trust, while transaction-related risks are represented by the Transaction Cost Economics (TCE) variables of asset specificity, task complexity, performance measurability, and environmental uncertainty.  The framework also links one of the established management control typologies (i.e., behaviour, outcome, and social) to two of the alliance control patterns (bureaucratic-based pattern, and trust-based pattern) identified in the literature on alliance control.  Inter-firm alliances, such as joint ventures, are a form based on mutually dependent cooperative relationships between two or more firms. Researchers increasingly recognise inter-firm trust as an important variable in the control and functioning of alliances (eg., Creed & Miles , 1996; Child, 1998; McEvily, Perrone & Zaheer, 2003). As McEvily et al., (2003) in their introduction to the Organization Science special issue on trust comment:

How can Village Banks Maximise their Strategic Role of Promoting and Developing Small Businesses: An Overview of Developing Nations

Kisembo .K. Deogratius

ABSTRACT

Village banking which is also referred to as private or local or private banking by many authors has been a fast-growing business in many more developed countries, and now it is moving into less-developed countries such as Sub-Saharan Africa as well. It is with no doubt that village banks are one of the major sources of funding for many Small Businesses in many Developing countries. The winds of competition are blowing through the world's banking market, particularly at the top end. Local banks in many areas have seen their wealthiest clients take their funds to international private banks. Now some are responding by developing their own services. "The opportunities for domestic Village banks appear to be very great indeed," says David Gibson-Moore, executive manager of private banking and share trading at the Al-Rajhi banking and Investment Company of Riyadh.  Gibson-Moore echoes the sentiments of many individuals throughout the world that see the growth and development of village banking – in many different countries.  The concept of village banking will be discussed more fully throughout the paper.  It is important to define it and analyze it, because many people are unfamiliar with the terms and ideas used in the village banking tradition, and they may become confused if these terms are not explained more fully to them. 

Networked Organization and the Owner/Supplier Relationship

Dr. Deborah Hardy Bednar and Dr. Lynn Godkin

ABSTRACT

This case study details the criteria for establishing a Networked Company.  The criteria is then focused on the development and management of a Networked Company involving an environmental remediation project.  The participants include an international manufacturer, an environmental engineering firm and a privately held construction company.  Conclusions related to trust relationships in the face of project complexity are reported.  The notion that individuals can come together in virtual organizations and networked organizations is being recognized in the literature. (Hedberg & Holmqvist, 2003, p. 735)  Networked companies are typically associated with advanced information technology (Grenier & Metes, 1995) in partnerships (Davidow & Malone, 1992) and with temporary groupings. (Goldman, Nagel, & Preiss, 1995)  However, Hedberg uses the term “imaginary organization” to discount the influence of information technology.  (Hedberg & Holmqvist, 2003)  He uses “virtual organization” to refer to those organizations which are temporary and “imaginary organization” to those with similar characteristics, but of longer duration.  (Hedberg, 2002, p. 11)  Otherwise, networked companies coordinate their activities through development of joint mission and vision statements. (Hedberg & Holmqvist, 2003)  “Although they typically consist of a number of semi-independent legal units, they behave as one organization, and they exist and are manifested in the imagination of their leadership.” (p. 734) 

Personal Traits and Leadership Styles of Taiwan’s Higher Educational Institutions in Innovative Operations

Dr. Jui-Kuei Chen and I-Shuo Chen

ABSTRACT

With increasing numbers of higher educational institutions in Taiwan, how to become more efficient through innovative operation has become a critical issue. This paper studies the “Big-5” personal traits, leadership styles, and their relationship to innovative operation. Conducted with a sample of universities in Taiwan, the study analyzes 194 professors and lecturers from three universities by means of a questionnaire. The dimensions are divided into three parts: personal traits, leadership styles, and innovative operations. The study utilizes factor analysis, variable analysis, and correlation analysis. The two main findings are, first, that traits of extraversion and agreeableness have a positive relationship to higher perception of innovative operation in the university. Second, transformational leadership should combine with transactional leadership without management-by-exception passive (active participant style) for more efficient innovative operation. A discussion of the key research findings and some suggested directions for future research are provided.  Because of Taiwan’s joining the WTO and an increasing number of universities, innovative operations have become a crucial issue for survival in a competitive higher-education market. Extant research has indicated that organizational operations involve primarily top managers and their subordinates (Beng & Robert, 2004), although some studies have shown that institutions of higher education often fail to implement innovative operation (Glower & Hagon, 1998; Cuban, 1999) because of a lack of participation by teachers (McLaughlin, cited in Rudduck, 1991). Because of this finding, understanding the personal traits of teachers and managers’ leadership styles will be crucial for universities which seek innovative operation.

Constructing Financial Ratios to Evaluate Technical Corporations

Chun-Huang Liao

ABSTRACT

This article constructs cross-sectional data from financial ratios to evaluate technical corporations in Taiwan. Via establishment of financial constructs, 560 listed companies were segmented into four groups, each with its own financial situation. Financial ratios—including pre-tax EPS, net worth per share, cash flow per share, after-tax ROE, revenue per share, quick ratio, current ratio, and net worth ratio—are found to be significantly related to the factor of corporate market value. Reducing eight variables to two financial constructs—Operating Efficiency (OE) and financial Physique Structure (PS)—provides an overall financial picture and differences among listed companies. The findings should prove valuable in portfolio management and corporate financial decisions.  Revealing the financial quality of tech corporations, with financial constructs as a filter, can help to reduce risk and raise the performance of investment capital. Although the scientific and technological industry in Taiwan and many advanced countries is flourishing, not all tech corporations are at the same stage of development: Some are at the growth stage of the industry, some are in the plateau period, some are in the decline phase, and a few face bankruptcy. Filtering financial constructs helps to divide firms into different groups in order to benefit investors and layers of management.

Skill Requirements for Software Developers:  Comparisons between U. S. and Taiwan

Jui-Hung Ven and Chien-Pen Chuang

ABSTRACT

The job advertisements for software developers were collected from web recruiting services in the U. S. and Taiwan. Skills requirements were gathered via a semi-supervised program based on the information competency ontology created by the authors. All skills were classified into six categories: operating system skills, programming language skills, markup language skills, database skills, distributed technology skills, and other skills. The proportion of skill requirements for each individual skill and matched pairs in every skill category were calculated. The most common skills needed were reported and compared. The result shows that Windows, Java, SQL Server, and .NET were the most common needed skills in the four main categories. The average numbers of skill requirements were 9.16 and 7.69 in the U. S. and Taiwan, respectively.  A software developer should have many facets of competencies in order to complete the design, development, installation, and implementation of information systems. Competency is a set of KSA, which is the acronym for knowledge, skill, and ability. From an employment’s point of view, a software developer should know the knowledge related to software development such as programming techniques, data structures, relational database concepts, object-oriented concepts, software development life cycles, and etc. A software developer should also have technical or hard skills such as Windows, Java, VB (Visual Basic), SQL Server, and etc. Abilities or the so-called soft skills such as listening, speaking, reading, writing, information gathering, and etc. are needed in all workplaces.

Accounting for Impairment Test of Investments in Subsidiaries and Associates

Mauro Romano, Ph.D.

ABSTRACT

This study examines the two principal items that need to be treated in the impairment accounting of investments in subsidiaries and associates: goodwill and minority interests. The specific attempt of this study is to concentrate the attention on the determination of recoverable amount, defined as the higher of fair value less costs to sell of the asset and its value in use. The impairment test of investments in subsidiaries and associates may be approaching in different way in separate and consolidated statements. In the separate statement, the carrying amount of an investment in subsidiaries or in associates is compared with recoverable amount to determine impairment loss; in the consolidated statement, the impairment test regards identifiable assets and liabilities of the subsidiary or associate and, then, as residual value, the “goodwill on consolidation” resulting from the consolidation techniques. The proposed amendments of IFRS 3 (June 2005) introduces the ‘full goodwill’ method in the consolidated statement, with interesting reflects on the impairment test accounting.   The standard applies to an entity that makes an explicit and unreserved statement that its general purpose financial statements comply with IFRS. The standard sets out the procedures that an entity must follow when adopting IFRS for the first time. Its objective is to ensure that financial statements contain high quality information that is transparent, comparable, and can be generated at a cost that does not exceed the benefits to users.

The Choice of Housing Location

Hsiu-Yun Chang

ABSTRACT

This study attempts to explore the influence of house demanders on choice of housing location. The neighborhood’s effects have been investigated for a long time, and they are very important factors in the real estate market. However, more and more literature has recently focused on asymmetric information, and indirectly has found that a local home bias phenomenon exists in the choice of housing location. For example, Lerner (1995), Coval and Moskowitz (1999, 2001) and Garmaise and Moskowitz (2004) contribute to the literature by investigating the relationship between the distance and the degree of information asymmetry. Their investigation indirectly injects the conception of the local home bias phenomenon into the real estate market. This study models the spatial home bias effect and spatial neighborhood effects that arise from distinct community components and tries to explore whether the contextual interactions within the community influence the choice of housing location by the household members. Finally, the results prove that both effects influence the location choice of housing buyers. For further investigation, this study suggests that researchers can collect real estate data to test the magnitude of both these effects within each jurisdiction of a country, and thus forecast immigration phenomena.  Housing purchase behavior consists of dual motives: consumption and investment (Henderson and Ioannides, 1987; Arrondel, 2001). For consumption demand, houses are durable consumption goods and yield tangible services each period.

Long-Run Share Prices and Operating Performance Following Share Repurchase Announcements

Dr. Chaiporn Vithessonthi

ABSTRACT

This study uses a new data set to assess whether our understanding of share repurchase is portable across countries with different institutional settings. This paper presents the empirical results regarding long-run stock price and operating performance following share repurchase program announcements of listed firms in Thailand between 2001 and 2005. The results show that there is some evidence of long-run abnormal stock returns following announcements of a share repurchase program, implying that the market fails to incorporate the valuation effect of share repurchase information in a short period. The findings provide no evidence of the long-run operating performance improvement following the share repurchase program announcements.  It has long been documented that the initial stock price reaction to share repurchase announcements is positive (Comment and Jarrell, 1991; Dann, 1981; Peyer and Vermaelen, 2005; Lakonishok and Vermaelen, 1990; Rau and Vermaelen, 2002; Vithessonthi, 2007). However, several studies have questioned whether the market fully incorporates the valuation effect of share repurchase information in a short period. Some conclude that stock prices underreact to share repurchase announcements, and that the investors fully incorporate the effect of a share repurchase announcement in subsequent periods. The correction of such underrections may explain the long-run abnormal returns that share repurchase announcing firms experience.

International Dual Listing: An Analytical Framework Based on Corporate Governance Theory

Dr. Yun Chen

ABSTRACT

Recent studies have found corporate governance is a better explanation to understand the international dual-listing phenomenon. Based on reviewing conventional theory of international dual listing and its limitations, this paper explains international dual listing theoretically from corporate governance perspective. At the same time, it develops a basic analytical framework of relationship among international dual listing, external and internal corporate governance. The internal corporate governance mechanism includes ownership structure, shareholder base and the board of director. The external corporate governance mechanism includes legal system, disclosure requirements, monitoring from reputation intermediaries and market for corporate control. International dual listing will change external and in turn stimulate the company upgrade its internal governance mechanism.  The globalization in equity market has accelerated stock trading from around world. Up to now, tremendous competition has arisen among major stock exchanges around the world to attract listings and trading volume and to stoke capital-raising activity by overseas companies in their markets. According to the report of World Federation of Stock Exchanges in 2005, the number of foreign companies with shares dual listing and trading on major exchanges outsides of their home markets reached 2300, including the companies not only from developed countries but also from emerging countries opening up their stock markets to foreign investors for the first time.

Performance of Suppliers’ Logistics in the Toyota Production System in Taiwan

Nelson N. H. Liao

ABSTRACT

The present paper referred to the model of Dong, Carter and Dresner (2001) and sampled the supervisors of Toyota automobile suppliers in Taiwan to examine whether the supply chain integration, just-in-time (JIT) purchasing and JIT manufacturing can benefit the logistics performance of suppliers. The results indicated that supply chain integration, JIT purchasing and JIT manufacturing had direct and significant benefits to logistics performance.  The implementation of just-in-time (JIT) purchasing systems can result in reduced inventory costs, shorter lead times, and improved productivity for buying organizations (Shingo, 1981; Schonberger, 1982; Hall, 1983; Ansari and Modarress, 1987; Tracey, Tan, Vonderembse, and Bardi, 1995). A buyer’s inventory costs may be reduced because costs are transferred to suppliers after implementation of JIT (Romero, 1991; Fandel and Reese, 1991; Zipkin, 1991), so suppliers’ inventory costs are less likely to decrease (Dong, 1998).  Dong, Carter and Dresner (2001) developed and tested a practical model to determine whether the use of supply chain integration, JIT purchasing and JIT manufacturing could reduce logistics costs for both suppliers and buyers. The result of their test for suppliers is shown in Figure 1; although the extent of supply chain integration and JIT purchasing have no direct benefits to logistics costs, these two dimensions have indirect benefits to logistics costs through JIT manufacturing.

The Dynamic and Full Significance of Macroeconomics’ Main Equation

José Villacís, Ph.D.

INTRODUCTION

Germán Bernácer (Alicante, 1916-1926) laid the foundations of macroeconomics between 1916 and 1926. In his first book, “Society and Happiness. An Essay on Social Mechanics,” (Sociedad y Felicidad. Un Ensayo de Mecánica Social, 1916) Bernácer explains a macroeconomic production design, the origin of income and interest, and the monetary market. In 1922, he publishes an article under the title, “The Theory of Liquid Assets,” (La Teoría de las Disponibilidades) wherein he expounds the questions of money demand and the origin of interest. Liquid assets and production funding are two issues stressed throughout Bernácer’s whole work that the author believes are yet to be discovered by macroeconomics; these two concerns are the starting point for this paper.  Savings originate from income and revert into the production circuit in the form of demand for capital equipment – we call this operation “investment.” Actually, there is a portion of savings that are liquid assets, which are neither capitalized nor amassed, but rather, circulate and are used to repurchase secondary financial assets. This means, in the first place, that liquid assets entail a lack of demand. Secondly, that there is a part of the financial market that diverges, and therefore, such part is not neutral, nor does it function as a simple bridge between savings and investment. In addition, where there are liquid assets, then the portion of income that is not saved should be divided into two factions: the portion of savings to be capitalized on the one hand, and liquid assets on the other hand.

Promptness: A Teaching and Evaluation Model

David L. Russell, Ph.D.

ABSTRACT

Promptness is a desirable behavior in students and an expected behavior in professionals. Promptness can also be viewed as a surrogate variable of the larger concept of engagement with the course. Here, a model to integrate the evaluation of promptness into the usual pattern of teaching a college-level course is presented. The life cycle of a specific assignment is presented and broken down into measurable intervals. Classroom management software provides the key tool to perform the analysis. Other forms of evaluation of promptness are presented. Conclusions are drawn, focusing on increasing learning by maximizing the time students have available between the opening of a posted assignment and its submission.  Professors of Information Systems (“IS”) are expected to teach our classes in an interesting and informative matter, using technologies selected for their currency or for which there is demand in the labor market. Professors are also expected to themselves reasonably well informed about developments in the field and to conduct research in ways that meld with the mission statement of the professor’s institution.  In a more diffuse manner, professors are expected to serve as role models, thus helping students to evolve into working professionals.

The Evaluation of Advertising Costs Within the Accounting Recording System

Dr. Fatma Ulucan Ozkul

ABSTRACT

Advertising basically aims at leaving an impression on the mass of consumers and directing this mass to buy by effecting the ideas and habits of them and increasing the benefits of the companies.  The aim of this study is, rather than to put emphasis on advertisements’ being important and necessary for the companies and the consumers, to include to make necessary improvements with the idea that under today’s conditions the companies’, who reserve high budgets on advertising, reflecting the expenses of advertisements to financial statements by seeing them only as a mean of sale increasing gives missing information to the users of reports and misdirects them. In this study, the importance of dealing with advertisements’ expenses as expenditures which should be traced within the frame of matching principle because they affect the profits of companies just not in the current year but in the following years.  In this line, advertising should be evaluated as a means of investment in long term besides being evaluated as an activity of sale increasing in short term. Also, in the study, the expenses of advertising, which confirms the image of the business, increases its respect and makes it a brand, are dealt with not just as profits of current year but also the necessity of amortization in the period of getting benefited by capitalizing them.  As a result of rapidly changing market conditions and increasing of competition day by day, marketing interaction and the people’s, who work in these areas, effective and rational usage of them have become important in the success of the many companies which produce similar commodities.

A Typology of Co-branding Strategy: Position and Classification

Wei-Lun Chang

ABSTRACT

As many companies seek growth through the development of new products, co-branding strategy provides a way to develop new products. However, combining two brands may cause brand meaning to transfer in ways that were never intended. The present paper advances research on co-branding strategies by proposing a conceptual framework of co-branding through a typology with three concepts: co-branding aim, category, and effect. The typology framework not only provides a roadmap of co-branding strategies but also illuminates issues related to co-branding for related research.  As many companies seek growth through the development of new products, co-branding strategy provides a way to develop new products as successful brands provide signals of quality and image. Co-branding involves combining two or more well known brands into a single product. A successful co-brand has the potential to achieve excellent synergy that capitalizes on the unique strengths of each contributing brand. In the last decade, co-branding and other cooperative brand activities have seen a 40% annual growth (Spethmann and Benezra, 1994).  Companies form co-branding alliances to fulfill several goals, including: (1) Expanding their customer base, (2) achieving financial benefits, (3) responding to the expressed and latent needs of customers, (4) strengthening competitive position, (5) introducing a new product with a strong image, (6) creating new customer-perceived value, and (7) gaining operational benefits. One industry in which co-branding is frequently practised is the fashion and apparel industry (Doshi, 2007).

Leadership, Knowledge Sharing, and Organizational Benefits Within the UAE

Dr. Mohamed H. Behery

Abstract

The study is about an exanimation of the relationships among transformational and transactional leadership, knowledge sharing, and organizational benefits in Dubai. Leadership behaviors, knowledge management, and organizational effectiveness are considered major business topics today. There has been no previous direct empirical evidence to examine the relationships among transformational and transactional leadership, knowledge sharing, and organizational effectiveness in Dubai. To fill this research gap, this study focused on examining this relationship with an additional emphasis on professional service firms. Using a sample of 560 employees from different business services sector, the significant findings of this study are: (1) transactional and transformational leadership were positively related to knowledge sharing in these organizational settings (2) knowledge sharing was considered as a valid predictor of the organization’s organizational benefits and effectiveness (3) transactional and transformational leadership were positively     related to the organization’s organizational benefits effectiveness. (4) Unexpected neutral effect of demographic variables, such as gender and citizenship, upon the study’s variables has been detected. Limitations of this study and recommendations for future research are also provided.  Although leadership has been considered an important factor in the success of knowledge-based organizations (Hefner, 1994), prior related research has studied: (1) the relationships between leadership behaviors and knowledge management (Politis, 2001, 2002; Ribiere and Sitar, 2003), (2) the knowledge-based approach in strategic alliance settings (Dyer and Nobeoka, 2000; Parise and Henderson, 2001), and (3) the relationships between leadership behaviors and organizational benefits (Rodsutti and Swierczek, 2002; Avery, 2001; Pounder, 2001).

Social Participation and Life Satisfaction: From Youth’s Social Capital Perspective

Jui-Kun Kuo, Ph.D., Cheng-Neng Lai, Ph.D., and Chun-Shen Wang

ABSTRACT