The Journal of American Academy of Business, Cambridge

Vol.  17 * Num.. 1 * September 2011

 The Library of Congress, Washington, DC   *   ISSN: 1540 – 7780

 Online Computer Library Center   *   OCLC: 805078765 

National Library of Australia * NLA: 42709473

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New Method Approach Toward Efficiency

Dr. Lee G. Demuth III, Johnson College, Scranton, PA



Adopting a new method approach on efficiency is an important decision for many companies and corporations. Employees and consumers have had to think up new ways on finding efficient and productive ways to operate products and machines. A new and imaginative method approach will be used in this article. The researcher shall identify a new method approach in operating products and machines in the workplace. This article will be based on critical concepts observed by Everett Rogers regarding the diffusion of innovations theory. The outcome is where the researcher will identify a new method approach regarding innovation. Example showed that the new method approach was significant in estimating the adoption of operating products and machines more efficient and productive in the workplace.  Adopting a new method approach is an important decision for many employees and consumers in the workplace. The researcher will introduce a new method approach in this article. The focus of this article was on the current problem on operating labor-intensive products and machines more efficient way in the workplace. Employees and consumers find other ways to conserve and become more efficient as a solution toward adopting a new method approach in the workplace. Employees and consumers need to react more readily and radically to adopt a new method approach in this article. This article will view diffusion of innovation theory followed by the introduction to the new method approach will be viewed in this paper.  The increasing use of technology in organizations motivates employees to embrace technology while at the same time regard it as a problem. Organizations use technology to provide increased amounts of information in decision making and to improve efficiency. The advent of word processing was the first application of technology in the workplace to improve efficiency, and was initially viewed by some as only a secretarial tool. Nevertheless, diffusion of innovation was the outcome of implementing this technology in the workplace.  As defined by Rogers (1995), “diffusion is the process by which an innovation is communicated through certain channels over time among the members of a social system” (p. 5). This definition communicates a new idea about innovation. Communication involves spreading information to accomplish a task. Rogers asserted that “diffusion is a special type of communication, in which the messages are about a new idea” (p. 6). Rogers’s diffusion of innovation theory curve treats technology as a serious social system problem.  Rogers’s (1995) diffusion of innovation theory is focused on the idea that new innovation devolves from creation. The innovation process goes through channels that are created over time among members of an organization (Clarke, 1999). The process stages include knowledge, persuasion, decision, implementation, and confirmation. The knowledge stage includes explaining the function of an innovation. The decision stage seeks commitment on innovation adoption, then implementation occurs. The last stage is confirmation, which is usually based on outcomes (Clarke).  Clarke (1999) gave examples of how different innovations are accepted at different intervals. One example is the Sony Walkman. Clarke identified this innovation as one that attracted much attention. Some other innovations have great potential but are waiting until society has a need—for example, the fax machine. It was invented but not rapidly implemented until people were ready to adopt it. Clarke suggested that most innovations slowly penetrate an organization, after which adoption grows more quickly. Clarke also recognized that, quite often, this quick adoption slows afterward.  Diffusion of innovation research was first started in 1903 by seminal researcher Gabriel Tarde, who first plotted the S-shaped diffusion curve. In the 1940s, Ryan and Gross continued interest in diffusion of innovation using the S-shaped curve. Everett Rogers then reevaluated and continued in the adopter categories in the 1960s. Diffusion of innovation research has increased over the past decades due to its versatility. Various research studies have had similarities, such as the S-curve, which provides this versatility.  A study conducted by Smith (2000) of diffusion of innovation in an organization resulted in an adoption rate of 14%. Generally, adoption rates are relevant to how quickly people accept technology. Abandonment of newly adopted technology in Smith’s study was as high as 90%. Smith stated that costly abandonment and adoption rates revealed that organizations do not know how to motivate its employees to adopt new technology.  Grubler (1996) found organizations struggled with adoption of technology to increase productivity. A study conducted by Karahanna, Straub, and Chervany (1999) recounted pre-adopters’ and post-adopters’ views on diffusion. The results demonstrated that potential adopters vary in behaviors, attitudes, and norms. Potential adopters are pressured by the norms of the organization, and the intention to use technologies is determined by attitude (Karahanna et al.). Potential adopters either reject the innovation, adopt the innovation, or are forced to use the innovation because a decision to use it has been made at a higher level (Rogers, 1983).


A Longitudinal Analysis of Post-Merger Job Satisfaction for Marketing Faculty:  The Rebound Effect

Dr. William T. Neese and Dr. Stephen S. Batory, Bloomsburg University, Bloomsburg, PA



 A multidimensional measure of job satisfaction originally developed in the sales literature was adapted for this study to analyze the impact of a department merger over time on marketing faculty members.  Data from respondents were compared with that reported by marketing faculty who had most recently been split apart from an interdisciplinary department to form an autonomous unit and also the majority of peers who have never experienced any type of administrative restructuring.  Results indicate that overall post-merger job satisfaction and satisfaction with peers, with the chairperson, and with students deteriorates for several years then begins to rebound in a positive direction as time heals old wounds.  Finally, results consistently indicate that marketing faculty members who have never been through any restructuring are most satisfied with their jobs compared to their counterparts who experienced a stressful reorganization.  According to Wilkie and Moore (2003), two or three universities that are now “Big 10” schools began the academic discipline of marketing approximately 100 years ago by publishing textbooks and designing courses focused on how to be more efficient and effective distributing agricultural products to the masses in America.  Since its eclectic beginnings, the academic discipline of Marketing has struggled to break away from “parent” fields (e.g., Economics, Management, or Social-Psychology) and find its own identity.  This movement is part of a bigger phenomenon in higher education, where individual specialists have long desired to adhere together as a cohesive administrative unit and be managed by one with academic credentials highly similar to their own (see for example Aggarwal, Rochford, and Vaidyanathan 2009).  Naturally, debate concerning the merits of narrow specialization versus interdisciplinary integration has ensued (Walvoord et al. 2000; Wilkie and Moore 2003; Wills 1978).  In a paper describing the ongoing debate about more elective courses versus having a mostly prescribed curriculum, Denham (2002, p.13) reports that by the late 1960s, a “proliferation of diverse courses ruled the period with faculty as specialists defending their favorite courses.”  Some observers now call for restructuring fundamental aspects of higher education administrative practices.  According to Trower (2009), although most academic departments still adhere to rules established decades ago governing promotion and tenure for faculty members:  “Academe cannot continue with business as usual (p.B5).”  A narrow perspective seems to come naturally to an academic discipline;  members of a particular discipline tend to view their specialization as essential to the university’s mission, and barriers often evolve that prevent effective interdisciplinary partnerships from developing (Bulger 1994; Dirks 1996).  Providing a good example of how such impediments can materialize between specialty areas, Naesens and Gelders (2009) describe a dysfunctional patient transportation department at a university hospital in Belgium suffering from conflicting operational processes between divisions within the larger department.  Sullivan (2000) provides a case study of an academic department in Sweden composed of several pre-existing smaller units plagued “by an identity crisis, both at personal and departmental levels, which had resulted in major inter-personal and inter-small-group conflict (p.177).”  Discussing marketing doctoral programs in the U.K., Burton (2003) mentions earlier reports “critical of the relatively narrow focus of most doctoral theses [that expressed] a concern that the content of PhDs did not always match the needs of careers beyond academic and academic-related research (p.885).”  Finally, in a manuscript discussing Denmark’s attempt to establish a total quality management (TQM) system across its universities, Juhl and Christensen (2008) conclude that “there are a number of institutional barriers that obstruct the possibilities for the new university managements to operate the university as an industry (p.732).”  However, there are also several legitimate reasons that support consolidation of various administrative functions to save costs and provide other efficiencies.  Schulz and Szekeres (2008) report that many universities have bundled  multiple services such as student administration and support, information technology, cashier, and other financial services in a single department to provide more convenient accommodations for students.


Evaluation of Learning Outcomes in Undergraduate Onsite and Online Accounting Courses

Dr. Consolacion Fajardo, Professor, National University, California, United States



This study will entail analysis of the results the Standardized Learning Outcomes Assessment Tests (SLOATS) that are being administered to the students both onsite and online in the Bachelor of Accountancy Program at National University (a non-profit, accredited, private university in higher education) over a five-year period for academic years 2004-2005 to 2008-2009.  This is an internal direct measure of the students’ performance in accounting courses. The evaluation instruments were created and administered on an incremental basis starting initially with one course and adding on to a total of ten courses having the SLOATS in academic year 2008-2009.  There are two goals: (1) to have a mean score of 3 out of 4 questions for each of the course learning outcomes and (2) to have a proportion of students achieving 75%.  The scores are being analyzed and interpreted to determine the possible causes when goals are not met. The results of the analysis are being used as bases for improvement in the accounting curriculum to enhance the quality of students’ learning and increase  teaching effectiveness.  The current trend in educational assessment is geared to desired learning outcome approach Outcome relates to what a learner is expected to comprehend and be able to apply after the completion of the learning process (Stock etal, 2010).  Desired learning outcomes are expressed in terms of competencies and skills that can be applied and evaluated. Thus, there is a correspondence among desired learning outcomes, competencies, assessment factors, assessment instruments, and teaching methods.  The Accounting Education Change Commission (AECC) was established in 1989 with the task of revamping the accounting education to produce individuals who possess the communication intellectual and interpretative skills necessary to succeed in the complex global environment and who have the commitment to lifelong learning to maintain continued success. Implicit in the AECC charge is the need to assess and evaluate the effectiveness of curriculum changes and to demonstrate that the changes have had positive influence on the student’s knowledge, attitudes, and skills.  Successful assessment programs are the result of careful planning, development, and implementation (DeMong etal, 1994). Faculty and administrator are implementing assessment programs to provide the information necessary to improve the effectiveness of their schools. Many state legislatures are demanding assessment programs as a means of holding schools and departments accountable for their actions (Ewell, 1985).  Assessment programs are also required by some accreditation associations (Terenzini, 1989). Continuous improvement is also one of the tenets of the new accreditation standards of the American Assembly of Collegiate Schools of Business (AACSB, 1991). Assessment programs establish a potential feedback loop that can be used in continuously improving an academic program. Assessment programs can be integrated into a Total Quality Management (TQM) program.  To make an assessment program a means toward continuous improvement, the faculty and administration must systematically analyze assessment data with an eye toward improving the accounting program.  Assessment is the evaluation of the student’s attitude, motivation, learning strategy, and performance. The regular documentation of knowledge, skills, abilities, and attitudes allows teachers to control the desired learning outcomes of learners. Stock etal. (2010) delineated three main functions of assessment: (1) Prognosis which is the assessment of learning: This is summative form is used for selection and promotion, signalling students’ progress, outcome, ranking and admission qualifications. This is done at the end of the course or program and is completed with a final grading. (2) Diagnosis refers to assessment for learning:


Developing Successful Negotiation Models and Strategies for

Health Care Managers

Kristina L. Guo, Ph.D., MPH, Professor of Public Administration, and

Professor and Director of the Health Care Administration Program, University of Hawaii-West Oahu



 This paper describes strategies and models for successful negotiations utilized by health care managers for training and development purposes.  An effective manager should be able to skillfully manage problems and conflicts and develop creative solutions. The key is to follow a systematic approach for generating successful negotiation tactics that result in win-win solutions.  This article analyzes the role of the manager as a negotiator and develops a methodical process to enhance managerial proficiency in negotiations.   Understanding the importance of the negotiator role is essential to managerial training and development since this is critical to the ultimate success of health care organizations.  Health care managers face many challenges to achieve organizational goals.  Utilizing various strategies can be complex and difficult because success is dependent upon the ability of managers to manage effectively, develop strategies successfully, improve communication skillfully, and resolve problems readily. Perhaps the most important work of a manager is to assure that organizational problems are solved (McGinnis, 2007).  Problems and conflicts in organizations are inevitable and unavoidable.  They occur in all types of organizations, but are especially numerous in health care organizations due to the complexity of the health care industry that is characterized by high stress, high emotions, scarce resources, competition, intense regulations, and multiple stakeholders.  All of these factors increase the likelihood of more problems and conflict in health care settings.  A problem exists when the current state and desired state differ, and the role of the manager is to solve the problem by finding a way to reach the desired state.  Numerous problems occur on a daily basis in health care organizations; they can range from patient complaints, high staff turnover, understaffed clinics, lack of qualified applicants, low revenue and reimbursement, high uncompensated care, and lack of compliance with regulations.  The list of problems and potential conflicts are endless. An effective manager should be able to competently manage problems and conflicts and develop creative solutions.  To become more effective, managers must engage in training and development to improve their negotiation skills.  The key is to follow a systematic approach for generating successful negotiation tactics that result in win-win solutions.  This article analyzes the role of the manager as a negotiator and develops a methodical process to enhance managerial proficiency in negotiations.  Understanding the importance of the negotiator role is essential to managerial training and development since this is critical to the ultimate success of health care organizations.  Henry Mintzberg’s (1973) groundbreaking research on managerial work is of especial significance because he was able to separate and identify distinctive activities of managers which he classified into ten essential work roles of managers: three of which are interpersonal roles, three are informational roles, and four are decisional roles (see Table 1). The interpersonal roles describe the work of the manager as a figurehead, leader, and liaison.  In the figurehead role, a manager is responsible for a variety of social and ceremonial activities to represent the organization.  In other words, he adds dignity and status by performing this role.  In the leader role, a manager is responsible for motivating, supporting, and inspiring his/her subordinates to achieve organizational goals.  In this role, a manager provides direction and purpose to enable the organization to accomplish its objectives.  In the liaison role, a manager’s primary responsibilities are to build strong networks of professional contacts to enhance the nature, mission, goals, and objectives of the organization.  The second set of roles is informational, consisting of the monitor, disseminator, and spokesperson.  Specifically, the monitor role of the manager is responsible for gathering information and identifying problem areas and developing plans to improve the overall state of the organization.  The role is importance because this role enables the manager to comprehend what takes place in the organization in relation to his or her environment; thus, monitoring the external environment is crucial the survival of the organization. 


Strategic Impact of Incentive Programs for Loan Officers of Micro-Finance Institutions

Dr. Jay Jiwani, Robert Morris University Illinois

Dr. Jamaluddin Husain, Purdue University Calumet



This study investigated the relationships between pay-for-performance incentive programs and the productivity of loan officers in microfinance institutions (MFIs). Loan officers’ performance was measured by five key performance indicators: new borrowers, portfolio value, average loan size, arrear rate, and default rate. Seven hundred and eighty-five MFIs from five continents were invited to participate in the survey, with a final sample of 95 loan officers and 112 supervisors of loan officers. Results indicate that   (a) the arrear rate for loan officers with an incentive program is lower than for those without an incentive program, (b) larger incentives and the use of a computer to calculate the variable portion of the salary were associated with more new borrowers, (c) loan officers who worked at MFIs with larger incentives and where the default rate was used as one of the performance benchmarks tended to have larger average loan sizes, (d) loan officers who placed a high importance on promotion tended to have lower arrear rates than loan officers who placed less importance on promotion, and (e) when the average loan size was used as a benchmark, and when a loan officer considered promotion to be very important, they tended to have a lower default rate.   The purpose of the study was to explore the impact of pay-for-performance on MFI outcomes. Specifically, this research identified contributing factors of financial incentive programs offered by MFIs, and it examined if loan officers’ incentive programs influenced productivity of the MFIs, and whether loan officers’ financial incentive programs influenced sustainability. The financial impact of MFI incentives was measured by the value of the portfolio, and social impact measured by the breadth of outreach.  The research investigated the predictors of incentives on loan officers’ performance to discover the salient factors of productivity. The participants for the study were supervisors and loan officers of various MFIs across the globe. The criteria for selecting the sample were that participating MFIs must: (a) have available monthly productivity data of loan officers for the most recent three months, and (b) have incentive programs instituted for their loan officers for a minimum of three months. Previous studies had suggested the need for additional studies to further assess the impact of financial incentives for loan officers. This study, therefore, was designed to contribute to the existing body of knowledge.  Literature on incentives argues that the design of effective remuneration incentive programs should align with the needs and values of the employees (Locke & Letham, 1990).  One of the critical factors that determine success or failure of the MFI is the proper selection of financial incentives for domestic commercial banks or global MFIs. The focus of the study was limited to extrinsic incentives used to stimulate loan officers’ productivity.  


Online Buying Decisions in China

Dr. Wen Gong, Howard University, Washington, DC

Dr. Lynda Maddox, George Washington University, Washington, DC



This survey of 503 Chinese consumers’ online shopping behavior reveals that Chinese are shopping more online than two years ago and use the Internet to look for new products and brands, search for information, compare products and brands, make purchases, and follow up after purchasing.  They believe the Internet is a convenient, time saving and price competitive venue for shopping and enjoy the extensive information and brands. Chinese shoppers who frequent the brick and mortar counterpart are more likely to purchase online, and they seek good prices, customer service, and payment security. Income and marital status are the most influential in consumers’ online decision-making process. Age, education and Internet usage have impact at different stages of the process, while gender has little influence.  China’s Internet penetration rate was 31.8 percent in June 2010, exceeding the world’s average of 28.7 percent (CNNIC, 2010; Gao, 2010;, 2010). Although significantly lower than the U.S. (71.2 percent) (, 2010) and other developed countries (, 2010), China’s sheer size translates to 420 million Internet users (CNNIC, 2010), the world’s highest.  The economic slowdown has curbed e-commerce growth in most world markets (, 2009), but China’s online retail market has been growing steadily with 87.8 million users shopping online in 2009 compared to 74 million a year before (CNNIC, 2009). Preliminary research suggests that young Chinese consumers will become avid online shoppers (Rein, 2008), but academics have suggested that China’s cultural preference for face-to-face business interactions combined with regulatory issues may inhibit this development (Raven, Huang and Kim, 2007).  Although Western consumers’ online shopping behavior has been studied, little is known about other parts of the world such as China (Stafford, Turan and Raisinghani, 2004). This paper intends to fill this knowledge gap by empirically investigating Chinese online shopping behavior.  Thanks to the one-child family policy and the rapid transition to a market economy, Chinese consumers consumption power has been greatly expanded in the past 20 years (Gong and Li, 2007; Zhao et al., 2008). An increased understanding of online applications, a more transparent and convenient online shopping environment, and expanding investments by companies have fueled the online retail market value to $18.8 billion USD with a growth rate of 128.5 percent in 2008 (Lee, 2009). China’s online shopping penetration rate reached 24.8 percent and the online B2C annual growth rate is expected to exceed 100 percent over the next two years (CNNIC, 2009). Young, educated Chinese have become early adopters and trendsetters in street fashion, mobile phones, and online purchases (Gong et al., 2004; Lee, 2009; Rein, 2008).   This has led to fiercer competition, undifferentiated products and retailers, advanced technology, and low entry barriers (Lee, 2009). The Chinese government released a series of policies, mainly through the 11th Five-Year Plan and the 2006-2020 National Informatization Development Strategy, to regularize and guide the Internet and e-commerce development (CNNIC, 2009).   


Stock Price Reaction to Acquisitions in Banking Sector: An Empirical Analysis on Selected Asia Pacific Countries

Prof. Mo T. Vaziri, California State University, San Bernardino, CA



In this research we examine the abnormal return of banking acquisitions for the acquiring bank using an event-study methodology for selected Asian countries. Using data from 2001-2010, we find that acquisition announcements are generally associated with a gain in value for the acquirer in the long term. There are mix results in the short term among the Asia markets. In the six Asia countries, the market reaction of China, Hong Kong and Taiwan are similar to the announcement of bank M&A events. The results of Malaysia and Indonesia are different from other four countries. There is insignificant positive or negative performance of cumulative abnormal return to the announcement in Malaysia.  During 2001-2007, the financial sectors in Asia-Pacific regions have experienced significant rise in the M&A activities as local governments begin implementing policies that encourage foreign investment and consolidation. The drive to consolidate has been particularly strong for banks in Taiwan, Indonesia, Malaysia, China, and Singapore.  Also, with regulations for foreign entrance relaxing, many foreign institutions are seeking growth potential in the region’s banks by either forming tie-ups with or taking a stake in them.  In China, the banking industry dominated the M&A scene, as foreign banks continued their march into the mainland. Foreign banks are positioning themselves to tap China’s huge growth potential in the areas of credit cards, wealth management and insurance products.  Mega mergers between Standard Chartered with Taiwan’s seventh largest lender, Hsinchu International Bank (TWN: HIB), China’s third largest lender, CCB, with Bank of America Corp’s (NYSE: BAC) retail banking operations in Hong Kong and Macau, Citigroup (NYSE: C) with large controlling stake in Guangdong Development Bank, are few to name. Despite widespread uneasiness over the financial market situation around the world during 2007 and 2008, business confidence and optimism among Asia-Pacific countries remain high. Banking M&As in the region continues to be robust. The Asia-Pacific’s emerging global champions are continuously seeking opportunities to grow into regional power through aggressive growth plans involving acquisitions. However, during the third quarter of 2008, the Asia-Pacific banking sector has shown signs of pressure particularly as conditions in the international financial markets took a significant turn for the worse. Overall, global M&A activity overall is sluggish during 2009, unlike the level of activity seen during the previous years. However, the banking sector in Asia have benefitted from the disposal of Asian assets and operations which are previously held by troubled western banks to raise cash and consolidate their global businesses to conserve capital.  The purpose of this research is to explore stock price reaction to acquisition announcement by banks in Asia Pacific countries. We investigate both short run and long run impact on the stock performance following acquisition announcement from Asia Pacific countries. Mergers and acquisitions in Asia Pacific countries pose different sub-periods. Activities from 2003-2007 has been consistently on the rise and then it starts to drop in 2008-2009 during the worldwide financial crisis. However, merger and acquisition activity due to financial crisis and how and whether they create value to the shareholders either in the short run and or in the long run is an interesting question.  The rest of the paper is designed as follows.  Section two offers a survey of the related literature. Section three discusses the data. Section four details the methodology used in this research. Section five explains the results of our findings. Finally, the paper ends with some concluding remarks and direction for future research in section six.  There is extant literature on the before and after math effects of acquisition announcements.  We present a brief summary of selected literature. Moore (1997), shows that larger bank tends to value smaller bank higher than the smaller bank’s management does to successfully complete acquisition. Hannan and Pilloff (2007) observe that less profitable banks become target for acquisition and inefficiency is positively related to the probability of acquisition. Knapp et al. (2006) and Koetter et al. (2007) show that acquisitions transfer assets from poorly managed to better managed firms. Hernando, Nieto, and Wall (2009) also suggest the similar pattern.


A Comparative Study of US and Australian Students’ Perceptions and Topic Choices of the First College-level Financial Accounting Course

Dr. Ronald Woan, Indiana University of Pennsylvania, Indiana, PA



The objective of this research is to examine the potential differences in ex post perceptions between accounting-finance majors (AF) and other  majors (NAF) of the first college-level financial accounting course and, if differences exist, whether these differences lead to differences in opinions regarding topical coverage.  In contrast with earlier research which predominantly used univariate statistical methods for multiple hypothesis testing, multivariate statistical techniques are used in this research. The multivariate results of this study indicate that, as expected, there are statistically significant overall perception differences between AF and NAF cohorts; but, surprisingly, these differences do not lead to statistically significant different opinions on topical coverage even though the univariate approach indicates statistically significant differences on some topical variables. The topical variables show that there are important differences between US students and Australian students: Australian students on average prefer a user approach, whereas US students on average favor the traditional preparer approach. US students seem to treat the first course as providing an opportunity to learn accounting as a business language. This calls into question the wisdom or practice of offering user-oriented course for NAF cohort in US. Finally, the perception variables provide discriminant function that classifies the subjects accurately both within sample and for out-of-sample sample.  Logistic regression provides similar results. These in combination lend further credence to the chosen perception variables. In response to the accounting profession’s dissatisfaction with the quantity and quality of accounting graduates, the Accounting Education Change Commission (AECC) was appointed by the American Accounting Association in 1989 to serve as a catalyst to improve the academic preparation of accountants. AECC subsequently issued two position statements: Objectives of Education for Accountants: Position Statement No. One (AECC, 1990) and The First Course in Accounting: Position Statement No. Two (AECC, 1992). AECC specifically underscored the importance of the first college-level accounting course. In its first position statement AECC states: “The introductory accounting course should be given special attention. It must serve the interests of students who are not going to enter the profession as well as those who are.”  (p.309).  In its second position statement, AECC observes,  “For those who decide to major in accounting or other aspects of business, the course is an important building block for success in future academic work” (p.249). AECC calls for changes in both the objectives and teaching methods in the first accounting course sequence.  The AECC’s clarion call for changes in the first accounting course sequence spawned a spate of research studies and curriculum revisions.  Some of the more important studies will be reviewed in the next section. This study is motivated by a survey study on Australian students’ perceptions of an introductory accounting course by three Australian accounting and finance professors: Tickell, Lim & Balachandran (TLB, 2010).  It will be interesting to compare US students’ perceptions with those of Australian students.  In contrast with earlier research studies which predominantly used univariate statistical methods for multiple hypothesis testing, multivariate statistical techniques are used for hypotheses testing in this study. This multivariate statistical approach has the advantage of exploiting the interrelated nature of the perception as well as the topical variables and providing the correct type one error rate of rejecting the null hypotheses when they are true.


The Impact of Department Restructuring on Job Satisfaction for Marketing Faculty

Dr. William T. Neese, Bloomsburg University, Bloomsburg, PA



A multidimensional job satisfaction scale adapted to this study revealed that marketing faculty who most recently experienced a department merger with another academic discipline were significantly less satisfied with peers, the chairperson, the promotion and tenure process, and students versus their counterparts who most recently experienced splitting a combined unit apart to form an autonomous marketing department or those who never experienced any department restructuring.  Results from this survey clearly demonstrate the negative impact that stress has on overall job satisfaction felt by marketing faculty after an administrative reorganization.  The historical development of today’s academic marketing department has a century old tradition in the United States, beginning with early efforts on a few Midwestern campuses to improve agricultural product distribution and culminating in highly specialized organizational units housed in most colleges of business at modern universities (Wilkie and Moore 2003).  During its evolution, the discipline of marketing pushed itself away from others such as economics and management to form autonomous administrative units typically preferred by those marketing faculty members directly involved.  Such widespread realignments in business schools mirrored trends across the academy at large during the Twentieth Century, and have resulted in a debate concerning the merits of narrow specialization versus interdisciplinary integration (Walvoord et al. 2000; Wilkie and Moore 2003; Wills 1978).  Denham (2002, p.13) states that by the late 1960s, a “proliferation of diverse courses ruled the period with faculty as specialists defending their favorite courses.”  Numerous experts believe that the importance of departmental administrative structure cannot be overstated because it exerts such a major influence on teaching, research, and service productivity (Hartnett and Centra 1977; Pascarella and Terenzini 1991; Quinlan and Akerlind 2000; Serow 2000; Volkwein and Carbone 1994; Willcoxson and Walker 1995; Zemsky 1993; Zemsky and Massy 1995).  Complicated by multiple subcultures and structures (Hobbs and Anderson 1971), varying goals set forth by academic institutions and departments are known to have a direct impact on individual faculty member performance (Kaya, Webb and Weber 2005).  A narrow focus is fundamental to the concept of an academic discipline;  members of a particular discipline tend to view their specialization as essential to the organization’s mission, and impediments tend to develop that may prevent interdisciplinary bridges from being built (Bulger 1994; Dirks 1996).  According to Summer et al. (1990, pp.362-363), “All fields of study have a philosophy, a set of attitudes, values and beliefs that establish the ultimate aim of the field, the choice of constructs (theories, models) relevant to attaining that aim, and the choice of methods by which research and teaching will be executed.  For some disciplines [medicine, law, Economics], this philosophy is clearly articulated… For some disciplines, philosophy, especially ultimate value aims, is less clear.”  Largely due to such discipline-specific philosophical characteristics, faculty members usually prefer to be administratively organized with others most similar to their own field of study.  The majority of academic marketing departments select their chairpersons from existing faculty in that department (Aggarwal, Rochford, and Vaidyanathan 2009), which has an element of self-interest since even within the discipline of marketing, different types of universities have differing views of acceptable job performance (Shepherd, Carley, and Stuart 2009).  Zagenczyk et al. (2010) propose that similarity among coworkers will lead to higher levels of perceived organizational support (i.e., the social network).  Quality of work life and work environment is positively related to the job satisfaction of marketing faculty members (Weaver 1989).  According to Houston, Meyer, and Paewai (2006), faculty members are experiencing increased workloads, particularly more teaching and administrative requirements.  They measure the impact of workload and work environment using a multi-item job satisfaction scale, and conclude that – although faculty remain committed to teaching and research – “there was a tendency to blame another unit or system for their frustrations, absorb additional tasks at the expense of overall productivity, and become increasingly insular, which, in turn, would further decrease effective communication toward solving problems (p.28).”  Many observers have pointed out that faculty job satisfaction is correlated to their intention to change jobs.  Oshagbemi (2000) reports that overall job satisfaction is significantly correlated in a positive direction with how long an individual faculty member has been at his or her current institution but is not related to length of time in the academic career.  Peterson and Wiesenberg (2006) conclude that large anticipated faculty retirements, increasing university enrollments, and fewer doctoral students make faculty retention a major concern.


Lowering Stress of Expatriates: The Role of Culture and Management Styles

Dr. Lung-Tan Lu, Fo Guang University, Taiwan



This study examines the effects of culture (i.e. Individualism, uncertainty avoidance, and masculinity) and management styles (i.e. supervision style, interdepartmental relationships, and paternalistic orientation) upon role stress of expatriate managers. Data collected from questionnaires completed by 193 Japanese expatriates in Taiwan were analyzed by structural equation modeling (LISREL 8.52). It is found that management styles are significantly predicted by individualism and masculinity. Moreover, role conflict is negatively related to supervision style. Role ambiguity is positively associated with supervision style and inter-department relations. Surprisingly, it is found that role conflict is negatively related to role ambiguity. Managerial implications and further research directions are discussed.  Understanding the role of culture in the underpinnings of the global operation of multinational enterprises (MNEs) is one of the most important issues in the filed of international business research (Jain and Tucker, 1995; Buckley, 2002). One of the cultural components that have been the subject of cross-cultural research that has grown rapidly over the past two decades is stress (Cooper and Dewe, 2004). Among the most important reasons is the consistent finding that experienced role stress can have negative effects upon organizational performance (Shenkar and Zeira, 1992; Tubre and Collins, 2000). In the field of international business, researchers have noted that cross-cultural research is needed more than ever because it is no longer assume that Western concepts and theories can be employed directly worldwide (e.g. Perrewe, et al., 2002). This study develops and tests a research model that examines the effects of Hofstede’s cultural dimensions (i.e. individualism, uncertainty avoidance, and masculinity), and management styles (i.e. supervision style, interdepartmental relationships, and paternalistic orientation) upon role stress (i.e. role conflict and role ambiguity) of expatriate managers in Taiwan. The main goals of this study are to examine: (1) the effects of individualism, uncertainty avoidance, and masculinity on management styles; (2) the effects of management styles on role stress; and (3) the relationships between role conflict and role ambiguity. This study is organized as follow. In section two, following the theoretical background and research model, the hypotheses are proposed. In the next sections, the research methodology and empirical results are discussed. Finally, this study concludes with implications and suggestions for further research.  Culture is a complex concept with numerous definitions and debates (Gould and Grein, 2009; Leung et al., 2011). Hofstede’s definitions: ‘the collective programming of the mind which distinguishes the members of one human group from another’ probably is the most cited definitions since 1980s (Hofstede, 1991: 4-5). His IBM survey, one of the most influential contributions in cultural studies, collected data from IBM’s oversea subsidiaries in more than seventy countries. Hofstede suggests that nation can be the cultural boundary since the different systems between countries such as legal and educational systems are the collective programming, which differentiate people of one nation from another (Hofstede, 1983). Four dimensions, power distance, individualism, uncertainty avoidance, and masculinity, are found through a combination of quantitative methods and theoretical reasoning. Each of the cultural dimensions, however, is reflected in the national culture patterns exhibited across countries (Hofstede, 1983).  Individualism (IDV) refers to the relationship between individuals and the collectivities, which prevails in a given society. On one hand, people in these societies can enjoy a large amount of freedom because the binds between individuals are not tied up. Managers from high-individualism (HIDV) and low-individualism (LIDV) working in international joint ventures (IJVs) may have more conflicts because they focus on different fields. Managers from LIDV countries such as Taiwan, Hong Kong, endorse “traditional” points of view, not supporting employee initiative and group activity. In contrast, managers form HIDV countries, such as U.S.A., France, endorse “modern” points of view on stimulating employee initiative and group activity. Uncertainty avoidance (UA) refers to the degree to which people prefer planned to unstructured situations in society (Hofstede, 1980). Firms in high UA cultures are characterized by a strong need for rules and regulations; greater structuring of organizational activities; employee preference for unambiguous instructions and intolerance toward unexpected ideas and behaviors in companies (Hofstede, 1980).


Foreign Exchange Denominated Borrowings and Corporate Profits: Evidence from Turkey

Dr. Deniz Parlak, Dogus University, İstanbul, Turkey



In modern finance literature, value maximization is accepted as the primary goal of corporations. To attain this goal, firms try to decrease their cost of capital as much as possible, since firm value is calculated by discounting expected cash flows at cost of capital.  Borrowing in foreign currencies is one of the tools used by firms to decrease their cost of capital. However, although firms are able to realize large spread gains in times of relative purchasing power disparity, foreign exchange risks are difficult to cover in periods of crisis where local currency depreciates. Thus, foreign exchange risks are considered one of the most important reasons of the financial fragility in times of crisis.  The purpose of this study was to investigate the magnitude of foreign exchange denominated financial borrowings of Turkish manufacturing companies and the impact of these borrowings on company profits and corporate risks. It was hypothesized that companies with low operating profits and low operating risks tend to borrow in foreign currency to decrease their cost of capital and increase their after tax return in times of purchasing power disparity. However, this creates an important source of financial fragility.  The President of the Central Bank of Turkey stated in a conference announcement that “In many emerging markets, high dollarization is identified as an important factor that adds to the challenges related to international capital flows. On the other hand, dollarization is seen as a symptom of some underlying causes such as macroeconomic imbalances and inflation. Clearly, there is a long way ahead for both policy makers and academics in assessing the causes and consequences of dollarization” (International Conference on Dollarization, "Consequences and Policy Options," December 14-15, 2006). As stated in the conference announcement, macroeconomic imbalances may be an underlying cause of the high dollarization attitude. One of the main sources of macroeconomic imbalance is the deviation from relative purchasing power parity. Relative purchasing power parity is a well known economic theory which predicts that the change in the exchange rate is determined by price level changes in two countries. In the time period studied, the Turkish economy witnessed deviations from relative purchasing power parity in the form of local currency overvaluation with respect to foreign currencies. There exists numerous ways of opening position; one of them is borrowing in foreign exchange denominated debt instruments. Especially in countries where stock market capitalization rate is low, borrowing becomes an important instrument to finance both activities and capital investments.  The main objective of the present study is to investigate the reasons why companies take foreign exchange risks by borrowing in foreign exchange denominated debt instruments, to determine the magnitude of these risks and to analyze their impact on companies’ cost of capital which has direct effect on both firm value and net income which are among the most important figures summarizing a company’s survival potential. More specifically, the main purpose is to investigate the causes and the magnitude of the foreign exchange risks of manufacturing companies and the impact of these risks on companies’ net income.  The remainder of the article is organized as follows. Section 2 provides a general theoretical background. Hypotheses are presented in Section 3. Section 4 provides the definition of variables and Section 5 describes the data used in the study. The analysis and related results are discussed in Section 6. The final section summarizes the main findings of the study and concludes. 


Competitive 4P’s Strategy Analysis before Liquor Liberalization:

Case Study of Beer Companies

Dr. Sinee Sankrusme, Ramkhamhaeng University, Bangkok, Thailand




The study analyzed both the domestic and imported beer markets in Thailand. In the domestic beer market, the case study was concerned with the Boon Rawd Brewery Company, the Thai Amarit Brewery Company, the Thai Asia Pacific Company, the Carlsberg Brewery Company and the Thai Beer (1991) Company.  In the imported beer market, the case study concentrated on the TIS Worldwide Marketing (1997) Company and the C.V.S. Syndicate Company. The study analyzed 4P’s strategy of beer marketing before liquor liberalization in 2000. The original beer entrepreneurs were the Boon Rawd Brewery Company and the Thai Amarit Brewery Company. Three more brewers were granted permission to operate in 1991, namely the Thai Asia Pacific Company, the Carlsberg Brewery (Thailand) Company and the Thai Beer (1991) Brewery Company. As a result the beer market became highly competitive. A 4P’s strategy was conducted for market share. Companies had to create consumer satisfaction.  The companies needed to conduct surveys of consumer demand and conduct research into their competitors’ market. The year 2000, the first year of liquor liberalization, was eagerly anticipated, with the introduction of many new products.  The 4P’s strategy was applied in full. The 4P’s strategies of beer businesses were quite interesting and proved to be useful information for setting up a market plan.  Beer demand increased as a result of a change of policy in 1991, which meant that the development of production efficiency gave rise to an increase in product quality. The government therefore abandoned its rules forbidding the establishment of additional breweries and instead granted permission to establish new breweries liberally. There was an increase in new entrepreneurs who were interested in entering the beer business. Entrepreneurs who entered the market during this period were the Carlsberg Brewery Company, producers of Carlsberg, the Thai Asia Pacific Brewery Company, producers of Heineken, and the Thai Beer (1991) Company, producers of Chang.  This created serious competition in the beer market. Imported beers from abroad, mostly Europe and the USA did not themselves offer severe competition. However, the arrival in Thailand of beer business operating groups from abroad caused an increase in the challenges faced due to beer competition. A new era of beer marketing in Thailand began when Carlsberg was introduced in 1993.  Initially, Carlsberg applied a low price strategy for its introduction into the market. After that Carlsberg concentrated on creating a product image.  In the primary stage, Carlsberg could not rival Singha. Since a prominent feature of Singha was that it was a local beer from Thailand, which had a long history of support from Thai people, the consumer loyalty toward Singha was high. On the other hand, Carlsberg’s image was that of an overseas beer, so its natural competitors would be other beers from abroad such as Heineken, Budweiser and Kloster.  A chance for new entrepreneurs to gain profitability initially depended on their capacity to destroy brand loyalty. In order to resolve such a weak point, the Thai Beer (1991) Company, which belonged to the same family as Carlsberg, introduced Chang in 1995. This had an image of a local beer with a concentrated taste, which corresponded to the demand of Thai drinkers, and which was distributed at a lower price than other beers.  In the primary stage, a large advertising budget and public relations exercise was launched on the public, in order for Chang to enter the market rapidly. Chang was reasonably successful at an early stage.


Core Competencies of Managers in an Emerging Market

Dr. Muberra Yuksel, Kadir Has University, Istanbul, Turkey



Increasing uncertainty and intensive competition have forced companies to focus on developing their core competencies to increase their competitive advantage. According to Prahalad and Hamel (1994), companies having unique and non-substitutable resources and competences that cannot be achieved by the competitors obtain sustainable advantage. The main sources of such specific organizational core competences or capabilities are effective technology, organizational learning, strategic flexibility and innovative capacity - which are founded upon people management and individual competencies some of which are broadly applicable across the organization or may even be generic within a sector. The cultural or functional competencies are usually specific, while business leading or managerial ones are often general. I have first employed Belbin’s team role profile model (1981, 1993) based on role theory and typology among top managers, and then, I compared selected common competencies of the service sector in Turkey to determine if the human resources are prepared for coping with change and crisis in this volatile knowledge-based economy. Keywords: Core /global competencies, workforce scorecard, team roles and leadership  In the era of information and globalization, managers face accelarating pace of changing conditions, increasing uncertainty and competition which demand sustainable organizational momentum via high performing and competent employees.  Enterprises are becoming flatter organizations with temporary structures, virtual teams, networking and doing more both in quantity and quality with less people. Effective creation, organization, and leverage of knowledge throughout the organizations are becoming increasingly the main sources of competitive advantage in fast changing, information-driven economy. Internet as a mass medium is transforming global business in such a way that accelerated productivity is in the process of displacing unskilled jobs with information-intensive work. With the continuous pace of change along with diffusion of technology and the consequent increase in electronic connectivity, adjustment to the new roles and instant action to fulfill demands have  become more significant. Thus, companies are increasingly recognizing the importance of managing their human resources as effectively as possible.  They are also recognizing that doing so, however, cannot be done without recognition and incorporation of the global context. As the environment becomes more global, managing people also becomes more challenging, more unpredictable and uncertain and more subject to rapid change and surprise.  Many companies are devoting a great deal more time, attention, skill and effort into doing it well since the importance of managing people effectively in the global context is great.  Globalization is basically grounded in the communication-information-technology producing industries and knowledge enterprises which supply the goods and services that support IT-based business processes.  To gain a competitive advantage in speed, connectivity, flexibility and adaptibility, banks and brokerage firms in  finance sector are rapidly adapting the IT-enabled processes.  Meanwhile, global competencies of human resources are gaining higher priority  in these two service sectors increasingly with the advent of the  knowledge economy since there is a continual organic drive from within to redesign their organizational frameworks so that “on-line” “zero-time” service-response speed is attained. Are we sufficiently prepared with respect to our capabilities for the new economy which  a different mind-set of development? In the agile organization of tomorrow , work is customer-oriented, process-centered, and technology-intensive. Knowledge workers unlike traditional workers must think as well as work, make decisions rather than follow  instructions.  Technology is ubiquitous; change and uncertainty are permanent conditions. All employees need to contiınuously upgrade their skills  to be able to understand business as a whole and its processes; since everyone’s work affects everyone else. Everyone has to become decision-makers and business partners by comprehending business from strategy to costs.  Literacy in technology and the internet are prerequisites since all work depends on it.


IFRS Adoption and Audit Timeliness: Evidence from Malaysia

Najihah Marha Yaacob, University Teknologi MARA, Terengganu, Malaysia

Dr. Ayoib Che-Ahmad, Universiti Utara Malaysia, Kedah, Malaysia



Audit timeliness is prominent as one of the quality characteristics of corporate financial reporting. It is an indicator to measure whether or not, financial statements convey information to the investors as promptly as possible. The transition to the international single accounting standards, namely International Financial Reporting Standards (IFRS) was regarded as a big transformation to some companies. Since the new IFRS demands detailed disclosures, it requires more effort and time to conduct an audit engagement. Thus, the question of whether IFRS adoption would affect audit timeliness is questionable. A more promising data structure, the panel data approach over a five-year period (2004-2008) was utilized. The fixed effects regression results revealed a significant increase on the length of time to issue audit reports after IFRS adoption in Malaysia. This study proved the complexity of the issuance of the new and amended IFRS and thus auditors required more hours in performing their audit engagement.  The harmonization of accounting standards of different countries will assist in better comparison of financial information (Stovall, 2010), so investors can make decisions based on the financial reports available across the boundaries. Definitely, investors would prefer markets with understandable financial information and would have more confidence (Bebbington and Song, 2007). An accounting standard setting body that is responsible to promote a single accounting standard that can be applied worldwide is known as International Accounting Standards Board (IASB). In order to promote further convergence between the local Generally Accepted Accounting Principles (GAAP) and international accounting standards and practices, IASB has amended some existing standards and adopted certain new standards in the name called ‘International Financial Reporting Standards’ (IFRS). The first IFRS was issued in June 2003 that is IFRS 1: First-time Adoption of International Financial Reporting Standards.  Nowadays, it is a global phenomenon for the convergence of IFRS and the trend is escalating further. IFRS has been accepted as a mandatory transition in many countries such as in the European Union (EU), Australia, New Zealand, Rusia, Bahrain, US, South Africa, Singapore and Malaysia (Bebbington and Song, 2007). IFRS would grant considerable advantages to many parties such as the public listed companies and their shareholders, regulators, financial professionals as well as local and international investors (Thomas, 2009). Tyrrall, Woodward and Rakhimbekova (2007) list several advantages of IFRS adoption which include: (i) enhancing the perceived quality and status of financial reports, (ii) costs of preparing financial statements is minimized, (iii) setting up costs to develop national standard are eliminated and (iv) boosting national and international financial markets’ efficiency due to the increase in understandability, comparability and reliability of financial statements.  It is further supported by Zeghal and Mhedhbi (2006) based on the arguments that harmonization with international accounting standards would promote the quality of financial information and would enhance the comparability of accounting information with international setting. Garcia-Ayuso (2003) points out that the only solution to the imperfect market, which gives negative economic impacts to the shareholders, is when international harmonization is achieved.


Psychometric properties of the Behavioral Trust Inventory for Measuring Trust in Mentoring Relationships

Dr. Joanne D. Leck, School of Management, University of Ottawa, Ottawa, Ontario, Canada

Dr. Annie Robitaille, University of Victoria, Victoria, British Columbia, Canada



Background: The role of trust in mentoring relationships is an area of research that warrants to be further studied. Yet, to our knowledge, no measure of trust has been validated to measure willingness to be vulnerable in mentoring relationships. Objective: The objective of the current study was to examine the psychometric properties of the Behavioral Trust Inventory (Gillespie, 2003) for a sample of senior level women. Data and Methods: The Behavioral Trust Inventory includes 10 items designed to measure two dimensions (Reliance and Disclosure) of people’s willingness to be vulnerable in work-related relationships. Reliance measures willingness to rely on other people’s abilities, skills, judgement, and knowledge and Disclosure measures readiness to share privileged information with others. The factor structure (confirmatory factor analysis) and internal consistency of the scale were examined for a sample of 222 women. Results: The confirmatory factor analysis revealed acceptable fit indices for the 2-factor structure similar to the original one. Cronbach’s alphas were high for both dimensions of trust (Reliance = .84 and Disclosure = .76). Interpretation: The Behavioral Trust Inventory appears to be a psychometrically sound instrument for use in research on trust in mentoring relationships.  In response to the heightened need to attract, retain and develop talent, organizations have introduced a plethora of formal and informal mentoring programs to identify and support high-potential employees and to provide a way to pass down the knowledge and skills of more senior employees. For example, approximately seven out of ten large Canadian organizations provide mentoring programs (Orser, Hogarth-Scott & Riding, 2000; Immen, 2007).  Mentoring is typically a mechanism whereby a senior person ‘takes under his/her wing’ a more junior person, and ensures that their ‘protégé’ understands his/her job, is introduced to the right people, is aware of how the organization works and has someone to talk to about personal and other issues. Mentors help individuals to learn to be managers within the organizational setting (see Marsick and Watkins, 1994; van Velsor and Hughes, 1990, Bierema, 1996) and provide protégés with psychosocial support, such as friendship and acceptance (Kram, 1983, 1985). Mentoring also offers the protégé career development support, such as helping the protégé advance in the organization, providing sponsorship and coaching, setting up challenging assignments, fostering positive visibility, and protecting the protégé from adverse forces (Kram, 1983, 1985). Mentors also benefit from mentoring. They report that they find the process rewarding and that mentoring permits them to leave their ‘mark’ on future generations. They also benefit from an improvement in their own performance, the formation of a loyal base of support and from recognition by others (see Ragins & Scandura, 1999 for a review). Surprisingly, the role of trust  in mentoring relationships has not been a primary research focus, even though trust plays a significant role in mutually beneficial, and hence, successful relationships.  Understanding why people trust has been a central focus of many disciplines for many decades (See Axelrod, 1984; Deutsch, 1958; Ekeh, 1974; Gambetta, 1988; Mellinger, 1956). More recently, researchers have focused their attention on trust in organizations and in various management functions such as leadership, performance appraisal, labour management relations and work teams (Hosmer, 1995; Kramer, 1999; Lewicki, McAllister,  & Bies, 1998; Mayer & Davis, 1999; Mayer, Davis, & Schoorman, 1995; Mayer & Gavin, 2005; Robinson, 1996; Serva, Fuller, & Mayer, 2005; Whitener et al., 1998).


Corporate Governance and Corporate Failure in the Context of Agency Theory

Dr. Faizah Darus, University Technology MARA and Accounting Research Institute, Malaysia

Azlinda Mohamad, University Technology MARA, Malaysia



Following the Asian financial crisis in 1997, the Malaysian corporate governance has undergone major reforms to strengthen its corporate governance mechanism resulting in the establishment of the Malaysian Code on Corporate Governance (MCCG) in 2000.  This study aims to investigate the impact of corporate governance reforms in mitigating corporate failures in Malaysia for a three year period from 2004 to 2006. Using 176 Malaysian listed companies (88 distressed companies and 88 non-distressed companies), the impact of corporate governance attributes namely board structure, ownership structure and internal control mechanisms on the poor performance of companies in Malaysia were investigated in the context of agency theory.  Results reveal significant negative association between CEO duality and financial distress condition. This implies that leadership structure affects the performance of companies. The findings suggest that CEO duality will reduce agency problem as the agent will act in his best interest and provide better strategic vision and leadership in companies’ goals and objectives compared to an independent chairman. This in turn will result in the rapid execution of organization’s operational decisions and improved performance.  The other governance and internal control mechanisms identified in the study were not significant in mitigating financial distress conditions of firms.   An implication of these findings is the suitability of the corporate governance monitoring mechanisms as recommended by MCCG which adopted some international principles. Such monitoring mechanisms may not be applicable for emerging markets such as Malaysia due to the different economic development and political culture.  The most common cited reason for corporate failure was due to the lack of internal control arising from poor corporate governance of companies (Agrawal and Chadha, 2005; Charitou et. al, 2007; and Deng and Wang, 2006). Following the Asian financial crisis, steps were taken by the Malaysian government to reform the corporate governance structure in Malaysia resulting in the establishment of the Malaysian Code on Corporate Governance (MCCG) in 2000. However, despite the extensive regulatory reforms undertaken to improve the corporate governance mechanism in Malaysia, there are still companies listed on the Malaysian Stock Exchange that experience poor financial performance resulting in them being financially distress.  The aim of this study is to examine the corporate governance attributes that are associated with corporate failure or distress condition of firms. In particular, it is contended in this study that a company’s internal governance mechanism, specifically board structure, its ownership structure and its internal control mechanisms may influence the financial conditions of firms.


Investigating the Influence of Exchange Rate Fluctuations on Stock-Index Returns in Taiwan’s Electronic Industry and Eight Sub-Industries

Dr. Tzu-Chun Sheng and Dr. Shu-Hui Lan, Ling Tung University, Taichung, Taiwan



This paper applies the DCC bivariate GARCH-M modeling methodology to investigate the influence of the exchange-rate changes of the NTD/USD on the stock-index returns of Taiwan’s electronic industry and each one of the eight sub-industries from 2007 to 2010. Exchange-rate changes are a major source of profit risk for companies operating under an environment of increasing internationalization and globalization, that identifying and measuring these influences can improve the risk management strategies of investors in this industry. The investigations reveal that depreciation (appreciation) of NTD/USD negatively (positively) affects all of the nine studied stock-index returns. The stock-index returns of Taiwan’s electronic industry have a stronger connection with the studied exchange-rate changes than do any of the other eight stock-index returns investigated in this paper. The stock-index returns of computer and peripheral equipment industry have the second strongest correlation with the exchange-rate changes of NTD/USD. The weakest correlation is between the exchange-rate changes of NTD/USD and the stock-index returns of information service industry. Moreover, depreciation (appreciation) movements of the NTD/USD are almost simultaneously reflected in the downward (upward) movements of the nine stock-index returns. The lag effect suggests that an investor can observe movements of the NTD/USD exchange value and successfully act on it by way of buying/selling stocks within the lag period. The business managers in Taiwan’s electronic industry can use financial hedges especially in the currency markets of the NTD/NTD to manage exchange risk. The findings also provide support to the hypothesis that strict market efficiency does not exist for the electronic stock market in Taiwan.  Due to the collapse of the Bretton Woods System, the countries all over the world have gradually abandoned fixed-exchange-rate system and adopted floating-exchange-rate system since 1973. Exchange rates, therefore, began to fluctuate in wider ranges internationally and became an important risk to manage in any business enterprise with linkages to world markets. The relationship between exchange rates and stock prices has been discussed extensively in many analytic and research literatures, but the published empirical results are not consistent. Soenen and Henningar (1998) indicated that the relationship is positive; Chiang, Wang and Yang (2000), Ciou, Ciou and Su (2001), Kanas (2000) and Hsu and Wu (2003) showed that the relationship is negative. Positive relationship in this paper means the stock prices will rise when the exchange rate of the domestic currency depreciates; negative relationship means the stock prices will rise when the exchange rate of the domestic currency appreciates. Differences in sampled countries, sampled industries, sampled period, typed data and analytic methodology explains the differences in conclusions.   Taiwan is an island economy with most of its industries being highly trade-oriented, especially the electronic industry. Due to the characteristics of short product life cycle and highly trade-orientation, competitive prices for export, costs for import and exchange profit or loss are critical for financial and even stock performance of Taiwan’s electronic industry. Taiwan’s electronic industry can be divided into eight sub-industries with their own weight stock indices used by the Taiwan Stock Exchange Corporation (TSEC) since July 2, 2007, including semiconductor industry, computer and peripheral equipment industry, optoelectronic industry, communications and internet industry, electronic parts/components industry, electronic products distribution industry, information service industry and other electronic industry. The detailed company number and definition of each sub-category can refer to Table 1.


Does the Degree of Influence of Individual and Situational Factors Affecting One’s Ethical Beliefs and Decision Making Vary Among Certain Demographics Key Variables?

Dr. Muath M. Eleswed, New York Institute of Technology, Kingdom of Bahrain



An exploratory study was conducting in a private hospital in Kuwait to examine whether or not there is a variation in the degree of influence of individual and situational factors affecting one’s ethical beliefs and decision making among certain demographics key variables. The study included one hundred and eighty one subjects, and took place between the months of May and July of 2008. The results of this study indicate that the degree of influence varies among certain demographics key variables including gender, age, education level completed, and job type.  Based on the results, implications and recommendations for further research were made.  As the quest for building the ethical organization is on the rise, it becomes apparent that organizations ought to ethically behave while conducting their daily practices. This is essential simply because, employees tend to act in the same manner as their organizational leaders when it comes to ethical conducts (Erondu, Sharland, & Okpara, 2004).  According to Morgan (1993), ethical conduct is perceived as an important element of leadership. Because of that, when leaders create ethical practices they become more effective, efficient, innovative, and successful. While achieving their organizations’ goals, leaders are often challenged to compromise their personal ethics (Weeks & Nantel, 1992). Consequently, many ethical failures have occurred all over the world (Beyer & Nino, 1999) as evidenced by “scandals at Enron, Worldcom, Parmalat, Allied Irish Bank, and National Irish Bank” (Knights & O'Leary, 2006, p. 125). Recently, the issue of ethics of leadership has been greatly emphasized (Knights & O'Leary, 2006), to include all types of organizations. This was due to the complexity consequence of globalization practices and major ethical lapses which have emerged and caused major damages to organizations and societies (Beyer & Nino, 1999). Ignoring the issue of ethics such as “societal expectations, fair competition, legal protection and rights, and social responsibilities” (Koh and Boo, 2001, p. 209) significantly impacts organizations. Examples of such impact include job satisfaction which in turn, affects stress, motivation, commitment, performance, absenteeism, and turnover. According to Arjoon (2000), the crises facing organizations and society are now known as the crises of leadership and ethics. According to the literature, many researchers have examined the relationship between organizational ethics and many organizational outcomes including customer satisfaction (Barnes & Powers, 2006), organizational citizenship (Ensher, Grant-Vallone, & Donaldson, 2001), financial performance (Wah, 1999), goals achievement (Davis, 2006), productivity and quality (Stainer & Stainer, 1995), turnover (Schwepker, 1999), and job satisfaction (Schwepker & Hartline, 2005). Finally, Chockalingam, Deshpande, and Joseph (1998) asserted that there are many determinants by which ethical behaviors are formed. These include for example educational level, years of employment, and age (Ford & Richardson, 1994), and many others. Nevertheless, understanding these determinants is essential for understanding the factors that are associated with organizational ethics and how ethical decisions are being made (Koh & Boo, 2001). Thus, this study aims at exploring the degree of influence that certain factors have on one’s ethical beliefs and decision making.   Ford and Richardson (1994) and O' Fallon and Butterfield (2005) have compiled empirical literature reviews which examined factors influencing one’s behavior. These include individual and situational factors. Many studies have examined individual factors affecting one’s decision making process (Ford & Richardson). Furthermore, Ford and Richardson asserted that these factors “represent the sum total of the life experiences and circumstances of birth that a particular individual brings to the decision making process” (p. 206). For example, Religion has been investigated in terms of three dimensions. According to Ford and Richardson, McNichols and Zimmerer (1985) examined religion in terms of the strength of the belief. Other dimensions include orientation of the religious value (Hegarty & Sims, 1978) and denomination and frequency of church attendance (Kidwell, Stevens, & Bethke, 1987). Out of these three dimensions, according to Ford and Richard, McNichols and Zimmerer found only the strength of belief had a direct relationship to ethical standards. Researchers have also examined the influence of the education on decision making. The results of these studies have different outcomes. Beltramini et al. (1984) have discovered that students in business majors were more sensitive toward ethical issues than other students in non-business majors. Similar findings were also reported by Hawkins and Cocanougher (1972). Moreover, Wu (2003) reported that ethics education influences individuals ethical decision making, however, Sankaran and Bui (2003) reported that non-business students tend to behave more ethically than business major students. In a study examining the ethical sensitivity of technical and non-technical majors’ students, according to Ford and Richardson, Chonko and Hunt (1985) discovered that managers who had technical educational background were more concerned with ethics than managers whose educational background was non-technical. Conversely, Ford and Richardson, asserted that Laczniak and Inderrieden (1987) and McNichols and Zimmerer (1985) reported no effect of education of individuals on their decision making process. Furthermore, research has shown mixed findings as to employment type.


An Empirical Test on Corporate Environmentalism as a Strategy: Evidence from Thailand

Dr. Apichart Kanarattanavong and Dr. Guntalee Ruenrom

Chulalongkorn University, Bangkok, Thailand



This paper reports the empirical test of the model of corporate environmentalism presented by Kanarattanavong and Ruenrom (2009). The model was developed with the notion that corporate environmentalism is a strategy to achieve competitive advantage. To test the model, a mail survey was used to collect data from manufacturing firms in four industries in Thailand, resulting in 772 usable observations. Multiple group analysis with SEM was used to analyze the data. Results indicate a limited role of external factors,i.e., perceived uncertainty of environmental market and of environmental regulation, in influencing corporate environmentalism; however, corporate environmentalism evidently improved marketing, social, and environmental performance.  Corporate environmentalism (CE) refers to the incorporation of concerns about the natural environment into firms’ decisions. Bansal and Roth (2000) studied motivations underlying the adoption of CE. Their study found three motives: competitiveness, legitimacy, and social responsibility, each of which was related to a unique set of decisions regarding CE. Firms with “competitiveness” motivation innovatively implemented CE and attempted to achieve competitive advantage, while firms with “legitimacy” motivation emphasized the costs versus risks of non-compliance to the environmental regulation (Bansal and Roth, 2000). Firms with “social responsibility” motivation were concerned about their wealth, as well as social good (Bansal and Roth, 2000). However, when studying the antecedents of CE, many scholars did not explicitly assume distinction of motivations. A research stream studied the antecedents of CE, using the political economy perspective as a theoretical base (e.g., Banerjee et al., 2003; Langerak et al., 1998). The perspective posits that firms’ behaviors, e.g., CE, are influenced by economic and sociopolitcal forces internal and external to firms (Stern and Reve, 1980). Examples of such forces influencing CE include organizational structure, public concerns, regulation, and environmental sensitivity of top management and marketers, etc. (Menon and Menon, 1997; Banerjee et al., 2003; Langerak et al., 1998). It is not decisive that firms implement CE because they want to achieve competitive advantage or because they are merely compliant to regulation. Another research stream used stakeholder theory to identify the antecedents of CE. Stakeholders include consumers, employees, suppliers, and shareholders, as well as government agencies, the public, the media, the neighboring community (Henriques and Sadorsky, 1996; Henriques and Sadorsky, 1999). However, firms are obligated to these stakeholders in different ways; consequently, using stakeholder theory to determine the antecedents of CE means the specific motivation for decisions could not be pinpointed.  The current paper reports the empirical test of the model of CE presented by Kanarattanavong and Ruenrom (2009). The model was developed based on the idea that CE is a strategy (Banerjee, 2002; Banerjee et al., 2003) to achieve competitive advantage and that firms’ strategic decisions are influenced by both internal and external factors (Varadarajan and Jayachandran, 1999). The empirical test of the model provides evidence for better understanding of CE. Because the model investigated different types of effect of external factors, namely the direct, moderating, and simultaneous effects of perceived uncertainty of environmental market and of environmental regulation, the type of the effects from two specific sources of perceived uncertainty (i.e., environmental market and environmental regulation) were empirically tested. The model also investigated marketing, social, and environmental performance outcomes of CE; therefore, they were tested. Lastly, the empirical test was conducted in a developing economy, a research context distinguished from the majority of studies; that has been conducted mostly in the developed countries. The next section briefly reviews the model of CE, followed by the research methodology. Research results and analysis are presented and discussed.


The Influence of the Leadership Practice “Inspiring a Shared Vision” on Group Norms in the Organizational Culture of Financial Institutions, in the Gambia, West Africa

Dr. Michael Ba Banutu-Gomez, Professor of Management and Entrepreneurship

William G. Rohrer College of Business, Rowan University, NJ



This research examines the powerful influence of a specific leadership practice, “Inspiring a Shared Vision on the ongoing development of group norms, a vibrant aspect of the organizational culture within the financial institutions of The Gambia, West Africa.  Its purpose is to discover if the utilization of this specific leadership practice can nurture, within the financial institution of an African country, the growth of group norms, which foster increased accountability, innovation and sustainable change.  Participants in this study were employees of Financial institution in the Gambia.  The Gambia, which is located in West Africa, is a narrow strip of land tucked 300 miles east of the Atlantic Ocean. It is nestled inside Senegal along both banks of the River Gambia, which is about 15 to 30 miles wide. The Gambia’s population is about 1.5 million people, with 95% of the natives of the Islamic faith and 5% of the Christian faith.  The Gambia consists of five main ethnic groups: Mandingo, 42%; the Fula, or Fulani, make up 18% of the population; the Wolof, 16%; the Serahuli, 9%; and the Jola, 4% (CIA World Factbook, 2004). The minority ethnic groups in The Gambia, which make up 11% of the population, are the Manjako, the Karonika, and the Balanta.  Between the 8th and 11th centuries, the River Gambia was part of the vast trans-Saharan trade routes, which brought both visitors from the North and the subsequent influence of Islam. In 1455 the Portuguese, who were the first Europeans to see The Gambia, reached the River Gambia and sold exclusive trading rights along the river to some English merchants, which began English influence in the area (Oluyitan, 1997). The Europeans brought goods such as salt, ostrich feathers, iron, pots and pans, firearms and gunpowder.  These goods were exchanged for ivory, ebony, beeswax, gold and slaves. For the Europeans, the slave trade, which operated legally from the 1500s until 1807, was its most “lucrative” area in The Gambia (Columbia Univ. Press, 2004). In 1820, Great Britain declared the River Gambia a British Protectorate, and for many years ruled it from Sierra Leone. In 1886, The Gambia officially became a crown colony, and in the following year, France and Britain drew the boundaries between Senegal, which at the time was a French colony, and The Gambia. As slavery ended, the British continued to rule in The Gambia while the French controlled the Senegal (Oluyitan, 1997). After abolishing slavery in 1906, the colonial administration’s main concern was the collection of revenue for the British Crown (Oluyitan, 1997). The people of The Gambia would have no say in the affairs of their country for the next 59 years.  On February 18, 1965, The Gambia was one of many African countries to be granted independence from Europe. Since then, there have been two generally popular Presidents. The first, D’awda Jawara, ruled until the current President, Yahya Jammeh, overthrew him in 1994 (Columbia Univ. Press, 2004).  Since 1994 President Jammeh has retired from the Army and been twice re-elected as a civilian in what seemed to be a fairly democratic vote. Most Gambians are very confident about Jammeh’s regime. Agriculture is the backbone of The Gambia's economy exporting mainly groundnuts, groundnut oil, fish and cotton. Tourism is the second largest foreign exchange earner. Currently, there are about 225 primary and high schools in the country, one teacher's college, and the University of the Gambia, which was established in 1999, as the highest institution of learning (Columbia Univ., 2004). 


The Quality Policy in Value Based Management

Prof. Piero Mella, University of Pavia, Italy



This study is based on the premise that, strictly speaking, capitalistic firms are business profit oriented organizations that are viewed as systems for the creation of economic and financial value for their shareholders (owners). This assumption has guided the new concept of a management whose aim is the production of value, or Value Based Management (VBM).  VBM recognizes that financial performance – based on profit and the value of capital – depends in a causal way on the level of quality of products and processes, and that therefore quality is the condition for producing value for the client and financial value for shareholders.  This paper has a twofold objective.  It seeks above all to analyze the different ways VBM must use to consider quality as a value driver – identifying the relations between quality levels, on the one hand, and cost, revenue and profit levels, on the other; and, secondly, to indicate the guidelines based on which VBM can develop a strategy of Total Quality Management, or Company-Wide Quality Control that is integrated with the other “value creating strategies”.  The spread of Value Based Management (VBM) is relatively recent. Only since the 1990s have many large firms turned to this managerial technique, whose objective is to direct management toward the primary goal of creating shareholder (owner) value (Mella and Pellicelli, 2008).  For Arnold, VBM does not represent a new management technique, a specific method, or a new system of control; rather it is a mental attitude toward the systematic maximization of shareholder value: “Value-based management is a managerial approach in which the primary purpose is long-term shareholder wealth maximization. The objective of a firm, its systems, strategy, processes, analytical techniques, performance measurements and culture have as their guiding objective shareholder wealth maximization” (Arnold, 2000: p. 9). The objective of monetary profit gives way to that of the maximum return on the shares, and thus to the maximization of shareholder value; as a result, the need inevitably arises for management to move toward a value based approach, continually changing the composition of the businesses in the portfolio, abandoning the low profit ones for new ones with higher returns, in order to maximize the return on equity (roe) and the return on invested capital (roi) (Copeland, Koller and Murrin, 2000: p. 87).  Morin and Jarrel consider VBM from an organizational point of view and argue that VBM “is both a philosophy and a methodology for managing companies. As a philosophy, it focuses on the overriding objective of creating as much value as possible for the shareholders. ... As a methodology, VBM provides an integrated framework for making strategic and operating decisions” (Morin and Jarrel, 2001: p. 28).  These principles represent the main elements that guide the formation of the “value creating strategies” of firms adopting VBM (Rappaport, 1998).  Once the company develops strategies, a number of operational drivers that are key to implementing the strategy have to be identified. By focusing on these operational drivers, the company’s strategy is successfully implemented, which in turn improves the value drivers, creating aggregate value” (Morin, Jarrel, 2001: p. 343).  While the first two principles have been widely treated in the literature (Serven, 1998; Rappaport, 1998;, the third deserves further treatment since the production of value for the client not only is an objective to pursue but also represents a fundamental driver for profitability, and thus shareholder value.


E-Microenterprise: Designing Microsoft Access Database for Four Industries

Mei-Luan Huang, Nan-Jeon Institute of Technology, Taiwan

Dr. Yaw-Yih Wang, Central Taiwan University of Science and Technology, Taiwan



Software suites cannot cater to the demands of enterprises with streamlined staffing and their need of informationalization, while on the other hand, the price of customized applications is so out of reach. In such predicament, this study aims at enabling e-microenterprise environment, setting up inventory system, cutting back on personnel costs, and promoting business performance.  By way of case study method and in-depth interviews, this study draws up the research structure after interviewing vendors and clients to understand their system demands as well as information process. This research develops the economical, prevalence-accessed, and easy-to use Microsoft Access for catering industry, body shops, agricultural cooperative markets, and motels. By combining theory and practice, this business database will facilitate vendors to maximize benefits with minimum investments.  The designed database—with related information entered—was distributed to the vendors and has gained their approval. After several interviews, we perfected the database according to their opinions.  The ubiquitous supermarket POS system, ATMs, school administration, and seat reservation system are the proof of how database affects our lives drastically. It facilities our daily routine, not to mention what an efficient instrument inventory management is for business.  For micro-enterprise and SME owners that has no intention in hiring information professionals or spending fortunes on management system implementations, this study turns to the easy-to-use Access software for database management, especially those catering business, agricultural cooperative markets, body shops, and motels. The software helps inventory management lower administrative expenses and increase profit.  Through an elaborative design, the database consist a collection of particular data to satisfy users’ demand at the right moment. The database structures are usually three-tiered, the so-called ANSI/SPARC architecture where users’ applications are separated with actual data to achieve data independence.  Database management system is a program that helps users build and maintain database. It basically has the following three functions: (1) to define the type, specification and limitation of data; (2) to save data on media that is controlled by the database management system; (3) for inquiries, searches, modifying data and production report. Database system includes database and database management system that poses great advantage in data processing: (Xiang-hui Chen, 2007; Chan-ling Dai, 2002) (1) complete data definition and data independence; (2) data sharing; (3) reduce repetition; (4) remain data consistency; (5) real-time processing; (6) database security control; (7) backup; (8) increase data and document standardization; (9) easy-to-use, and saving more time on the design process.   According to the data model, database management system could be divided into: Hierarchical Database, Network Database, Relational Database, and Object-Oriented Database (Shou-zheng Ceng, 1997). ORACLE, DB2, FAXPRO, and ACCESS are most common of all. As for MS ACCESS, it is a member of the Microsoft Office suite of applications, a great assistance that is convenient and handy. This study targets ACCESS as the design software.


Dark Side of Mergers & Acquisitions: Organizational Interventions and Survival Strategies

Dr. Ceyda Maden, Fatih University, Istanbul, Turkey



Mergers and acquisitions (M&As) are increasingly prevailing, influential and risky corporate events.  The bulk of the literature relating to M&As focus on economic, financial, and strategic factors behind these practices and financial performance is taken to be the most common determinant of M&A success.  Nevertheless, increasingly, the success of organizational combinations has been measured by the reactions of individuals affected by these practices.  Negative behavioral outcomes associated with these events, such as high voluntary attrition rates, absenteeism, employee stress, and unprecedented acts of sabotage, influence the performance of M&As and subsequently reflect in the “bottom line” figures.  This study has three strategic objectives.  The first is to highlight the major employee concerns subsequent to a merger or acquisition processes.  The second is to address some critical HR decisions after M&As and present certain implications managers to cope with the prevailing employee stress.  The last aim is to convey some personal strategies for surviving in the new organization.  The first part of this study entails a comprehensive literature review that portrays the theoretical background of relevant issues concerning the human side of M&As.  In the second part, two real life cases regarding the merger/acquisition processes of four reputable Turkish banks are presented.  Implications derived through the personal interviews, which were conducted with four middle-level managers who had been involved in the merger/acquisition processes of selected banks, are found directly related with the theoretical discussions in the literature.  Mergers and acquisitions (hereafter, M&As) are increasingly prevailing, influential, and risky corporate events.  Although most of the time, the primary purpose of these establishments is to improve overall performance by achieving synergy, the mere existence of potential synergism does not guarantee that this possibility will be realized.  In addition, given the available research evidence on M&A performance, the reluctance of many firms to engage in this type of high risk activity may seem to be well founded.  The bulk of the literature relating to M&As focus on economic, financial, and strategic factors behind these practices and financial performance is regarded as the most common determinant of M&A success.  Accordingly, a variety of objective measures such as net income, share price fluctuations, and profit-earning ratios are taken into consideration while drawing the borders of major accomplishments and failures.  Nevertheless, increasingly, the success of organizational combinations has been evaluated based on the reactions of those individuals that are deeply affected by these practices (Cartwright and Cooper, 1994).  Negative behavioral outcomes associated with these events, such as high voluntary attrition rates (Walsh, 1998; Unger, 1986), absenteeism (Davy, Kinicki, Kilroy, and Scheck, 1988), employee stress (Cartwright and Cooper, 1993), and unprecedented acts of sabotage (Altendorf, 1986) are proposed to affect M&As’ performance negatively and subsequently deteriorate “bottom line” figures.  As ‘mergers’ or ‘acquisitions’ often require the integration of previously independent organizations with their existing human resources, they may challenge individuals’ job motivation and upset their career plans through various resistance generating changes such as new roles and assignments, transfers to new jobs and/or geographical locations, adjustments in salaries and compensation packages, changes in perks, career paths, organizational status, colleagues, and bosses (Larsson and Finkelstein, 1999).  In addition to these potential changes, transformation in corporate culture and loss of identity are two other critical concerns that substantially de-motivate individuals.  This study has three strategic objectives.  The first is to highlight the major employee concerns subsequent to a merger or acquisition.  The second is to address some critical human resources (HR) decisions after M&As and present certain implications for managers to surpass the high stress level of employees.  The last aim is to convey implications for individuals to help them survive in a merged, acquirer, or acquired organization.  The theoretical knowledge, which is built through the review of existing literature on human side of M&As, is supported by the themes discussed in personal interviews, which were conducted with four middle-level managers who had been involved in the merger/acquisition processes of four reputable Turkish banks.


Toward Finding an Optimal Mix between Push and Pull Strategies: Try Conjoint Analysis

Dr. Chaim Ehrman, Loyola University Chicago, IL

Jerusalem College of Technology and Bar Ilan University, in Israel




In the field of Promotion, there are 2 well known promotion mix strategies: Push and Pull.  The decision maker faces the problem of defining optimal budget allocation for Promotion, and how to divide this budget between push and pull strategies. In this paper, it will be shown how Conjoint Analysis can be used to solve this problem.  The field of Promotion represents the 4th "P" of the Marketing Mix: Product, Price, Place and Promotion. The American Marketing Association defines a company's total promotion mix as the specific blend of advertising, sales promotion, public relations, personal; selling and direct marketing tools that a company uses to persuasively communicate customer value and build customer relationships. In this paper, the focus is on budget allocation for sales promotion.  Sales promotion is defined by the AMA as short-term incentives to encourage the purchase or sale of a product or service. There are two strategies that can be used to implement sales promotion.  The Push strategy uses sales force and trade promotion to push the product through the channels of Distribution. The producer directs its marketing activities toward channel members (retailers, wholesalers, etc.) to induce them to carry the product and promote it to final consumers. The Pull strategy calls for spending on Consumer advertising to induce the final consumer to buy the product. If the pull strategy is effective, consumers will then demand the product from channel members (retailers), who will in turn demand it from producers.   (See Kotler and Armstrong, page 415).  Kotler and Armstrong state, (p. 412), "One of the hardest marketing decisions facing a company is how much money to spend on promotion (p. 439)." The amount to allocate for Promotion expenditure is clearly a very significant, and difficult problem to solve, and certainly a non-trivial issue for the marketer. The next section represents several approaches to solve this problem.  In the Marketing Literature, we find four methods that marketers use to allocate promotion expense. The Affordable method states that after all expenses are deducted from total revenues, we assign a fixed amount of revenue for promotion based on what the company can afford. This is myopic, since a given level of expenditure for promotion may be required to achieve a given goal of market share or profit impact. The fixed amount of promotion may be insufficient to achieve the firm's goal.  A second approach is defined as "percentage of sales". Using this approach, when our sales figures decrease, the budget for promotion expense also decreases. Unfortunately, this strategy puts the cart before the horse! The purpose of promotion is to increase sales and profits. This method advocates incremental spending when sales are high and decreased spending when sales are low. In reality, when sales are low one should spend more to stimulate sales. When sales are high, one can spend less because there is a lower need to stimulate sales and promote the product.  A third method is known as the Competitive – Parity Method. The logic of this method is as follows: Promotion is essentially conducted in a competitive environment. One does not want to see the competitor outspend his firm in promotional budget allocation. Therefore, a logic approach would be to simply match your competitors. The collective wisdom of the industry should represent the ideal amount to spend for promotional activity. This approach would advocate spending the industry average for promotion expense. Unfortunately, this method does not work. There are no grounds to assume that your competitors have a better understanding what promotion expenditure should be.   Many companies have their "own" special promotion needs. This approach could be classified as an example of the "blind leading the blind."


Usage of Web 2.0 Tools for Ubiquitous Enterprises

Burcu Balım and Dr. Ozgur Dogerlioglu, Bogazici University, Istanbul, Turkey



The aim of this research is to investigate the awareness and usage of Web 2.0 tools within the context of Enterprise 2.0.  One hundred and fourteen companies from different sectors participated in data collection process. Awareness of Enterprise 2.0 is analyzed according to usage of Enterprise 2.0 tools in the company, technological pursuits of the company, resistance reasons and perceived effects of Enterprise 2.0. Awareness level of participant companies is also measured according to their terminology and concept knowledge about Enterprise 2.0. Only 28.1% of the respondents are highly aware of Enterprise 2.0. Blogs, Social Networks and Forums are among the most known tools of Enterprise 2.0. Marketing is the area with the highest Web 2.0 tools usage. Content control is the most important resistance reason related to the usage of Web based systems for communication and information sharing activities. Using internet for following new developments and innovations in a specific industry is significantly correlated to the perception of web based systems as accelerators of internal communication. Companies following technological developments closely prefer to use Web 2.0 platform for knowledge sharing.  Web 2.0 concept has emerged in 2004 (O'Reilly, 2005)  and internet users have become active participators in the content creation process starting to generate data  and  sharing it on the internet instead of being passive readers of the web pages (Dearstyne, 2007; Cormode and Krishnamurthy, 2008). In the Web 1.0 which is World Wide Web, internet was used in order to publish text or data. Data publishing procedures were difficult and expert help was essential. Today everyone who is computer literate can create a web page or blog easily. Social internet sites such as Youtube, Facebook, Linkedin, and Flicker are using the same technology which is Web 2.0. While serving for different purposes, all of them provide easy to use or user friendly interfaces and adopted “freemium business model” (Wilson, 2006) which involves “collective user value, positive network effects, and community sharing” (Shuen, 2008). This study has a focus on Web 2.0 usage for business purposes.  Business enterprises noticed the opportunities and threats of the new digital platforms and the term “Enterprise 2.0” was introduced to indicate the focus of companies for adding value with the skills of their knowledge workers (McAfee, 2006). There are various types of Enterprise 2.0 tools such as blogs, wikis, podcast, RSS, and they support the communication, collaboration, content management and various related needs of the companies. The main difference of the Enterprise 2.0 tools from the standard tools that is used in the companies is the user orientation and involvement. By means of Enterprise 2.0 tools, employees take more control in the organization and formal structure of companies is changed (Gillis, 2008). Especially social networks and interactive web pages such as blogs are very beneficial to inform employees and customers about products, services or organizational news.   Enterprise 2.0 enables users to share content easily, and ensures knowledge management. Through tagging, RSS and bookmarking it is effortless to be aware about developments inside and outside the organization. Although the studies about Enterprise and Web 2.0 technologies are at the beginning stage, there is evidence that these platforms are beneficial in the cost reduction, risk mitigation and improvement of customer services, innovation, collaboration and communication inside and outside the company (Hayes, 2008).


Promotion of Self-Directed Learning Through Developmental Teaching Strategies

Dr. Li-Jeng Liang and Dr. Wen-Lan Wang, Ling Tung University, Taiwan



Since 1970 self-directed learning has been the study point of adult education. Since then self directed learning has become very popular. Self directed learning is taken up as a more serious topic now because all the countries were paying more attention on all lifelong learning, learning organization, learning society . This type of learning is natural and essential for promoting ability, life quality and satisfaction within human beings. So enhancing self-directed learning is one of the important educational goals.  An educator can use different teaching methods and interpersonal approaches to achieve the 'optimum fit' that caters the learner's level of self-directed learning. For example when a learner shows interest in taking up more responsibilities for learning, then the educator can gradually decrease his /her control  over teaching the learner and increase the learner's control over learning. This will enhance the learner's level of self directed learning. This paper describes the different teaching methods and interpersonal approaches to be used to match with the different levels of self directed learning and also emphasizes on promoting self-directed learning.  In order to promote one’s self-growth, improve one’s performance, make one be reasonable and think critically, and understand one’s responsibility of becoming social members, lifelong learning is necessary. To increase organizational efficiency and productivity, to maintain good social order, and to make everyone have equal economic opportunities, human beings need lifelong learning. Hence, when one leaves school, one must obtain basic knowledge, but the most important thing is that one must have the ability of getting new knowledge. School programs ensure that even a mediocre student will have some basic skills and knowledge. However, it is important that one should have the thirst for knowledge as well as the skills necessary to get that knowledge. Learning is closely related to life. We must learn from what we have done, from the people we deal with, from every organization, and from every personal and professional encounter. Thus, everyone and everything around us are learning resources. Learning must use all of these resources in order to achieve the aim of self-growing and development. Therefore, the goal of education must develop the probing volition and skill.  Any aim of education is to make learners become self-operating(Brockett and Hiemstra, 1991) and also to make learners be able to lifelong learning. Let learners have more self-directed learning ability, furthermore make learners be able to learn new things and complete self-realization. Whether they have a teachers’ guidance or not, their wisdom can be developed, they can assume learning responsibility and self-determining. For this reason, it is actually an important aim for education to promote the ability of self-directed lifelong learning (Glaubman, Glaubman and Ofir, 1997; Kreber, 1998).


Changing the Entrepreneurial Landscape Through Effective Use of Case Study Analysis

Professor Roger Paskvan and Dr. James R. Maxwell, Bemidji State University, Minnesota



In most entrepreneurship and leadership courses students use cases about actual companies to practice strategic analysis and to gain some experience in the tasks of crafting and implementing strategy to lead their organization to economic success.  A case sets forth, in a factual manner, the events and organizational circumstances surrounding a particular managerial or leadership situation. The purpose of this paper is to look at why case studies are used and recommendations for using them.  The case method is an effective avenue for sensitizing students and faculty to the complexities and structures of entrepreneurial business organizations and leadership situations. Business cases are one of the most effective and convenient ways to introduce practice into the classroom, to tap a wide variety of experiences, and involve students actively in analysis and decision-making. Cases are not intended as examples of either weak or exceptionally good management practices. Nor do they provide examples of particular concepts. Faculty that utilize case analysis methods are up-dated as to current techniques, successes and failures of business allowing them to stay current. Businesses that cooperate in case study analysis provide a constructive learning situation that can’t be beat by any other means of teaching  the practical side of the subject matter. Teaching techniques involving case study causes the student to “think,” in a business fashion encouraging educational development at all levels. The typical; failure or success of case study business models provide a bridge to a reality world not found in most current text books.  The case approach to strategic analysis is, first and foremost, an exercise in learning by doing.  Cases help substitute for on-the-job experience by (1) giving you broader exposure to a variety of industries, organizations, and strategic problems; (2) forcing you to assume a managerial role (as opposed to that of just an onlooker); (3) providing a test of how to apply the tools and techniques of strategic management; and (4) asking you to come up with pragmatic managerial action plans to deal with the issues at hand.  Cases attempt to reflect the various pressures and considerations that professionals of all varieties confront in the workplace. Using complex, realistic open-ended problems as a focus, cases are designed to challenge you and help you develop and practice skills that you may need in your future careers. Cases are also an excellent way to see how abstract principles learned in class are applied to real world situations. These real world situations can then be applied to other scenarios and compared to like-business models integrating the student approach from the classroom to the business world.


Performance Assessment in Thai State Owned Enterprises

Dr. Uthai Tanlamai, Chulalongkorn Business School, Bangkok, Thailand

Pornpipat Juta, Faculty of Management Science, Ubon Ratchathani University, Thailand



This study examines the implementation of performance assessment tools, Performance Agreement and Risk Management in Thai State Owned Enterprises (SOEs). These tools have been used to govern the operational efficiency, and provide non-financial performance measures of SOEs. The relationships between these non-financial performance scores and SOE’s financial ratios were empirically tested. Both primary and secondary data were collected, including 1998-2009 publicly available data, in-depth interviews, and survey using customized, individualized questionnaires. The results show moderate to weak relationships between performance agreement and risk management scores and the SOE’s financial performance. The former scores focusing on the assessment of strategic direction, business processes, and structure relate stronger to financial performance than to risk management related matters.  The development of State Owned Enterprises (SOEs) is critical to any developing country, especially those in the Asia Pacific region, as they provide a valuable source of fiscal revenue and contribute directly to the growth of other state and non-state sectors. Governments in different countries have tried to find mechanisms to improve SOE’s performances, operationally and financially. One simple way to achieve this goal is to change the management structure of the SOEs to be akin to those of private enterprises. Therefore, the fastest route is privatization. This is especially true in China where thousands of SOEs have been converted to (and from) different forms of ownerships (Jefferson and Rawski, 1996). With the adoption of the Open Door Policy at the end of the 1970s, liberalization and deregulation of government and state organizations have enabled Chinese SOEs to transform their traditional operations and embrace modern management systems so as to compete in the global marketplace(Buckley, Clegg, and Tan, 2005) . Similar to China, all Southeast Asian nations - Thailand included - rely heavily on foreign investment, domestic savings and export-led growth economies (Lim, 1996).  These nations have taken a similar pathway and have included privatization, the ultimate result of the reform and restructuring of their SOEs, into almost every government budget plan.  The motivation behind the movement to enhance the efficiency and effectiveness of Thai SOEs is similar to that of other economies around the world. The prosperity of Thai SOEs has had an important impact on the economic growth and social development of the country. Since the First National Economic and Social Development Plan (NESDP) in 1961, one of the constants in all these national plans has been the need to improve the operational efficiency of the government sector. During the 1997 financial crisis, privatization of SOEs was urged by the International Monetary Fund because it could stimulate the domestic capital market by attracting the foreign capital inflow necessary to stimulate the economic growth of the nation. However, the movement was opposed by labor unions and employees of SOEs who were afraid of a cut in salary and lay-offs. Political parties who had appointed their people as SOE’s board members and executives also opposed the privatization. They foresaw the loss of political influence and budgetary kickbacks once the privatization would be in place. Although hopes for privatization have faded in recent years, the need to improve management capability and enhance the performance of SOEs has become more and more urgent, driven by the global movement towards good corporate governance (CG). Although CG is not new, the recent attention given to this area has been the result of some very large business fraud cases around the world. CG is now considered to be the key practice that will strengthen the confidence of investors. In many countries, CG related regulations are formalized, legislated upon and enforced upon organizations, especially those in the capital market. For government agencies and public organizations, the implementation of CG is expected to help increase the efficiency and long term value of SOEs, as well as creating fairness for the shareholders of listed SOEs (SEC,  2003).  


An Empirical Study of Residents’ Attitudes to Tourism Impact Management Strategies

Ping-Tsan Ho, Tatung Institute of Commerce and Technology, Taiwan




Sustainable development has been an ideal goal for tourism destination, especially within precious nature and culture areas. The fundamental principle of sustainable development is to look for a better solution which will reach quality development for now and also for future generation. Thus, managing potential impacts of tourism development with care is essential. This study proposed a systematically approach to evaluate residents attitude to tourism impact management strategies. Research results showed that local residents most concerned about negative changes in environmental conditions, but welcomed positive outcomes of economic improvement. This study further examined resident perceptions of management strategies for concerned tourism impacts. The findings revealed that local residents preferred indirect management strategies to avoid offending visitors by direct regulations and rules. Finally, some critical factors, which might influence the perceptions of tourism impacts and the acceptances of impact management strategies, were examined to provide insight explanations for tourism impact management.  Sustainable development has been an ideal goal for tourism destination, especially within precious nature and culture areas (Wight, 1993; Nelson, 1994). The fundamental principle of sustainable development is to look for a better solution which will reach quality development for now and also for future generation (Middleton & Hawkins, 1998). In other words, the impacts of development at the present should not be an expense for the next generation. As a result, the impacts of the tourism development are widely concerned by residents and legal legislations (Mathiesin & Wall, 1982; Andreck & Vogt, 2000; Wall, & Mathieson, 2006).  Past researches have argued the extent of tourism in relationship to sustainability of a destination (McCool & Martin, 1994; Ko & Stewart, 2002). Negative tourism impacts were identified by researchers, such as crowding, resource deterioration, pollution, waste, culture commercialization, breakdown of social systems, and changes of traditional values (Ap & Crompton, 1998; Getz, 2000). On the other hands, positive tourism impacts were also recognized, such as increase of income and employment, increase of destination awareness, recuperating nature and culture resources, and encouraging resident confidence (Ap & Crompton, 1998; Lankford, 1994). These negative and positive tourism impacts can be categorized into three facets, including economical, environmental, and social-cultural impacts. While implementing sustainable tourism development, diagnosis of various impacts toward the destination is essential. In addition, factors that may influence resident perceptions of tourism impact have been received research attention in the past decade. The factors, such as age, education, tourism dependency, community dependency, tourism knowledge, residency, traveling distance, degree of tourism development, interactions between tourists and residents and the extent of recreation facilities usage were found to have a relation with residents’ perceptions of tourism impact (Sheldon & Var, 1984; Keogh, 1990; King et al., 1993; Madrigal, 1993; Lankford & Howard, 1994; McCool & Martin, 1994; Juroski et al., 1997; Andreck & Vogt, 2000).  Concerning the tourism impacts, several planning and management approaches were proposed in the past researches. Recreation Opportunity Spectrum (ROS), Limits of Acceptable Change (LAC), Visitor Experience and Resource Protection (VERP), and Visitor Impact Management (VIM) are widely adopted. Managerial strategies of tourism impacts can be classified into direct and indirect approach (Hendricks, Ruddell, & Bullis, 1993). Direct management strategy emphasizes on regulation and control approach. On the contrary, indirect management strategy focuses on influencing and persuading visitors to behave in appropriate manner which will minimize negative impacts and encourage positive impacts on destination. Rigorous control and management will maintain a balance between economic growth and the environment (Riley, 1995) and allow the development of sustainable tourism to be able to continue. However, every tourist destination has its own characteristics in terms of resources, socio-economic environment and structure of residents. There are various factors affecting the condition of tourist destination. Application of tourism impact management strategies will be varied accordingly. Pearce, Moscardo and Ross (1996) proposed those residents’ attitudes to proposed tourism development and implementation will be a critical factor of making the program success.


Strategic Groups, Mobility Barriers, and Industry Evolution: An Empirical Study of Taiwan Banking Industry

Dr. Te-Kuang Chou, Southern Taiwan University, Taiwan



This study argues that strategic groups should be indentified with variables which reflect vital characteristics of a focus industry. The identified group structure should be followed with an attempt at tracing industry evolution to reach insightful understandings of that industry. The empirical setting is Taiwan’s banking industry covering the period from 1992-2001. Cash flow variables were adopted as a basis for grouping since liquidity aspects determine the strategic positions of banks. It was found that Taiwan’s banking industry was polarizing, and there were very strong asymmetrical mobility barriers that deterred newly founded banks from moving into the best-performance group. These findings not only provide important knowledge for competitive dynamics about the focus industry, but also contribute a continuing dialogue with previous mobility barrier theories, with the possibility of theoretically linking the concept of the strategic group (CSG) with the resource-based view (RBV).  Hunt’s (1972) observation of asymmetrical strategies pursued by strategic groups of firms in the U.S. home appliance industry was quite a departure from the prevailing structure-conduct-performance (SCP) paradigm of industrial organization (IO) economics (Panagiotou, 2006). Since then, a considerable body of theoretical and empirical work has expanded upon this concept (Short et al., 2007; Prior and Surroca, 2006; Mas-Ruiz et al., 2005; Churchman and Woodard, 2004; Warning, 2004; Castle, 2003; Lee, 2003; Osborne, Stubbart and Ramaprasad, 2001; Peteraf and Shanley, 1997; Cool and Dierickx, 1993; Tang and Thomas, 1992; Fiegenbaum and Thomas, 1990; Cool and Schendel, 1987). With it’s terseness in conception and closeness to industry reality, the concept of the strategic group (CSG) has been listed as “one of the most valuable analytic concepts in the armory of the strategist, practitioner or researcher” (Hatten and Hatten, 1987: 340). Yet, in existing research studies there is still much controversy about how strategic groups should be identified (Leask and Parker, 2006; Dranove, Peteraf and Shanley, 1998; Barney and Hoskisson, 1990; Thomas and Venkatraman, 1988). More importantly, most CSG studies adopted static analysis and thus “implicitly assumed that groups are a stable element of market structure” (Mascarenhas, 1989: 333), leaving the potential for the CSG in tracing long-term industrial evolution yet to be fully exploited.  We argue that strategic groups should be identified with variables, which can reflect vital characteristics of that industry, and the identified group structure should be followed with an attempt at tracing industry evolution to reach insightful understandings of that industry. This paper sets out to identify the strategic groups on the basis of cash flows and traces the changes of the group structure over time. The empirical setting is Taiwan’s banking industry covering the period from 1992-2001. It was found that Taiwan’s banking industry was polarizing, and there were very strong asymmetrical mobility barriers that deterred newly founded banks from moving into the best-performance group. These findings not only provide important knowledge for competitive dynamics about the focus industry, but also contribute continuing dialogue with previous mobility barrier theories with the possibility of theoretically linking the concept of the strategic group (CSG) with the resource-based view (RBV, for reference see: Leask and Parnell, 2005; Barney, 2001, 1991; Peteraf, 1993; Wernerfelt, 1984).  Though initially proposed by Hunt, the most commonly used definition of strategic groups was provided by Porter (1980: 129): “A strategic group is the group of firms in an industry following the same or a similar strategy along the strategic dimensions”. Mobility barriers are group-specific entry barriers, which impede low-performance group firms from moving into high-performance groups, resulting in persistent performance differences among groups (Nair and Filler, 2003; Dranove et al., 1998; Mascarenhas and Aaker, 1989; Cave and Porter, 1977). Mobility barriers are the counterpart of group structure (McGee and Thomas, 1986). Logically, strategic groups cannot exist without mobility barriers. However, the extremely high level of mobility barriers might impede the emergence of strategic groups (Lee et al., 2002).


Empirical Analysis of the Price Discovery in the Stock Index and Its Derivatives Contracts: The Case of Taiwan

Dr. Chin-Yu Tsai, China University of Technology, Taiwan



This paper examines the intraday price discovery process among the stock index, index futures and index options in Taiwan’s financial markets using time series and cross-sectional data from January 2006 to June 2007.  The results indicate that the stock index futures lead the (spot) stock index and the at-the-money and out-of-the-money options also lead the stock index.  A symmetric lead-lag relationship is also found between futures and options, except for out-of-the-money options.  These results support the trading cost hypothesis which states that the derivatives markets give the investors much lower trading costs than the stock index markets.  This means that informed traders in the stock index and its derivatives markets may react faster to the stock index derivatives markets than the stock index markets.  In rational, efficiently functioning markets, the prices of securities and their derivatives should be perfectly contemporaneously correlated.  However, in the real markets there exist market frictions including various transaction costs and information asymmetry which will give rise to a lead-lag relationship between markets.  Because many traders take positions in inter-markets simultaneously, the differences in reaction times and the sizes of the differences in cross-sectional prices between markets can have a crucial effect on their profits.  For this reason, it is of interest to both practitioners and academics to examine the price discovery process by investigating the lead-lag effects between the stock index, futures and options markets.  The Taiwan Stock Exchange (TSE) Capitalization Weighted Stock Index Futures, launched on July 21, 1998, were the first organized financial derivative product traded on the Taiwan Futures Exchange (TAIFEX).  In 2001, the TAIFEX also launched two other new products – the Mini-TAIEX futures and the TAIEX options on April 9 and December 24, respectively.  Because of the thin trading volume problem, there have been few studies that deal with the lead­-lag relationships among spot index, index futures, and index options based on minute-to-minute data.  However, the trading volume of the TAIFEX stock index futures and options markets grew from 4.3 million contracts in 2001 to 114.6 million contracts by 2006, which was a huge increase.  In addition, the TAIFEX options trading volume ranks the third largest in the world, next only to Korea in Asia.  The sufficient liquidity of the markets ensures that the TAIFEX stock index futures and options markets are appropriate for the study of the market microstructure of price discovery associated with the stock index, futures, and options.  When comparing the strike price of an option with the corresponding stock price, it is often observed that there are five kinds of options, i.e., deep-in-the-money, in-the-money, at-the-money, out-of-the-money, and deep-out-of-the-money.  The degrees of those five options’ lead-lag relationships are different.  The trading volume of the at-the-money option is larger than that of the out-of-the-money option, and so the function of price discovery is higher than that of the out-of-the-money option.  The in-the-money option possesses an exercise value and has a strong correlation with the spot market, but it is possible that there exists a lower risk and return in the in-the-money option compared with the out-of-the-money option.  Because speculators do not appreciate a yield involving a lower return, the function of price discovery is not obvious.  Both local and international studies on the lead-lag relationships among the three markets tend to pay more attention to the at-the-money option in the case of the spot and futures markets, and to pay little attention to the five kinds of options just mentioned.  This paper seeks to supplement this deficiency and tries to explore the correlation between the spot, futures and those five types of option markets. The purpose of this paper is to provide price discovery functions of the TAIFEX stock index futures and options related to the stock index based on minute-to-minute price data.  The results derived should help investors in making their trading decisions.  This remainder of this paper is organized as follows.  Section 2 provides a brief review of the literature.  In Section 3, we describe the data and explain the methodology of this study.  Section 4 explores the lead-lag relationship among the different markets.  A summary and conclusions are provided in Section 5.


Asset Price Boom and Financial Market Perception of System Risk

Dr. Ana Rimac Smiljanic, University of Split, Croatia



Episodes of asset price booms have often been accompanied by an increase in private sector indebtedness and investment in an environment of low interest rates, low credit and regulatory standards, i.e. in an environment of reduced perception of system risk. This paper argues that asset price boom has an influence on a decreased perception of system risk in credit markets. In this study, we analyzed the influence of real estate and stock prices on the perception of system risk in the US since 1970 based on the co-integration VAR. The co-integration test suggests that long-term development of system risk perception in credit markets can be explained by asset price movements. Impulse response analysis based on Cholesky’s standard decomposition reveals that there is significant dynamic interaction between stock prices and the perception of system risk in credit markets.   Analysis of the connection among asset prices, credit booms and economic activity is mostly related to the literature on business cycle models that incorporate the financial accelerator effect first explained by Bernanke and Gertler (1995). Due to this effect, significant shocks to asset prices, relative to the prices of goods and services, change the net value of the potential debtor who determines the scope and the cost of external financing. If debtors have more valuable stock and real estate in their portfolios, the creditors consider them to be higher quality debtors and they can obtain loans from financial intermediates more easily. With more valuable assets in property, the debtor pays a lower premium for external financing and thereby has lower financing costs for spending or investment. Much empirical research confirms this effect in developed countries (Bernanke and Gertler, 1989; Bernanke, Gertler and Gilchrist, 1999; Kiyotaki and Moore, 1997; Gertler and Lown, 2000; Mody and Taylor, 2003; Kakes and Ullersma, 2003, 2005; Adrian and Shin, 2008, etc.). Although the financial accelerator theory explains well the cyclical movements of the real economy, we believe that it is inadequate for explaining cyclical developments in the financial system. In this paper, we claim that underestimating risk, with the financial accelerator effect, is one of the key factors in the occurrence of credit cycles. Minsky (1992) says that during economic and financial stability, investors and lenders reduce their risk aversion. They borrow and invest more in assets, and such behavior raises asset prices even more, which further encourages the growth of borrowing and investment in assets which in turn adds to the further growth of asset prices. With this approach, Roubini (2007) explains the emergence of the current financial crisis. Namely, current global financial crisis can be accounted for in crises largely connected to  asset markets. Borio, Firfine and Lowe (2001) provide important theoretical bases of risk perception in the cyclic movement of the financial system and emphasize the importance of its further research. In his paper, Borio (2004) emphasizes the importance of further research into the links between collective behaviors and the risk assessment of individual financial institutions. Furthermore, Borio (2006, 2007) in the analysis of the challenges faced by  monetary and regulatory authorities due to changes in the financial system has emphasized the importance of further research into risk misperception, calling it the “risk perception gap”. He emphasizes the necessity of better measurement and risk control at the micro and macro level. Borio and Drehmann (2009.) argue that the current crisis in the United States could be predicted based on indicators, which also include asset prices.  Psychological causes explaining the financial cycle were introduced into economic theory by Guttentag and Herring (1986) and Herring (1999). Herring and Wachter (1999) explain the manner in which credit is associated with the cycle in real estate prices. To explain how long-term stability and growth in asset prices affect the occurrence of credit cycles with the coincidence of reduction risk and capital, they united the psychological discernment of individuals in regard to the incidence of events (Kahneman and Tversky, 1974) and the micro economic behavior of investors, creditors and regulators. They called their theory Disaster Myopia.


Predicting Job Satisfaction Via an Organizational Ethical Conduct: An Empirical Investigation in a Private Hospital in Kuwait

Dr. Muath M. Eleswed, Assistant Professor of Management, New York Institute of Technology

Kingdom of Bahrain



A multiple regression model was utilized to examine whether or not job satisfaction of subordinates can be predicted by the organizational leadership ethical conduct. The study was conducted in a private hospital in Kuwait; it included one hundred and eighty one subjects, and took place between the months of May and July of 2008. Based on the outcomes of the regression model, the level of job satisfaction was predicted by three types of ethical conducts namely, caring, instrumental, and independence. Consequently, implications and recommendations for further study were made.  Organizations should operate in a sound ethical manner as part of their social consciousness. When employees perceive ethical conducts among leaders in the workplace, they are more likely to act in the same manner (Erondu, Sharland, & Okpara, 2004). Ethical behavior is considered a vital component of leadership, therefore when leaders engender ethical practices in their organizations, they become more effective, efficient, innovative, and successful (Morgan, 1993). Unfortunately, leaders of organizations are constantly challenged to compromise their personal ethics in achieving the goals of their organizations (Weeks & Nantel, 1992). As a consequence of this challenge, ethical failures of many leaders have been showed virtually in every part of the world (Beyer & Nino, 1999) as evidenced by “scandals at Enron, Worldcom, Parmalat, Allied Irish Bank, and National Irish Bank” (Knights & O'Leary, 2006, p. 125).  In recent years, the proliferation of concerns with the ethics of leadership has become more pronounced (Knights & O'Leary, 2006). Researchers have been extensively examining organizational ethics in all types of organizations. This is due to the fact that organizational ethics are becoming more complex as a result of globalization practices and because serious ethical lapses have emerged which have caused serious damage to organizations and societies (Beyer & Nino, 1999). According to Koh and Boo, (2001), ignoring ethical concerns such as “societal expectations, fair competition, legal protection and rights, and social responsibilities” (p. 209), drastically impact organizations. For example, ethical misbehavior, unconstructively impacts employees’ job satisfaction which consequently impacts their level of stress, motivation, commitment, performance, absenteeism, and turnover. Because of that, the crises facing organizations and society are being noted as the crises of leadership and ethics (Arjoon, 2000). The construct of organizational ethics has been examined by many researchers in relation to many organizational outcomes including customer satisfaction (Barnes & Powers, 2006), organizational citizenship (Ensher, Grant-Vallone, & Donaldson, 2001), financial performance (Wah, 1999), goals achievement (Davis, 2006), productivity and quality (Stainer & Stainer, 1995), turnover (Schwepker, 1999), and job satisfaction (Schwepker & Hartline, 2005).  Viswesvaran and Deshpande (1996) stated the literature does not include sufficient studies examining the consequences-based ethical behavior of individuals on organizational outcomes. In fact, they attested that “very little research has focused on the individual consequences of ethical behavior such as job satisfaction, stress and individual performance” (Viswesvaran & Deshpande, 1996, p. 1065).


Game Theory Analysis on Enterprises’ Behaviors Under the Environment Tax

Dr. Chen-Kuo Lee, Lin Tung University, Taiwan

Dr. Chung-Ming Lin, Chienkuo Technology University, Taiwan



Economists and government authorities are concerned for the tensions arising between economy and resources in connection with the scarcity of environmental resources and the externality of production. How to alleviate the tensions through environmental governance means has become the most critical concern for the economists and governments around the world. The objective of this study is to apply game theory to analyze the enterprises’ behaviors under the environment tax. The research results indicate that the enterprises adopt all kinds of game countermeasures to defy the laws and ordinances governing the environment taxes in order to maximize their profits. Their defiance reveals the difficulties faced by the enforcement of environment laws and ordinances. In the final chapters, this study presents the tangible methods to serve as the guiding principles and taxation theoretical basis needed by the environment tax.  From the economist’s standpoint, environmental issues and economic issues are two sides of a coin. Enterprises launch environmental protection activities (e.g. pollution preventive techniques) depending on their economic benefits or profits. Western economists apply the externality of economic activities to interpret the formation of environmental issues. The externality of economic activities is divided into external economics and external diseconomics. The external economics is also known as the constructive, positive or beneficial externality. The external diseconomics is known as the destructive, negative or harmful externality. The external diseconomics serves as an internal factor that causes the economic subject to overlook environment protection and to refuse to invest in the economic protection. Furthermore, the external diseconomics, including all economic activities related to development and utilization of resources, serves as the internal factor that causes pollution and destructs the environment. The concept of externality was presented by Cambridge University professors Marshall and Pigou in the early 20th century. Pigou (1920) considered the external diseconomics an important factor and had thus studied the external diseconomics intensively. Therefore, the Externality Theory is also known as Pigou Theory. Pigou mentioned taxation correction in the Externality Theory. The taxation tools designed for externality correction is therefore known as Pigou Tax. Pigou is a pioneer in the study on the issues related to externality. However, the Externality Theory and Pigou’s taxation tools had never been applied by any government although researchers had continued to study the Externality Theory for a long, long time. Stiglitz (2000) concluded that Pigou was the only researcher who followed Marshal’s footstep to “analyze and exaggerate the damages caused by the negative externality.” Faced with the deteriorating environmental issues, few people are questioning Pigou’s analysis. At the time that the environmental regulation tools advocated by Pigou are gradually understood and accepted, the majority of economists agree that the distortion of resource allocation has to be corrected by taxation tool. Furthermore, taxation is an ideal tool to correct the deficiency of negotiations, if the public works are considered externality (Coase, 1960). Thus, the social costs caused by environmental destruction and pollution are amortized into the production costs and market prices of all economic subjects. Then, the resources are allocated optimally through market mechanisms. In recent years, many literatures and theoretical discussions aimed to solve the negative externality via environment tax. Their discussions are very important for the taxation economists and environmental economists and are thus inspired to study the environment taxation theory. The researchers around the world have made concrete achievements in the study of the taxation tools. Ironically, Taiwan’s taxation theory still lacks the environment tax. Without the theoretical study, the environment tax is noting but a utopia in Taiwan. At the time that the pollution is deteriorating and the ecology continues to be destructed, the government of Taiwan is striving to find an ideal governance tool in order to solve the issues arising from pollution and ecological destruction. The environment tax, a market-based instrument, is designed to discourage pollutions and encourages people to abide by the environmental policies. With an efficient economic system, Taiwan is upgrading her market mechanism progressively. Tax reform will energize the economy. The government of Taiwan has listed the environment tax in her agenda. It is necessary to recognize the researches made in foreign countries and make best use of their experiences in the environment tax. Therefore, the objective of this study is to consolidate the previous researches for the study of environment tax.


Analyzing Factors that Drive Consumers to Purchase Counterfeits of Luxury Branded Products

Dr. Ayse Sahin and Kalender Ozcan Atilgan, University of Mersin, Turkey



The purpose of this study is to analyze the factors that drive consumers to purchase counterfeits of luxury-branded products. The study is conducted in Mersin and the sample used in the study is determined by convenience sampling method. With the data obtained from 404 participants using survey method, the factors that drive consumers to purchase counterfeits of luxury-branded products and the effect of these factors on the purchase intentions of the consumers are analyzed. The results of the empirical analysis suggest that consumers who perceive counterfeits of luxury-branded products as having high quality-price ratio and find ethical about purchasing such products affect their intentions of purchasing such products positively. It is also seen that the purchase intentions of consumers who find ethical about purchasing counterfeit branded products are high. As the education levels of the consumers increase, they think purchasing counterfeit products as an unethical action more.  While consumers purchase products, they also purchase the symbolic values of those products. Especially luxury-branded products are preferred by consumers because of such values besides their functional properties. The fact that counterfeits of the luxury-branded products are available as alternatives besides luxury-branded products is promoting consumers to purchase these counterfeits instead of actual luxury-branded ones.  In the recent years, the counterfeits of luxury-branded products are widely preferred by the consumers. Even though, the demand for counterfeits of luxury-branded products is high especially in Turkey. A significant gap is realized when the literature is reviewed for the reason why counterfeit brands are preferred. In this sense, the study will provide significant contributions to the marketing theory and manufacturers of luxury-branded products.  The purpose of this study is to search the factors that direct consumers to purchase counterfeits of luxury-branded products which are more easily accessible and cheaper than original products by reviewing the literature about the counterfeit brands. And also explore the effect of counterfeit products on genuine brands and global economy.  This article is presented in four parts. In the first section of this study, there is information about the reasons why these counterfeit brands emerge and a literature review that defines the factors directing consumers to purchase counterfeits of luxury-branded products is performed. Second, valid scales for the constructs considered in the conceptual model of the study were identified in the literature. Third, the variables which effect price-quality inference of consumers for counterfeit version of luxury brands, social effect of luxury brands, brand loyalty for luxury brands and ethical issues on intentions of purchasing counterfeits of luxury-branded products are tried to explain using descriptive research model and correlation analysis. In this section, the effects of demographic factors to the variables of conceptual model are also tested by means of the variance analysis. Finally, the conclusions are presented, including the main contribution of the study and strategies managers can use in order to reduce consumer attitudes toward counterfeits.


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