The Journal of American Academy of Business, Cambridge

Vol.  21 * Num.. 1 * September 2015

 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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Impact of Sarbanes-Oxley and White-Collar Crime Penalty Enhancement Acts of 2002 on Corporate Fraud Sentencing

Dr. Deanna Oxender Burgess, Associate Professor, Florida Gulf Coast University, FL

Dr. Ara G. Volkan, Eminent Scholar and Moorings Park Chair of Accounting, Florida Gulf Coast University, FL

Alisha Angeloff, Markham Norton Mosteller Wright and Company, PA, Fort Myers, FL

Kelly Dodrill, Markham Norton Mosteller Wright and Company, PA, Fort Myers, FL

James Soldavini, Matthew John Soldavini PA, Naples, FL

Jacqueline Sullivan, McGladrey LLP, Naples, FL

 

ABSTRACT

In the years leading up to the Sarbanes-Oxley Act of 2002 (SOX), a number of alleged fraudulent financial reporting cases listed the chief executive officers and/or chief financial officers as accomplices. Spurred on by rising pressure to address these failures, Congress and the House of Representatives voted nearly unanimously to support enactment of SOX. Section 302 of SOX requires chief executive officers and chief financial officers to attest to the fairness of the financial statements they oversee – effectively piercing the corporate shield and holding executives criminally responsible for corporate misdeeds. Companion legislation enacted at the same time, The White-Collar Crime Penalty Enhancement Act, extended the maximum jail-sentences for executives tried for these frauds in the federal courts. This research describes the sentencing outcomes of executives associated with these frauds in the pre-SOX and post-SOX eras, and examines whether the legislation resulted in stiffer penalties. Findings indicate that most frauds end in plea bargains, with fines paid and no admission of guilt. In cases where trials are held, most executives are sentenced to a small portion of the maximum jail-time allowed. Surprisingly, the fraction of actual jail time awarded compared to the maximum sentence permitted under the law decreased post-SOX. Executives committing fraud post-SOX are walking away with smaller portions of the maximum jail time permitted. This finding carries the unintended consequence of failing to hold executives accountable as prescribed by the SOX legislation. In addition, most defendants pay no restitution if they are sent to jail. This paper concludes that the threat of investigation and prosecution under SOX may not deter corporate fraud and unlawful earnings management due to the leniency shown by the courts. Companies are increasingly incorporating clawback provisions in their executive compensation packages as a disincentive to manage earnings. On January 20, 2015 Journal of Accountancy.Com reported that the Securities and Exchange Commission (SEC) is preparing to unveil the final clawback rules. The regulation will require corporate executives to repay bonuses or salaries calculated on financial outcomes that are later reversed. However, Chan et al (2015) reports that clawback provisions appear to have the unintended consequence of creating an incentive to manage earnings through alternative means such as transaction management (examples include altering research and development or optional travel). Similarly, while the Sarbanes Oxley Act of 2002 (henceforth SOX) was enacted to prevent illegal financial reporting and incidences of errors and omissions in financial reports, Brite (2013) and Leech and Leech (2011) suggest otherwise. Brite points to the Financial Crisis of 2008 as evidence of SOX failure. Leech and Leech report that thirteen percent of the 3861 companies studied (with market capitalization value greater than $75 million) were required to issue restatements in 2006 due to errors. Before SOX was implemented, the Committee of Sponsoring Organizations of the Treadway Commission (COSO, 1999) reported that nearly 300 financial statement related frauds were listed in nearly 700 Accounting and Auditing Enforcement Releases of the SEC during the 11 year span of 1987 to 1997.  A repeat study by COSO (2010) reported a smaller frequency of fraud involving 347 instances in 1,335 SEC Releases, but the magnitude of the median fraud had increased from $4.1 million to $12.3 million.  Leading up to SOX, a significant number (83%) of the alleged fraudulent financial reporting cases reported by the SEC identified the chief executive officers and/or chief financial officers as accomplices (COSO, 1999). During this time in history, the alleged criminal misconduct of executives associated with financial statement fraud was difficult to prove in a court of law.

 

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The Diameter and Company Profitability: An Experiment in Network Evolution

Dr. Tal Ben-Zvi, Stevens Institute of Technology, Hoboken, NJ

Dr. Paul Rohmeyer, Embry-Riddle Aeronautical University, Daytona Beach, FL

Dr. Donald N. Lombardi, Stevens Institute of Technology, Hoboken, NJ

 

ABSTRACT

This study examines how business networks evolve over time and impact company profitability. Through simulation, we show that the impact of network evolution on overall profitability is mediated by the network’s diameter. Our analysis indicates that as a network grows, the network’s diameter increases in size. However, as the network evolves beyond a certain point, the diameter stops increasing and starts to decline, following an inverted U-shaped curve. We also demonstrate how a well-connected industry network with a small diameter is correlated with higher company profitability and vice versa – a looser network with a larger diameter produces lower profitability for companies. The results uncover theoretical and practical managerial insights and present a novel approach of conceptualizing businesses within industries. A key question in social networks and alliances studies is how networks in which companies are embedded shape companies’ behavior and conduct, and affect their profitability over time (see, e.g., Goerzen, 2005; Gulati et al., 2000; Hite and Hesterly, 2001; Soda, 2011). Contrary to studies focusing on internal factors that impact companies, this paper discusses the role of network theory in explaining company profitability in a global business environment. We maintain that when companies interact with congruence of interests, when they cooperate with each other to reach a higher value creation while struggling to achieve a competitive advantage, they strive to better positioning within their market. Our main argument is that paying close attention to partnerships and alliances, structuring them into a network that grants access to information, goods, services and capabilities, allow for more business opportunities to companies, which in turn, are translated into higher profits. One way to deepen understanding from this vantage is to investigate the evolution of company networks over time (Chassagnon, 2013). Here, we use a laboratory approach to studying business networks and employ a simulation game approach using dedicated software: we form teams of MBA students, and let them play roles as companies over six simulation-periods. The teams form alliances, create contracts, merge, and go bankrupt just as companies do. The difference is that their interactions are recorded and can be analyzed in detail, providing longitudinal data of a closed system. We take after Carrington et al., (2005) and create a network model that conceptualizes structure as lasting patterns of relations among the actors – in this case, the playing teams. What makes this an experiment in social networks is the inclusion of concepts and information on relationships among the actors and the operationalization of structures in terms of networks of ties among the entities (Wasserman and Faucet, 1994). Entities (or Companies) do not act outside a social context; their purposive actions are embedded in ongoing social relations (Granovetter, 2005). In a similar way that connections among people can be characterized in network terms (Van Dijk, 2012), interactions among companies have structural implications that consequently may affect their profitability.  The reminder of the paper is organized as follows: first, we review literature related to networks and company profitability. We look at concepts we later explore. Then we set the study’s hypotheses and describe the employed methodology (the simulation game we used). Next, we examine the implementation of network theory in the proposed simulation and analyze the hypotheses. Finally, we discuss the applicability of this study and draw conclusions to both researchers and practitioners.  Many studies have been analyzing companies as autonomous entities, endeavoring for competitive advantage by either studying the external industry sources or the internal organizational capabilities and resources (Gulati et al., 2000). However, while these studies have undisputed value in indicating strengths and weaknesses of businesses, they fail in offering an overarching view of industries and how they evolve over time. As social networks analysis examines the attributes of entities in terms of patterns or structures of ties among them (Wasserman and Faucet, 1994), this paper maintains that as entities (companies) interact with one another, their associated network (the industry where they reside) evolves and impacts their profitability. In this paper we study a network characteristic called the network’s diameter. The diameter is defined as the maximum distance between all pairs of vertices (Wasserman and Faust, 1994). The distance between two vertices is defined as the length of the shortest path between them, assuming there is such a path. A path between two vertices exists if and only if both vertices are linked together, either directly or indirectly through other vertices. The length of the path is the number of edges it has. Thus, the diameter represents the largest nodal eccentricity and is a network characteristic that evolves as the links between network vertices change (Scott and Carrington, 2011).

 

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HR Challenges for Safeguarding Employee Privacy Rights in The Private Sector Workplace

Dr. Bernadette Baum, National University, San Diego, CA

Dr. Jennifer M. Davis, University of New Hampshire School of Law, Concord, NH

 

ABSTRACT

Historically, courts have set down precedent dashing any expectation of privacy employees may enjoy in the private sector workplace.  Despite the absence of strong employee privacy rights laws, however, employers do not always have the right to violate fundamental privacy values.  With recent trends indicating a shift toward laws with broader protections for employee privacy rights, Human Resource managers are tasked with creating and implementing fair policies involving workplace privacy. Employers risk engaging in privacy violations concerning matters related to searches, access to private information, and third-party disclosures. Legitimate reasons may exist for employers to monitor employees or conduct searches.  Reasons range from managing the productivity levels of employees to maintaining a safe environment for all employees in the workplace.  Likewise, business necessity dictates an employer’s need to obtain certain personal information regarding employees and applicants.  Because an employer’s need to know is somewhat broad, HR professionals face challenges in creating policies that strike a balance between how much information is appropriate to obtain and the proper ways in which to safeguard the information.  Potential problems arise when employers utilize the services of outside agencies to maintain company personnel records.  Reportedly, such data is often shared with third parties and other entities without the knowledge of the employee, or even the employer.  Similarly, background checks conducted on prospective employees by outside contractors often reveal inaccurate information detrimental to job applicants, thereby exposing employers to liability should a lawsuit arise as a result of the dissemination of inaccurate information.  This paper will explore the challenges faced by HR managers when tackling the tough decisions associated with protecting employee privacy rights.  The scope of this paper will be narrowed to private sector employers, with analysis focused on the areas of searches, access to personal information, and third-party disclosures.  The word “privacy” does not appear in the United States Constitution, or any other founding document, for that matter.  Yet, from the dawn of the country’s inception, America has valued the freedoms associated with privacy as the hallmark of its identity.  Freedom of speech, freedom of association, freedom of religion, freedom of assembly, and freedom of the press are among the many freedoms that distinguished the United States of America from any other country in the 18th and 19th centuries.  The declaration of its citizens to be endowed with certain inalienable rights – the right to life, liberty, and the pursuit of happiness - was unprecedented.  The right to privacy has been interpreted as being implicit in the 4th, 5th, 9th and 14th Amendments to the Constitution.  As Justice Brandeis stated, in pertinent part, in his dissent in Olmstead v. U. S., “The makers of our Constitution … sought to protect Americans in their beliefs, their thoughts, their emotions and their sensations.  They conferred, as against the Government, the right to be let alone…” (Olmstead, 1928, p. 478) (emphasis added). Fast forward to the Information Age of the 20th and 21st centuries. The lines of privacy have become blurred as American citizens voluntarily relinquish their right to privacy on a regular basis.  Participation in social media activities have exposed citizens to avenues of information and requests for information that may have long lasting ramifications on an individual’s personal and private life.  Balancing the rights associated with the declared freedoms becomes challenging when the rights of one citizen infringes upon the rights of another.  Nowhere is this more challenging than in the workplace.  Human Resource managers are faced with the continual task of balancing employee privacy rights with the company’s need for access to personal information. There are three areas in which issues of violations of employee privacy rights appear most often in the workplace:  searches, access to personal information, and third-party disclosures.  This paper proceeds with an overview of the reasonable expectation of privacy standard and related tests.  Select law in the areas of searches, access to personal information, and third-party disclosures will be explored to determine trends that impact the manner in which HR managers implement privacy policies.  The paper concludes with preventive measures for private sector HR managers to consider in an effort to mitigate the risks of exposure to liability for violations of employee privacy rights.  When examining the source of privacy rights, it is natural to think of the right to privacy as emanating from the United States Constitution.  However, privacy rights implicit in the Constitution do not apply to private employers.  As a result, privacy rights in the private sector workplace are derived from state common law and federal and state statutes (Brady, 2009). Although private sector employers are not subject to the Fourth Amendment they can be sued under state privacy law, and presumably under any federal right to privacy statute that is applicable.  Therefore, in order to limit liability for actions that arguably invade employees’ privacy rights, private employers should establish HR policies that are guided by the principles in key U. S. Supreme Court Fourth Amendment workplace decisions. Two cases, O’Connor v. Ortega, 480 U.S. 709 (1987) and City of Ontario, California v. Quon, 560 U.S. 746 (2010) set the framework for determining whether an employee has a reasonable expectation of privacy under certain workplace circumstances.  The inquiry under the test for whether an employee has a reasonable expectation of privacy in the workplace is largely based on the workplace context. 

 

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Does the Fire Station have a Glass Ceiling? Perceptions of Female Firefighters

Dr. John Griffith, Embry-Riddle Aeronautical University

Dr. James Schultz, Embry-Riddle Aeronautical University

Dr. Ronald Wakeham, Embry-Riddle Aeronautical University

Dr. Marian Schultz, The University of West Florida, FL

 

ABSTRACT

This research examined perceptions of 338 female firefighters in the United States. Specifically, respondents answered questions on if they would pursue a career in the fire service again, if they would advise a daughter or family member to join and if they were treated as equals by male firefighters. Additionally, female firefighters were asked if they achieved more acceptance from males based on length of time on the job and if physical requirements unnecessarily limited female firefighters. A significant majority of female firefighters indicated that they enjoyed their careers, would advise a daughter or family member to join and that the longer they were on the job, the more acceptance they gained from male firefighters. Significantly more female firefighters disagreed that physical requirements to be a successful firefighter limited females.  A significant majority of retired female firefighters disagreed that they were treated as equals by male counterparts. Recommendations included repeating this survey in three to five years and studying sexual harassment in the fire service.  Future researchers should also examine mentorship of women and minorities, and the acceptance of lesbian, gay, bisexual and transgender (LGBT) firefighters in the fire service. Women comprised 47.2% of the total U.S. civilian workforce in 2010. As of the 2010 census, the United States had 301,000 paid firefighters, 3.6% of whom are women.  That translates to approximately 10,800 female fighters (U.S. Census, 2012).  Organizations such as the International Association of Women in Fire and Emergency Services as well as researchers producing studies at the National Fire Academy have questioned why the number of female firefighters appears to be so low.  Some have looked into the idea that many women do not seem to apply to be firefighters and focused attention on recruiting efforts (Kronenberger, 2009; Ross, 2011). Other researchers have postulated that the career field is male dominated making it difficult for women (and minorities) to enter the fire service and serve long term (Couch, 2002; Pinson, n.d.).  This research explores that second line of thought as the possible root cause of low female employment in the fire service. If fire service is perceived to be a difficult environment for women, would that not hurt recruitment efforts? This research explored some fundamental questions on how current female firefighters felt about working in the fire service and how their male counterparts treated them.  Previous research has focused on sexual harassment (“Sexual Harassment”, 1995), and recruitment efforts.  This research attempted to answer two questions.  Do females in the fire service feel uncomfortable working with their male counterparts and if so, why?  Researchers developed a survey that was distributed through academic channels as well as through the U. S. National Fire Academy TRADENET service to gain perceptions of female firefighters in the U. S. fire service.  A total of 339 female fire fighters responded to this survey.  Numerical data were evaluated using non-parametric statistics.  Open area comments from 162 respondents were also analyzed using NVivo 10 qualitative analysis software to identify significant themes. Researchers at the National Fire Academy explored the issue of low female employment in the U.S. fire service while exploring the low percentages of minorities as a whole.  Much of this applied research focused on recruitment although some researchers also delved into gender and cultural norms, departmental working environments and physical requirements. Kroenberger noted that women were 51% of the population in Middletown Connecticut, but were only 4.5% of the fire service. The city had set goals for minority hiring to include three black females, one Hispanic female and three white females, (seven black males and 3 Hispanic males were also sought). At the conclusion of the recruitment drive, 95 candidates had applied but only 52 of those met requirements and completed all interviews and tests.  This group included 47 white males, two black males and three Hispanic males.  Unfortunately, no women completed the application process and/or were eligible for hire even though women were actively sought for recruitment.  Kroenberger worried that results like this would make his fire department unable to reach diversity goals.  To that end, he recommended a strategic recruitment plan that included job fairs at the local high school and college to be advertised well in advance and staffed by minority fire fighters for recruiting purposes.  Kroenberger also recommended fire department explorer programs to get interest from potential minority recruits and for his fire department to partner with the Middletown Board of Education for early certification as Emergency Medical Technicians (EMT) and fire fighter certification with the fire and emergency services department, with parental approval (Kroenberger, 2009).  The recommendation for more education and certification was noted by other researchers as well and would not only help potential firefighters gain employment, but would help with later promotion.

 

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Ireland Maintains Business Allure

Dennis C. Stovall, Grand Valley State University, Grand Rapids, Michigan

 

ABSTRACT

Businesses in the United States have continued to embrace the many positive aspects of locating in Ireland.  The two countries have many shared values, with a majority speaking the same language.  In addition, the corporate tax rate of 12.5 percent in Ireland has come to be one of the greatest benefits identified by investors.  Ireland also has a willing, flexible, and productive workforce, and one of the highest levels of economic freedom in the world.  Irish officials have created organizations solely for the purpose of making the transition into the Irish economy as effortless as possible for foreign companies.  With all of this and more, Ireland’s business allure has evolved and caught the attention of countless corporations including Amgen and Microsoft.  This shift is the cause of some concern for the American government as a great amount of tax revenue leaves with the companies. Rising numbers of Irish companies also are attempting to break into the American economy, however, they do not have the same resources or benefits that the American businesses receive when expanding into Ireland.  Irish companies face a unique set of obstacles.  Some Irish companies choose to establish contacts to spread the word about their business.  Others utilize trade shows to make themselves known.  But each comes with some form of the same goal: to become a grand success and a leader in its industry in America. As the benefits of becoming corporately involved in the Irish economy increase, so too does the number of U.S. companies placing or expanding their business into Ireland.  The business relationship between the United States and Ireland dramatically increased in 1969 when John A. Mulcahy, a one-third shareholder of Pfizer Inc., convinced Pfizer to move some of its business to his home country of Ireland.  Cork, Ireland, became the city of choice for a new citric acid plant built by the drug company.  Naturally, other companies looked into the reasoning behind this new venture and discovered many attractive qualities of the European country.  With this discovery, many U.S. companies made their way across the Atlantic Ocean to the island nation (Wetzel).  In the past few years relationships have been formed.  A two-way flow of human, physical, and intellectual capital has been established and is intensifying as the Irish-American relationship continues to be built and maintained. The relationship between the United States and Ireland is longstanding and multifaceted.  Due to Irish immigration into America, close to forty-four million American citizens now identify themselves as having some degree of Irish descent.  The flow of people between Ireland and America is steadily increasing as tourism expands, students study abroad, academics go overseas to instruct, and business between the two countries increases (Wetzel). It is this increase in business that is at the forefront of their recent relationship.  As globalization and international business become more prevalent in the world, Ireland and the United States possess the opportunity to work together utilizing the relationship they have built over the years.  The United States Ambassador to Ireland, James C. Kenny, views Ireland as a bridge between Europe and America.  He sees the relationship as one that facilitates international cooperation and that increases the two countries’ involvement in each other’s private sectors (Kenny).  The American Chamber of Commerce Ireland reports that over 700 U.S. businesses have operations located in Ireland.  These businesses employ over 115,000 people and the stock of these investments total 204 billion dollars of foreign direct investment.  Additionally, the investments in Ireland are greater than the combined United States investments in Brazil, Russia, India, and China.  In 2012, these investments accounted for 74 percent of Ireland’s inward investments.   This investment relationship is not one-sided.  As of 2011, Irish investment in the United States totaled 25 billion dollars and the companies located in America employ an estimated 120,000 people in 227 companies across the United States (“U.S. Investment”).  Kenny recognizes that the interests Ireland and the United States have put into each other stem from the associations created through immigration.  Past generations had many Irish citizens immigrating to America and gaining an understanding of American culture while also providing Americans with an understanding of Irish culture.  This mutual understanding created a pathway to strengthen the ties between the United States and Ireland. (Kenny) Kenny also stresses the contribution that shared values have made to perpetuate the Irish-American relationship.  He says that the values of democracy, respecting basic human rights, respecting the law, tolerance, appreciating diversity, and having a commitment to individual importance, are shared between the two countries.  These shared values lead to connectivity in which business relationships can thrive because the countries are united in striving for the same goals.  This is not to say that Ireland and the United States never differ in their policies. 

 

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FDI and Its Impact on Developing Markets

Bryan Herriford, Sam Houston State University, TX

Dr. Balasundram Maniam, Sam Houston State University, TX

Dr. Hadley Leavell, Sam Houston State University, TX

 

ABSTRACT

Foreign Direct Investment (FDI) has played a crucial role in the growth of the economies in many developing countries.  With FDI monies, a country may be able to make the transition leap to a developed nation.  As companies determine where to place their resources, they must consider the effects these investments will make on the host country.  Host countries must learn what investors are looking for and ensure their country is receptive to the change these investments will make.  This study looks at the increase in FDI in many developing countries over the last twenty years and the effects these investment have had on the host country.  First this study looks at the positive reforms that host nations enact in order to attract new foreign investment.  It will then discuss different types of spillover effects FDI has on the domestic market.  It concludes with a look at possible negative effects to the host economy and what host nations can do to limit those effects. Foreign direct investment has been one of the largest factors in the growth of developing nations over the last decade.  Many countries with a low gross domestic product (GDP) have seen the opportunities that additional capital from foreign investment could bring to their countries and how fast they could grow their economies with outside help.  The large impact foreign investment can have on a country’s economy has heavily influenced political leaders in these countries.  New laws and policies are reconsidered in light of the ramifications they would have on their desirability to foreign investors. Many companies have seen the potential for very large returns by investing in developing nations where investment was never possible before.  With the chance to expand business production and products into untouched markets, multinational companies are investing large sums of capital in many developing economies to lower their production costs and gain a larger market share in the world economy.  As these investments grow, developing nations are forced to consider new reforms that would help entice companies to invest.  With the increase in FDI over the last few decades, developing economies have had to make changes in order to attract new capital investments in their countries.  Many economic and governmental reforms have been enacted to help capture the largest, and best, foreign capital for their countries.  Companies are looking for the largest returns with the least amount of risk.  Foreign investment has expanded economic boundaries and increased the diversity of goods and services available in developing countries.  One important benefit that foreign investment provides to developing nations is “spillover effects:” when a company brings advanced know-how to a new market and the market learns and adapts these advances to help update its local firms.  The spillover effects can increase the efficiency and productivity of many domestic companies and allow them to compete effectively with the larger multinational corporations. However, the FDI will also have negative effects on the local economy as new businesses may push out less efficient existing companies.  It can also cause the local economy to develop unequally as foreign companies are only looking to invest in sectors where they can make money and not always where it would best benefit the nation as a whole.  Host nations need to be cognizant of the negative effects and find ways to maximize the pros and minimize the cons. Lautier and Moretaub (2012) explore how the level of domestic investment in a developing country affects the amount of foreign direct investment the host country receives. 

 

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Organizational Creativity Capability and Firm Performance: Evidence From Software Businesses in Thailand

Wadsana Charunsrichotikomjorn, Mahasarakham University, Thailand

Dr. Phaprukbaramee Ussahawanitchakit, Mahasarakham University, Thailand

Dr. Prathanporn Jhundra-Indra, Mahasarakham University, Thailand

 

ABSTRACT

This study aims to investigate the relationship between organizational creativity capability and firm performance via the mediating role of business practice effectiveness, organizational innovation success, and organizational excellence efficiency. The results were derived from a survey of 104 software businesses in Thailand, which CEOs or managing partners are the key informant. The results found that new management method and valuable human resource development have significant influences with all of two organizational consequences; business practice effectiveness, and organizational innovation success. Whereas useful operational control establishment has an insufficient influence to yield significantly expected outcomes. The contributions of theoretical and managerial, conclusion and suggestions for future research are also discussed. Keywords: Organizational creativity capability, New management method, Valuable human resource development, Novel oganizational culture formation, Useful operational control establishment, Original performance evaluation system, Business practice effectiveness, Organizational innovation success, Organizational excellence efficiency, Executive proactive vision, Strategic renewal mindset, Corporate resource rreadiness,  Business environment complexity. Under the severe competitive business environment such as economic, technology and culture, those firms generate rapid responses in order to survive and succeed. In an era of high-technology changes, firms encounter globalization and rapid changing in business environment, many firms have been affected by macro environmental factors including the threat of new entrants and established competitors, substitute products, bargaining power of suppliers and customers (Porter, 1979). These factors have a pressure on firm characteristics. The rapid changes in the external environment provide advantageous or disadvantageous outcomes to the firms. Firms must be capable of current adaptation and future changes in the external business environment by continually renewing their products and services. According to this change, firms can create their capability to resist the drawback under the rigid competitive context. The approaches which the firms employed to operate to gain accomplishment of the organizational objectives are the implementation of their strategy. The diverse strategies are formulated under the situation of existing firm capabilities. In order to grow up and survive, firms require continuous improvement of their capabilities for responding to the changing of the dynamic external business environment. As a result, the best way for growth and survival depends on often having new capability, new products, and new services.  In contrast, the relationships between innovation and productivity have never linked in the short term, because complex organizational environment needs a long period so as to change (Chakrabarti, 1990). Especially, the manufacturing industry is encountering gradually more competitive environment (Danneels, 2002) such as, firms have a new diversity of products affecting operations of both production and sales with more complication. Consequently, the manufacturing industry continues to execute several techniques for the sustainable achievement of the firm (Chenhall & Langfield-Smith, 1998). However, in the long term, innovations are still significant in increasing productivity and firm performance. Likewise, firms require creativity capability in the process of generating innovation for new opportunities in markets. Hence, both creativity and innovation are key success factors for firm survival, growth, and are a cause of organizational excellence (Cook, 1998). As aforementioned, organizational creativity capability is proposed to fullfill these gaps, which it examined in terms of a quantitative variable of the collected data from the software businesses in Thailand, while most of the past research proposed the conceptual relationships. The Resource-Advantage theory (R-A theory) aims that the resources of firms are dissimilar, unique, and relatively dormant within the same industry. “ R-A theory is an evolutionary, disequilibrium-provoking, process theory of competition in which innovation and organizational learning are endogenous, firms and consumers have imperfect information, and entrepreneurship, institutions, and public policy affect economic performance,” (Hunt & Madhavaram, 2006). It emphasizes that a source of competitive advantage leads to sustainable performance. Especially, firm resources are inimitable, non-substitutable, valuable, and rare in which are applied four principles: (1) market segments, (2) heterogeneous firm resources, (3) comparative advantages and disadvantages in resources, and (4) marketplace positions of competitive advantage or disadvantage (Hunt & Madhavaram, 2006).It highlights on creativity, including proactive and reactive. Both proactive and reactive creativity capability contribute to the competitive advantage. In this research, the R-A theory is applied to explain that organizational creativity capability is the intangible strategic resource which creates an advantage for the marketplace position (organizational innovation success, and business practice effectiveness, organizational excellence efficiency) leading to organizational outcomes, as well. Contingency Theory proposed depended on the situation and chose the best practices which were appropriate with each situation (Fiedler, 1967). When the situation was different, the management changed.

 

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Management As A Moderating Variable in the Causes and Effects of Construction Delays

Dr. Miemie Struwig, Professor, Nelson Mandela Metropolitan University, South Africa

Gerrit Smit, Nelson Mandela Metropolitan University, South Africa

 

ABSTRACT

The construction industry has been exhaustively studied, both internationally and locally, in the area of delays in projects. A list of possible delays has evolved over the past 10 years that covers all major delays in this industry. Although the causes and effects of projects delays are clear, little attention has been given to what factors can moderate the influence of the delays. This research focuses on the development of a proposed model of causes, effects, and moderating variables of project delays. The intention is to use the proposed model to identify and confirm the moderating variables (management activities) to mitigate construction delays. The causes and effects of construction delays are well documented and researched (see Motaleb & Kishk, 2010; Sambasivan & Soon, 2007; Assaf & Al-Heijji, 2006). Causes of construction delays are factors or events that occur before and during the construction process that will affect the time to complete, and the cost and quality of completing, a project. Effects of construction delays are the consequences when the causes of delays are not identified and worked on effectively. Although most studies on construction delays and their effects proposed solutions or remedies, their effectiveness has never been tested. Very little research focuses on the moderating variables that will influence the effects of delays due to the various factors causing them. Thus, based on the surveys of construction delays and their effects, a proposed model showing the effects of delays will be developed. This model will include the suggested moderating variables that can assist to manage construction delays, and that can be tested empirically. The construction industry is known as a very highly-fragmented industry with a large number of activities involving different parties and professionals, such as architects, engineers, quantity surveyors, contractor teams, suppliers, and financiers. As a fragmented industry, management efficiency and competency is needed to increase the level of competitiveness. The construction industry has been exhaustively studied, internationally and locally, in the area of delays in projects. A list of possible delays has evolved over the past 10 years that covers all major delays in this industry. The most extensive list is that of Yang, Yang and Kao (2009), which identified eighty possible delays. This research will focus on the development of a proposed model of the causes, effects, and moderating variables of project delays.  The literature shows that the causes of delays occur at different levels, ranging from those caused by the client or owner to those caused by other external factors (Youngjae, Kyungrai & Dongwoo, 2006; Kim, 2009; and Al-Humaidia & Tan, 2010). The literature also shows that each category of causes of delays has different factors that can lead to delays on construction projects. There is much research into the causes and effects of project delays in the literature (for example, Aiyetan, Smallwood & Shakantu, 2011 and Mukuka, Aigbavboa & Thwala 2013). The effects of delays in most cases are only linked to a few construction delay causes.  Most of the literature focuses on the delays in projects in the construction industry; information on project delays in other industries is also available. Odeh and Battaineh (2002) focused on owners, contractors, and consultants when investigating construction project delays. Owners, contractors, and consultants in many projects dislike experiencing extensive delays because they have a negative impact on the initial cost and time estimates (Odeh & Battaineh, 2002). Delays are generally acknowledged as the most common, costly, complex, and risky problem encountered in construction projects. The overriding importance of time – for both the owner (in terms of performance) and the contractor (in terms of money) – makes it the source of frequent disputes and claims that lead to lawsuits.  Table 1 outlines some previous research done into the causes of project delays. A comprehensive list of construction delays across varying countries was developed by Toor and Ogunlana (2008), which showed the difference in construction delays before the year 2000, compared with those after 2000. Their study identified additional factors that cause delays in developing countries.

 

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Organizational Management Flexibility and Goal Achievement of Electrical Appliance and Electronic Parts Businesses in Thailand

Dararat Thatrak, Mahasarakham University, Thailand

Dr. Karun Pratoom, Mahasarakham University, Thailand

Dr. Pakorn Sujchaphong, Mahasarakham University, Thailand

 

ABSTRACT

The objective of this research is to examine the relationships between organizational management flexibility and goal achievement via organizational innovation, value creation, and firm competitiveness as mediating variables. Creative organizational culture, organizational learning, change management competency, and environmental dynamism are the antecedents of organizational management flexibility. The data was collected by a mail questionnaire survey from electrical appliance and electronic parts businesses in Thailand. The model used in this research was explained by using the dynamic capability theory and the contingency theory. The sample was 128 electrical appliance and electronic parts businesses in Thailand. The statistical results revealed that organizational management flexibility had a significant positive effect on organizational innovation, value creation, firm competitiveness, and goal achievement. Besides, the consequences of organizational innovation had a significant positive effect on value creation and goal achievement. Value creation and firm competitiveness had a positive effect on goal achievement. Finally, the antecedent constructs, namely, creative organizational culture, organizational learning, change management competency, and environmental dynamism partially affected organizational management flexibility. Some theoretical and managerial contributions, a conclusion, and suggestions for future research are also discussed. In a globalized world, the uncertainty of the environment is considered as the key factors that organizations need to focus on the business operation because it is a factor that may cause the operation of the organization not success. Therefore, the current business operations of the organization need to keep track changes in the environment that is constantly. Organizations must accept and be prepared to cope with the changes that occur. Then need to have several strategic options for management and modifying the form and method of operation to improve the organization's ability in order to have a way to operate in a form that can respond to the changes that occur quickly which will entail the ability to perform tasks that help organizations to survive and achieve organizational goals (Kogut & Kulatilaka, 2001; Sommer, 2003). Flexibility is one option which is necessary that organizations should pay attention because of the environment has the dynamic changes.Organizations must have flexibility management of the organization of changes that take place quickly. The organization should have the comprehensive capabilities in many aspects in order to improve and develop methods of operation which occur in new ways to respond to the changes under conditions of high uncertainty (Combe, 2012; Dreyer & Gronhaug, 2004; Zhang, 2006).  Flexibility in the organization will demonstrate the ability of the organization to handle.That allows organizations can adapt quickly on an environment that is changing all the time. This is a challenge in today's corporate executives that should be aware of and pay attention. Organization must have management technique that can improve the rapid adjustment of the organization in order to operate in a dynamic situation that has changed (Combe, 2012; Evans, 1991; Regner, 2008).Therefore, in situations where there is uncertainty in the environment the organizational management that featured on flexible management in the organization must build capacity for the organization in which to adapt to any style when a change occurs of environment (Bacanu, 2006). That is, organizations can improve existing systems and processes in response to the changing environment from the flexible management of the organization. Organizational management flexibility is the management organizational capabilities which enable organizations to have the process and system that are flexible. It is the ability to design a corporate job to respond to the changing environment. Organizations must have a dynamic capabilities to use the resources and capabilities to improve operational guidelines in accordance with changes. The organization has the update how new operation constantly and when changes occur. The organization must be ready to adapt to use new strategies or methods of operation to cope with change.

 

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Sports Sponsorship: An Effective Tool for Marketing Strategies

Dr. Hyun Sook Lee, National Autonomous University of Mexico, Mexico City

 

ABSTRACT

Companies adopt sponsorship to capture or target the huge consumer market, communicating their brand information and image, and informing consumers about the company and its offerings and building a long term relationship with the consumer (Stipp, 1998; Simmons & L.Becker-Olsen, 2006; Tanvir et al., 2012).  In particular, sponsorship for mega-sports events such as the World Cup, Olympic Games, Formula 1 racing etc. has become the marketing tool of choice for corporations seeking brand impact in the heart of consumers both globally and nationally.  In terms of totally or partially banned TV advertising on products like tobacco and alcoholic drinks, mega-sports sponsorships  present great opportunities to access their target markets. Sport plays one of the most significant roles in everyday life of people around the world, whether those actively participating in it or those who are just spectators and supporters.  In most western countries, this part of social life is widely reported on and reflected by the mass media (Lee, 2013).  The same phenomena might be an opportunity for the companies that are looking to raise their current and/or potential consumers´ awareness of their products/services, including certain products prohibited for advertising through mass media. In the meanwhile, salient/prominent athletes and/or sports teams tend to earn large sums paid by their sponsors, resulting in mutual benefits to all.  For this paper, the author intends to define sponsorship as well as sports sponsorship in particular.  She also reports trends of sports sponsorship, especially the most sponsored sports, a background of mega-sports events  and principal sports sponsors.  A discussion of marketing effects through sports sponsorship, based on secondary sources like academic journals and Web-sites is included. Sponsorship has been defined as “provision of assistance either financial or in kind to an activity by commercial organization for the purpose of achieving commercial objectives (Meenaghan, 1983; Speed & Thompson, 2000). The involvement of a second party, that is, the activity sponsored, distinguishes sponsorship from advertising, and the commercial motivation distinguishes sponsorship from altruism (Speed & Thompson, 2000). Sponsorship shows the alliance and relationship of the organization with the sports event (Stipp, 1998). Through rapid increases in media exposure, companies try to target the huge consumer market in a short period of time. For this purpose, companies adopted sponsorship to capture or target these consumers, communicating their brand information and image, and informing consumers about the company and its offerings and building a long term relationship with the consumers (Stipp, 1998; Simmons & L.Becker-Olsen, 2006; Tanvir et al., 2012). Sponsorship has become a vital part of funding for a wide range of sporting, artistic, and social events.  The worldwide sponsorship market has grown from an estimated US$2 billion in 1984 to $16.6 billion in 1996 (Meenaghan, 1996; Speed & Thompson, 2000).  Sponsorship can prove effective only when the company hits the targeted audience that relates to and associates itself to the Olympics.  Sponsors' attempts to attract consumers around the world may fail if their image and activity is perceived differently in various parts of the world (Lee, 2013).  Major sporting events in particular have become dependent on sponsorship (Stipp, 1998; Shoebridge, 1995; Speed & Thompson, 2000).  In today's environment sports sponsorship plays a very significant role towards consumers and people value it (Tanvir et al., 2012).  Sports sponsorship is big business, and it is still dominated by a relatively small number of sports with huge pulling power, such as football. But few marketers have the sort of budget needed to participate in these more popular sports on a national or international scale (SPORTS SPONSORSHIP, 2006). It is crucial to preserve the image of the team or event because it is this image which attracts the fan to watch the sport. Several types of sponsors and their requirements are discussed. The first high volume consumer brands to be involved in Formula 1 as well as other sports were alcohol and tobacco brands. The globalization of commercial brands and instantly recognizable consumer products has resulted in a new class of sponsor with deep pockets. Among other considerations, care must be taken that a sponsored event does not become known only by the name of the sponsor and then loses its identity when sponsorship changes (Felt, 2002/2003). Sport sponsorship can be viewed as a strategic business-to-business (B2B) relationship between a sponsor and a sport entity or athlete for mutual benefit (Farrelly & Quester, 2005; Henseler et al., 2011).

 

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Service Innovation Capability of Tour Operator Businesses in Thailand

Sakkasem Panalad, Mahasarakham University, Thailand

Dr. Phaprukbaramee Ussahawanitchakit, Mahasarakham University, Thailand

Dr. Nantana Ooncharoen, Mahasarakham University, Thailand

 

ABSTRACT

This research aims at investigating the effect of service innovation capability on performance via competitiveness in the new model. Whereas, customer force, competitive diversity and technology become the antecedents of service innovation capability. Moreover, the moderating effects are executive vision and learning culture. The key research question is how service innovation capability affects performance. Data are collected from travel agency in Thailand. The regression analysis is employed to examine all hypotheses. The results indicate that some dimension of service innovation capability namely innovativeness, alertness to create, and research and development awareness have a positive effect on competitiveness. Moreover, competitiveness is effective on performance. A potential discussion of the results is evidently implemented in this research. Contribution and conclusion of the research are presented accordingly. The atmosphere of global economy, business environment is rapidly change in the area of customer demand, competitions, technologies, regulations, and economic group (Tingsapat, 2006). As a result of a intense competition to both domestic and international markets. Firm need to make adjustments or try to find ways to deal more effectively o firm that have the potential to compete and more competitive and success of the business performance. Therefore, firms need to focus on various firm capabilities. Especially, capability service of innovation has become important factor of the competitive advantage and success of the business competitiveness which effect to its performance. As previous research found that innovation establishment is a significant factor of the business competitiveness which effect to its performance. Melton and Hartline (2010) suggested that businesses are forced to change by the innovation which affected on business performance. As well as it play on importance role to competitive advantage for all the countries (Porter, 1990). In addition, managers are providing the innovation to encourage a managerial system, and it is likewise the innovation creates a basis of the firm achievement (Hult et al, 2004). Service innovation capability is the important key to create a competitive opportunity of firms. Nonetheless, service innovation capability different from technological innovation capability and unique product innovation, because service innovation is the combination of tangible and intangible goods (Asasongthum, 2005). Effectiveness of service innovation tends to increases the growth and profitability of business services, as well as creates of the business value (Berry et al, 2006). Moreover, the innovation is able to develop new approach to serve customers that are more efficiently and progressive results. Accordingly, it expands and increase customer with the presentation of new and different products (Theoharakis and Hooley, 2008). In this research, resource-based view of the firm (RBV) this is theory used to explain the  service innovation capability, the sources of competitive advantage and a sustainable performance, so that there are firm resources are rare, valuable, non-substitutable and inimitable. Also, organization attempts to develop their unique internal capability to gain its accomplishments (Penrose, 1959; Barney, 1991). In addition, service innovation capability is determined as the internal capability which coordinates various activities within firm and it provides beneficial resources for management and business administration as a result of enhancement of firm performance. The purpose of this research is to examine the effect of service innovation capability (ie., innovativeness, capacity to innovate, willingness to change, innovation perception, alertness to create, research and development awareness) on firm performance via competitiveness. This research investigates the antecedent of service innovation capability with are customer force, competitive diversity, technology growth and also examine the moderating effects of executive vision and learning culture.  The key research questions in the current research are; 1) How does each dimension of service innovation capability affect competitiveness?, 2) How does competitive affect performance?, 3) How do customer force, competitive diversity, and technology growth have an influent on service innovation capability?, and 4) How do executive vision and learning culture effect on the relationship among service innovation capability, competiveness and performance?.This research attempts to investigate how service innovation capability affects competitiveness and performance by utilizing resource based viewed of the firm is explain the conceptual model.

 

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Service Perceptions of Social Networking Sites: A Comparison of Saudi and Indian Users

Dr. Yasser Mahfooz, King Saud University, Riyadh, Kingdom of Saudi Arabia

 

ABSTRACT

The objective of this paper is to compare perceptions of service quality of social networking sites (SNS) among Saudi and Indian users. The data was collected online using convenience samples technique. The respondents were students who visit social networking sites (181 in Saudi Arabia and 128 in India). The service quality of social networking sites was measured using four dimensions- ease of use, privacy, design, and functionality. Data was analyzed using exploratory factor analysis, t-test and regression analysis. Respondents in both countries reported high levels of perceived service quality for social networking sites. However, Saudi respondents reported a higher perceived service quality than Indians on all dimensions, and all individual items. The social networking sites should recognize the importance of design and functionality in service delivery, by implementing appropriate customer-oriented strategies. Despite the large number of studies on social networking sites, very few studies compare e-service quality perceptions among different countries. The present study does so between users in two countries with different socio-cultural environments - Saudi Arabia and India. A traditional service is an intangible offering based on performance or efforts (Berry, 1980), whereas electronic service or e-service can only be delivered through mediation of information technology. E-service can be delivered alone or with e-commerce, either unconditionally or with a service contract (Rowley, 2006). Researchers have been of the view that e-service is an information service (Rust & Lemon, 2001; Rowley, 2006) and has significance in providing better experience to consumers through interactive flow of information (Santos, 2003). This information can be gathered and analyzed by the e-service provider, and used as the basis for the customization of the service that the organization offers to the customer (Rowley, 2006). Social networking sites (SNS) generate information through user-generated content, which includes personal profiles with photographs, audio, or video; and can also include activities and tools such as blogs, forums, or message boards (Kaplan & Haenlein, 2010). They focus on active involvement of users to facilitate communication through creation of content, sharing of information and opinions, and insights on various topics or offerings (Lim et al., 2013). Another opportunity in these networks has been found by businesses which use them to build brand communities (Muniz & O’Guinn, 2001) through pull marketing, marketing research (Kozinets, 2002), or promotion of their offerings and enhancement of brand image (Trusov et al., 2010). The businesses consistently identify new ways to make profitable use of social networks, such as Facebook or Twitter. Social networks thereby represent a revolutionary trend that is of interest to individuals and businesses alike.  The existence of numerous social networking sites makes it essential to differentiate the services. Service quality is considered to be an important strategy to differentiate according to customer value and satisfaction of customer needs (Ozment & Morash, 1994). This form of service quality, which is termed as ‘E-Service Quality’ relates to customer perception of the outcome of the service along with recovery perceptions if a problem occurs (Collier & Bienstock, 2006). It is defined as ‘the consumer’s evaluation of process and outcome quality of the interaction with a service provider’s electronic channels’ (Gummerus et al., 2004). High e-service quality levels have been linked to better relations with customers (Keating et al., 2003), and a greater ability to attract potential customers (Yang et al., 2004). Previous research on e-service quality has primarily focused on the interaction of the consumer with the Web site (Lociacono et al., 2000; Yoo & Donthu, 2001), especially retail Web sites. These e-service quality studies provide an adequate framework for measuring Web site interactivity but have failed to look at the broader picture that e-service quality is more than just a retail process. As a result of these considerations, the paper provides valuable insights and implications for application of e-service quality scale to social networking sites. In e-services, perceived quality is defined as the overall judgment of the excellence and quality of offerings. This is based on the expectations of consumers toward e-marketplaces (Santos, 2003). Research by Zeithaml et al. (2002) states that expectations are not well formed in e-service quality, which supports perception as the basis for measuring e-service quality. The dimensions of service quality suitable for offline environment may not be applicable for online business. The difference in perception is often due to the unique characteristics of the Internet that can be affected by server problems, outages for backing up information, and connectivity issues (Collier & Bienstock, 2006). One of the early definitions of e-service quality was proposed by Zeithaml et al. (2000), which stated that service quality on the Internet is the extent to which a Web site facilitates efficient and effective shopping, purchasing, and delivery of products and services. Earlier research in conceptualizing e-service quality focused on the interaction between the customer and the Web site.  

 

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Internal Audit Transparency and Firm Goal Achievement: An Investigation of Financial Businesses in Thailand

Varipin Mongkolsamai, Mahasarakham University, Thailand

Dr. Phaprukbaramee Ussahawanitchakit, Mahasarakham University, Thailand

Dr. Sutana Boonlua, Mahasarakham University, Thailand

 

ABSTRACT

The main objective of this study is to examine the effects of internal audit transparency of Thailand’s financial business firms’ goal achievement. 81 firms are the sample of the study. The results reveal that internal audit transparency is positively related to internal audit reliability, internal audit quality, internal audit usefulness, information value, and best decision making.  Internal audit quality has a significant positive effect on internal audit reliability and internal audit usefulness while information value results in a significant positive influence on firm goal achievement as well as best decision making, which also poses a significant positive effect on firm goal achievement. Besides, internal audit reliability and internal audit usefulness are positively related to information value whereas the information value itself displays a significant positive effect on best decision making. In terms of the antecedents of internal audit transparency, the findings assert that the internal audit ethics and regulation force pose a significant positive impact on internal audit transparency. Furthermore, future research could be conducted on different samples and on a larger scale to widen the generalizability of its findings.  For many years, the political unrest in Thailand has affected the economy and its investors’ confidence, which results in stock market bubbles or inefficient capital markets, and damages the economy (Penman, 2003). This is considered important for the reason that the stock market is a national treasure which can influence the economy success (Sutton, 2002). Since the market is no longer limited by time zone boundaries; businesses, therefore, are conducted simultaneously in various countries with many people worldwide. There have been numerous reforms undertaken to restore users’ confidence, including the internal auditor’s role outstands to reestablish the user’s confidence (Octavia, 2013; James, 2003). The internal audit function should be prepared, not only to explain how it affects market value, but also to show an increase in value (Octavia, 2013). From a capital market perspective, transparent reporting is important for both the allocation and institutional efficiency of the capital market (Burkhardt and Strausz, 2009; Pott, Mock, and Watrin, 2008). Most investors make a decision by the number of the financial status and reports. It is obvious that the financial report is truly supported by a transparent internal audit process, which makes it more creditable for the investors to be more confident to invest and results in more effective economy. The Eighteenth Century industrial revolution stimulated the formation of capital markets and the separation of owners and managers, which came with the potential for opportunistic management behavior (Imhoff, Jr., 2003). Sisaye (1999) notes that crisis creates the condition for organizational change to survive and remain competitive. Managers usually prefer high stock prices and high returns for the firms they manage since those motives can increase the value of their stock options and stock holdings, cash compensation, and chances for retaining their current jobs or landing positions with other firms (Bloomfield, 2002). A weak internal control environment accelerates earning management and opportunistic behavior, and also reduces the reliability of financial reporting (Jiang, Rupley, and Wu, 2010). Recent high-profiled corporate collapses have focused attention on corporate governance, and also emphasized internal auditing as an important part of the governance process (Coram, Ferguson, and Moroney, 2008). Some prior research has applied an agency cost framework to illustrate the value relevance of the internal audit function framework (Salehi, Arianpoor, and Salehi, 2013; Ho and Hutchinson, 2010; Lee and Ismail, 2010; Sarens, Beelde, and Everaert, 2009; Archambeanlt, DeZoort, and Holt, 2008; Coram, Ferguson, and Moroney, 2008).The current contexts of economic, social, and technical society development determine the appearance of new risks, which cause adaptation on the audit structure.  Thereby, the methods and techniques used have been enhanced to be able to analyze the risks and increase the internal audit performance (Munteanu, Zuca, and Ţînţă, 2010; Sfetcu, 2013). There are several clarifications of the internal audit’s roles which are increasingly important in improving the organization functions to enhance corporate governance, protect stakeholders and an organization’s assets (Octavia, 2013; Steinbart et al., 2013; Sobel and Kapoor, 2012; Pajak, 2012; Archambeault, DeZoort, and Holt, 2008). In addition, the internal audit is seen worldwide as a profession, searching to constantly meet the continuously changing needs of organizations (Watson, 2007; Flostoiu, 2012).  The extensiveness of the internal auditing scope has been emphasized by several authors. For instance, Sisaye (1999) notes that internal audit constitutes an important aspect of administrative process innovations that result in significantly better business performance. On the other hand, auditing does not only identify quality processes in organizations; it also locates problems and needs, and delivers information to develop action plans for better results. A fairly consistent finding across more recent studies is that internal audit function can result in a positive influence on corporate governance, including reporting quality and firm performance (Gramling et al., 2004). Moreover, transparency is used as a tool for global environmental governance, including the induction of targeted actors to reduce environmentally-harmful behaviors (Mitchell, 2011). At all levels of society globally and locally, transparency has become an increasingly essential element of governance. Also, to improve effectiveness for a leader, the development of leadership skills is necessary and led to transparency (Crumpton, 2011).

 

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Cost of Capital and Price of Banking Intermediation in Croatia

Dr. Alen Stojanovic, Professor, University of Zagreb, Croatia

Dr. Vlado Leko, Professor, University of Zagreb, Croatia

Zeljko Menalo, University of Zagreb, Croatia

 

ABSTRACT

From the very beginning, banks were considered to be the most important financial institutions in every financial system. In a certain aspect, they are treated as the “public good”. It is, therefore, understandable that the entire public, not just regulatory institutions, is interested in their safety and stability. This concern has been reflected differently, but most obviously seen in a slow and constant increase in bank capital requirements over the past few decades. Unfortunately, there has not been an agreement between the banks, regulatory institutions and scientific community on the important issues of effectiveness and sustainability of new capital rules. This paper will point to the complexity of increase in bank capital requirements, as well as mechanism of determining the price of bank intermediation and costs distribution of commercial banks funding, in order to contribute to very limited comprehension of long –term consequences in growth of bank capital requirements.  As it is generally accepted, tightened capital standards enforced upon banks by implementation of Basel III have drawn attention of not just regulatory and supervisory institutions, but also of wide scientific community. Discussions on potential effects of tightened capital standards include not just the issues of bank safety and stability of banking and the entire financial system, but also potential consequences of increasing capital requirements on the cost of bank intermediation, loan activity volume and, consequently, the overall economic activity. The scientific and expert literature differs two prevailing, but often completely opposite views on the matter. While some authors believe that these changes will lead to considerable negative effects on overall banking activities, especially in the part of increase in the cost of bank funding and consequently in the growth of required rate of return, other authors believe that, similar to Modigliani – Miller model, the growth in capital adequacy does not significantly influence the total costs of bank funding, the loan price or the level of bank loan activity. Using the comparison of financial leverage and net interest margin in Croatia, the paper tries to contribute to a contemporary discussion about suitability of M–M model in modern banking that is about the impact of capital structure or sources of funding on the bank intermediation pricing. The paper reviews basic determinants of sources of funds, theoretical framework and new interpretations of the M–M model, as well as opposed general assumptions of traditional bank management, particularly in the part of influence of shareholders' equity on loan pricing. Furthermore, the paper shows bank development in Croatia, balance sheet analysis, as well as their growth over the last two decades. Having this in mind, paper will try to determine and explain the correlation between the financial leverage and bank's net interest margin in Croatia, in order to contribute to better understanding of the real influence of capital structure on the cost of bank intermediation, with a special emphasis on smaller, bank – oriented and transitional financial systems, such as Croatian.  Banks are from the very beginning considered to be the most significant financial institutions in every financial system. Their impact on the overall economic environment as financial intermediaries is crucial. By gathering savings and allocating it into economically profitable projects, banks serve as a stimulus to economic growth and development. Contemporary business activities of banks extend beyond traditional deposits, loans and non – interest banking services. They also include numerous business activities, products and services provided to their clients, all representing financial innovations that just recently gained more significance. The above mentioned specially refers to various forms of investment activities and securitisation techniques on the financial market, new forms of financing, general application of derivatives, strong growth of off – balance sheet activities, extensive orientation to international market, etc. Furthermore, banks today control the highest amount of total national savings and represent the most significant creditors of households and nonfinancial business sector, local government authorities and sometimes of the government itself. It is, therefore understandable that they are, in a specific way, treated as a “public good”.  Bearing this in mind, together with the fact that the bank's basic goal is to make profits, the concern about bank profitability and success is not only a matter for board members and shareholders but also for a wider public, including regulatory institutions, investment analysts, together with the representatives from both the scientific and professional community, as well as their clients. In that sense, it has been generally accepted that bank profitability is not determined only by their assets, but also liabilities structure, as well as increasingly important off – balance sheet activities. In other words, volume and structure of both incomes and costs determine the level of bank profitability.

 

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Audit Practice Transparency and Audit Survival: An Empirical Investigation of Certified Public Accountants (CPAs) in Thailand

Usaporn Ponphunga, Mahasarakham University, Thailand

Dr. Prathanporn Jhundra-indra, Mahasarakham University, Thailand

Dr. Kesinee Muenthaisong, Mahasarakham University, Thailand

 

ABSTRACT

This paper aims to examine the relationship among the effects of audit practice transparency and audit survival. The components, the consequences of audit practice transparency are included audit quality, audit credibility, financial information reliability, information value, stakeholder acceptance, and audit survival. For the relationships among audit practice transparency and its consequences can explain by the capability theory. The Certified Public Accountants (CPAs) in Thailand were selected as the sample. A questionnaire is used as the instrument for data collection and an auditor is the key informant. The data were received and usable 376 auditors of the sample. The effective response rate was 21.41%. The Ordinary Least Squares (OLS) regression analysis is methods for testing the hypotheses. The results indicate that audit practice transparency has significant positive impacts on audit quality, audit credibility, financial information reliability, information value, stakeholder acceptance, and audit survival. Similarly, audit quality has significant positive impacts on audit credibility, financial information reliability, information value, and stakeholder acceptance. Likewise, audit credibility and financial information reliability have significant positive impacts on information value, and stakeholder acceptance. Moreover, Information values have significant positive impacts on stakeholder acceptance, and audit survival. Similarly, stakeholder acceptance has significant positive effects on audit survival. Future research is suggestion to seek other consequence variables of audit practice transparency for literature review. Theoretical and managerial contributions are explicitly provided. Conclusion and suggestions and directions of the future research are included. Since the global accounting scandals surrounding Enron, WorldCom, and Xerox were caused from inadequate monitoring and timeliness about fraud detection and it was a signal for the failure of corporate governance, the cause of the collapse was the behavior of infidelity (Messier et al., 2010). Thus, the Sarbanes Oxley Act, 2002, was enacted to protect stakeholders. In addition, the failure of auditing leads to fraud (Pagano and Immordino, 2012). Because the auditors lacked good audit practice, it led to unfavorable financial information, and supported fraudulent financial reporting (Becker, Haugen, and Matton, 2005). Transparency is a key topic of corporate governance (Haat, Rahman, and Mahenthiran, 2008). Thus, transparency is a new ethical subject for the 21 century (Capurro, 2005). Transparency is the complete, accurate, and timeline disclosure about fair financial reporting information to shareholders, analysts, and other users, for understanding the operations and activity of the firm (Gramling and Hemanson, 2007). Also, it is a revelation of processes, procedures and assumptions of financial reporting (Lamberton, 2005). Also, it is causing reduced inequality of information between management and stakeholders, thus it is a chance of investments for the firm (Bushman and Smith, 2003). It increases the liquidity of high-quality assets, making sure for the stock of the firm (Burkhard and Strausz, 2009). Thus, when auditors have audit practice transparency, it leads to positive to information. Accordingly, the auditors with higher audit practice transparency should have high audit quality, audit credibility, financial information reliability, information value, stakeholder acceptance and audit survival. Such auditors who have reputation lead to audit quality and best certify the reliability of financial statement (Krishnan, 2003). Also, when events adversely affect that reputation, it should also lack perceived credibility of the audited financial statements (Wilson, Apostolou, and Apostolou, 1997). Additionally, the financial information is important for inside and outside users to promote decision-making (Reck, Vernon, and Gotlob, 2004). The investors/analysts need effectiveness about information disclosure and best report (Ho and Wong, 2003). Moreover, code of ethics with more general experience, leads to a higher judgments quality (Pflugrath, Martinov-Bennie, and Chen, 2007). Thus, audit practice transparency is important to guarantee the financial reports and is a consequence of audit best reporting. Moreover, capability theory which is adapted to explain the impact of audit practice transparency on audit quality, audit credibility, financial information reliability, information value, stakeholder acceptance, and audit survival. In this research, a questionnaire is used for data collection. The results of this research can improve the quality of audit practice transparency and provide implications for efficiency and effectiveness in the audit processes that lead to audit quality, audit credibility, financial information reliability, information value, stakeholder acceptance, and audit survival. Prior research such as that of Mironeasa and Codina (2013) demonstrate a new approach to audit functions and principles, by reviewing of the literature, identifying the principle audit and fine connections between principles and newest audit functions, such as principles with a viewpoint of a better understanding of the roles on in the audit process. Meanwhile, Becker, Haugen, and Matton (2005) studied a substandard audit work and unethical decisions of auditors, which have revealed that the investors and retirees have loss by billions of dollars and the loss of thousands of projects for investors and retirees. There are more studies in examining audit practice transparency in the ethical issues of monitoring activity influence on accountants. However, the updated transparency research in the accounting field that has focused on the code of ethics and its impact on the ethical dimensions of the auditor’s judgment which are mixed, unclear indications of ethics on all codling which are a part of the environment that may impact the auditors’ judgments.

 

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Exploring Business Development

Haifa Al Wawi, A’amal Holding Company, Kuwait

 

ABSTRACT

Business development has become an important tool to ensure current business growth, sustenance and future survival. However, the term “business development” is interpreted differently, and its theoretical foundations are still underdeveloped. The present study explores the business development function as currently being practiced in the corporate world to clarify the concept and to discover the main business development practices by investigating the duties and responsibilities of business developers in various commercial settings, as well as the skills and experience necessary to become a successful business developer. At present, business development (the abbreviation “biz dev” or the acronym BD are used by most professionals) refers to corporate entities’ and government agencies’ assisted development efforts for a particular area, groups of people or SMEs. This paper’s focus is on the corporate side of the business development.   The popularity of the term ‘business development’ has recently increased. A search on any popular Internet search engine for ‘business development’ may now result in millions of results. Despite its increased use in the corporate world during the past few years, relatively less academic research has been done on business development. This is evident from the fact that management books not only lack its definition but also exclude business development as a business function. Similarly, companies also differ in its interpretation. Even some progressive high tech-firms claim their core competence is business development; however, they are unable to define it except that to say that it has some specific tasks and procedures. Thus, business development represents an important but unacknowledged practice in management theory and the corporate world. This paper’s objective is to understand the concept of business development, its organization in companies, the main tasks of business development functions and the skills of business developers. A review of relevant literature reveals that business development has developed itself within the strategic management discipline. However, the BD function is now transforming itself into a separate function in the field of management. Broadly, business development can have two perspectives, viz., strategic and operational. The strategic side of business development focuses on long-term organization growth as a whole. This is why a business developer should know how to develop strategies for business growth or for consolidation in coordination with top management. The operational side mainly deals with managing development projects and revenue growth. Projects are used as the main tools of business development, and it is very important to link a strategy to a series of business development projects. The BD capability in organizations grows over time, and the groups or teams assigned to BD tasks are initially ad hoc and are themselves not clear about their BD goals. With time and experience, however, project-based units emerge, and they become formal BD units integrated with strategic planning; then, the organization starts to gain much from its BD efforts. (Christensen, 2007)  Firms should identify their BD requirements according to emerging market needs and arrange their stock of human capital. The business development activities involve a continuous restructuring and positioning of any firm to successfully exploit the business opportunities based on its strategy; thus, the BD function should be organized to act as a corporate entrepreneurial function to review opportunities and/or projects and to guide top decision makers regarding the risks related to its implementation and benefits related to it. BD mainly involves identifying and analyzing business opportunities, developing business models and business plans, finding new strategic business partners and managing relationships with them, getting into new market segments and acquiring new businesses, projects and customers, and making ground work for the sales function to achieve revenue targets. Thus, business development is an important function for an organization to fill pipelines with the new business opportunities that are essential for survival and long term benefits.  Business developers come from a variety of backgrounds and have earlier experience in a particular industry. In specialized industries they should be technically qualified in relevant areas, whereas they should generally possess experience in that industry. Thus, they may be a specialist in one area but have also integrating knowledge of other business functions. Their experience requirement in terms of number of years also varies according to the levels within the organization. They should have entrepreneurial skills in early stage businesses, as well as execution skills in later stages of the business expansion. They should have strong strategy, business acumen, analytical, project management and engaging skills. Their capabilities include industry know-how, strategic planning, customer needs and familiarity with products and markets.

 

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Service Creativity Strategy and Business Performance: Empirical Investigation of Boutique Hotel Businesses in Thailand

Anantaporn Puttassa, Mahasarakham University, Thailand

Dr. Prathanporn Jhundra-indra, Mahasarakham University, Thailand

Dr. Saranya Raksong, Mahasarakham University, Thailand

 

ABSTRACT

Recent research has indicated that service creativity strategy is hot issues, which a better explanation between firm creativity and firm strategy. Thus, this study addresses the main research question is how the relationship between service creativity strategy and business performance is. Based on two theories comprise of the Resource-Advantage Theory(R-A Theory) and Contingency Theory that are supported in this model. The purpose of this research is to investigate the relationship among each dimension of service creativity strategy, its consequences, and antecedents. Regression analysis is used for analyzes the data from 75 boutique hotel businesses in Thailand. The results show that service creativity strategy positively influences on its consequences and antecedents. Especially, the proactive service encouragement strongly influences on business performance. Finally, contributions and future directions are included.  Currently, the globalization of technology rapidly changes and has an influence on the organization's adaptation for increasing competitive advantage, efficiency, and effectiveness. Thus, the firms have creative ability to develop new service will succeed in competitive advantage, which is the basis for the firm competency to survive and grow in the future. Hence, creative strategy is the core of the organization’s survival and competitive advantage that brings firms to achieving sustainable competitive advantage (Haward, Murphy, and Lorenz, 2008). Specially, the influence of the global competitive environment pressured the executive need to increase a potential of business strategies (Porter, 1979). According to Dewett and Gruys (2007) suggested that the firm understanding of creative strategy is the foundation of innovation development. Moreover, it is suggested more than 50 years, which creativity becomes an influential resource to generate competitive advantage (Guilford, 1950). In summary, creativity is a main factor for product and service production because it develops and adapts for business advantage (Zeng, Proctor, and Salvendy, 2009). However, service sector concerns about both processes and activities intend to services modification for superior business performance. The most important issue is to understand the effect factors of service marketing, which firm should concentrate and search information to continually increase competitive advantage (Kunz and Hogreve, 2011). Hence, this research focuses all process of service creativity strategy for creating competitive advantage. Firm must creativity integrate in organization form several perspective analysis for create strategic planning; which firm should consider internal and external environment as well as others (Rivera, 2014). Thus, for decision making of excusive analysis should consider multiple factors for creative process in firm (Pabón, 2001). Organization creativity is a way to success for business performance (American management association, 2010). Moreover, creativity was the core competency for development of product and service for firm (Schmidt, Soper, and Bernaciak, 2013). Hence, firm considers creativity issue that is an important key for competitive advantage and success in organization.  Service industries in Thailand are the most important industry and can create huge income to the nation, and become one of the business driven economies. Correspond with Thailand that had established as tourism hub in ASEAN which has resource readiness of tourism such as outstanding culture, beautiful nature, and unique food taste. This opportunity of service business will gain acceptance from tourists both Thai and foreigners to invest in hotel businesses by expanding all over tourist attraction, which in turn, rapidly increases number of hotel businesses (National Tourism Development Plan, 2555-2559). However, the progress of dissimilar forms of tourist accommodation is a straight response to varying markets, the unstable production of somewhere to live, and most significantly to new consumer trends that select the standardized atmosphere of much of the commercial accommodation sector (Stern at al., 2007; Timothy and Teye 2009; Rogerson, 2010). Specially, the highlight five distinguishing features of boutique hotels, including: (1) a smaller hotel with a more intimate feel, (2) a stress on stylish fixtures fittings and appropriate electronics, (3) an individual identity despite the presence of a soft brand in some circumstances, (4) an emphasis on modern styles using key designers to develop the concepts, (5) personalized service but the hotels do not always have full service facilities such as restaurants and bars (Horner and Swarbrooke, 2005). Hence, organization creativity enhances distinctively for competitive advantage and superior performance.

 

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Social Marketing Strategy and Sustainable Marketing Success: An Empirical Investigation of ISO 14001 Manufacturing Businesses in Thailand

Chotika Chimngamsert, Mahasarakham University, Thailand

Dr. Prathanporn Jhundra-indra, Mahasarakham University, Thailand

Dr. Saranya Raksong, Mahasarakham University, Thailand

 

ABSTRACT

Societal marketing strategy has been viewed as one of key components that influence marketing outcomes. Drawing on Stakeholder Theory, the objective of the study is to investigate the relationships among societal marketing strategy and its consequences; brand image, product reputation, customer satisfaction, superior market position, customer loyalty, and sustainable marketing success, and also to explore the moderating effects of firm-stakeholder relationship. The result were derived from a survey of 95 ISO manufacturing businesses in Thailand provided the interesting points of the societal marketing strategy which was directly associated with marketing success. Ordinary least square (OLS) regression analysis is used the hypothesized relationships among variables. Results suggest that societal marketing strategy is positively related to its consequences. Brand image is positively related to superior market position. Product reputation is positively related to superior market position and customer loyalty. Similarly, customer satisfaction is positively related to customer loyalty. Firm-stakeholder relationship plays a moderating role between societal marketing strategy and its consequences are partially supported the hypothesis. Moreover, theoretical and managerial contributions, conclusion, and suggestions for future research are also interesting to be discussed. During the 21st century, there’s been a trend towards a global increase in the social and environmental responsibility. Current situations has emerged the effects and problems such as air and water pollution, and health problems such as cancer and heart disease (Crane and Desmond, 2002; Sirgy et al., 2012).Prior research has indicated that environmental and social effects may impede business development and long-term success (Timbur, 2010). Many empirical researches have been conducted on the social responsibility of businesses. Societal marketing strategy is popular marketing strategy that relates to corporate responsibility while firm achieves profits and sustainability (Burke and Logsdon, 1996; Liu and Zhou, 2009).  Societal orientation is the concentration of three domains including social, environmental and economic issues for sustainable development with decision making brought into corporate strategies which can enhance corporate image, competitive advantage, firm performance and sustainable success (Kotler and Zaltman, 1971; Zeng et al., 2013). Consequently, societal marketing strategy is a good practice for businesses under competitive environments. Its strategy that focuses on benefits of customer and stakeholder groups by improving products, protecting the natural environment, and operating marketing activities by the right ways. Therefore, societal marketing strategy aims to creating values for customers such as supporting a good health and happiness. Societal marketing strategy defined as the approach and process to create the salutary products to customers with the rights mix of marketing practice as well as enhancing the quality of life of consumers and public well-being. Fuller (1999) suggested that societal marketing strategy is the key to the success of green products, and reinforces the superior market position for these products in a global market.  Therefore, societal marketing strategy is a key way for marketing managers who create marketing activities that want to match customers and social group needs. However, efforts to understand the nature of societal marketing strategy found that a few empirical research studies have attempted to investigate the concept of societal marketing strategy. Therefore, it leads to an unexplored gap in research. In particular, there are only a few empirical studies that study the societal marketing strategy of for-profit organizations in the context of Thailand (Chattananon et al., 2007; Nurittamont, Ussahawanitchakit and Suwannarat, 2010). Most empirical studies have focused on investigating the social marketing domain of risky consumer behavior (for example: alcohol, drugs, and diseases), campaigns, advertising, and non-profit organization (Chitakornkijsil, 2012; Thailis, 2014). But few empirical studies have investigated the societal marketing domain. Therefore, this study contributes to a better understanding of the influence of societal marketing strategy on sustainable marketing success. Based on the above literature review, the conceptual model of societal marketing strategy has presented Stakeholder Theory to explain phenomena. The main purpose of this paper is to investigate the relationships among societal marketing strategy and sustainable marketing success through brand image, product reputation, customer satisfaction, superior market position, and customer loyalty, as well as the moderating roles of firm-stakeholder relationship is also examined. The key research question is how societal marketing strategy is related to sustainable marketing success. Furthermore, to highlight this relationship, four specific research questions are established as follows: (1) How is societal marketing strategy related to brand image, product reputation, customer satisfaction, superior market position, customer loyalty, and sustainable marketing success? (2) How are brand image, product reputation, and customer satisfaction related to superior market position and customer loyalty? (3) How are superior market position and customer loyalty related to sustainable marketing success? (4) How does firm-stakeholder relationship moderate the relationships among societal marketing strategy, brand image, product reputation, customer satisfaction, superior market position, customer loyalty, and sustainable marketing success? This study proposed testable hypotheses. This research makes two contributions to the literature on societal marketing strategy. First, it studies empirical data at the organization in the context of ISO 14001 manufacturing businesses, whereas prior researches do not. Second, this research applied Stakeholder Theory toward explaining conceptual framework. This study is organized as follows: The first part presents the literature review of societal marketing strategy and sustainable marketing success. Additionally, hypotheses developments are presented. Next, research method includes sample selection, data collection procedure, the measurement of variables, the statistics and equations to test the hypotheses. The results are derived from 95 ISO manufacturing businesses in Thailand indicated reasonable discussions with existing literature supports are shown. Lastly, the study concludes by discussing implications, suggestions, and future research. Since the 1990’s, the societal marketing concept has been adopted by marketers, as well as the conceptualization of the societal marketing concept, has been widely utilized (Kang and James, 2007). Its effect of societal marketing concept was applied by marketers through marketing practice to replace the original marketing concept. Societal marketing concept had been the four phases of marketing evolution. Societal marketing concept explains the environment, society, and profit (Prothero, 1990). The main cause of environment and human problems are affected by the speed of economic expansion that leads to use the natural resources (Kotler, 1972; Kotler, 1986). Previous phenomenon has shown the traditional marketing concept that focuses on a higher profit than competitors.

 

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Assessing the Consumers’ Propensity for Online Shopping: A Demographic Perspective

Dr. Mahmoud Abdel Hamid Saleh, King Saud University, Saudi Arabia

 

ABSTRACT

This paper is aimed at achieving two goals: first, to identify consumers’ propensity for online shopping, and second, to investigate the association of gender, income, age, and education with consumers’ propensity for online shopping. The study was conducted on a sample of 293 consumers in Saudi-Arabian market. Data were collected through a questionnaire contained four measures of consumers’ propensity for online shopping. The findings of the study outlined that 66% of the respondents preferred traditional retail-store shopping to online shopping. The findings also revealed insignificant differences in consumers’ propensity for online shopping between males and females and between the various levels of age. Conversely, significant differences were found between the levels of income and education for the higher levels. Based on the research findings, marketers are recommended to pay more attention to consumers who prefer online shopping to traditional shopping, and at the same time, work diligently to stimulate consumers who prefer traditional shopping in retail stores; removing their uncertainty and perceived risks associated with online shopping transactions. With the development of the Internet usage during the last two decades, Online shopping has grown up rapidly to be a major activity for numerous consumers all over the world. The amount of sales on the Internet increased globally to reach about 348.6 billion dollars in 2009 (Keisidou et al., 2011) and was expected to reach 778.6 billion dollars in 2014 (IMAP retail report, 2010). The reason for online shopping growth may be explained in terms of the advantages the Internet provided to both the sellers and the buyers. It allowed business organizations an easy access to enter the global markets effectively at a low cost. Simultaneously, it enabled consumers obtain adequate information on the products and to make convenient shoppings, anywhere at anytime. In the framework of the business concern to study consumers in the electronic markets and the factors influencing their behavior, marketers are interested in the differences in consumers’ propensity for online shopping; to be guided in making proper marketing decisions in several areas, e.g., market segmentation, targeting, building competitive positioning and strategies in e-markets. Previous studies that examined the research topic could be classified into three categories: the propensity for online purchasing, uncertainty avoidance, and perceived risk associated with online shopping (Al Kailani and Kumar, 2011). Despite the Westerners’ interest in studying topics related to consumers’ willingness and attitudes towards online shopping and the factors that influence their behavior in e-markets, the researcher did not find similar studies concerning the Arab or Gulf regions. Accordingly, this study is aimed at identifying the consumers’ propensity for online shopping in the Saudi-Arabian market, and the consumers’ propensity for online shopping associations with some related demographics. The findings from this study could guide both national and international businesses in e-commerce to understand the basic dimensions of doing e-business in the Saudi market, especially with the lack of studies and information regarding consumers’ online shopping behavior in this market. Considering the importance of online shopping to consumers, previous studies indicated three perspectives on online shopping: first, the consumer’s completion of online shopping transactions (Degeratu et al., 2000), second, the data collection of goods and services (Yang and Cho, 1999), and third, a combination of these two perspectives (Pan et al., 2010; Hill and Beaty, 2011). In terms of the third perspective, online shopping is defined as efforts made by the consumer via digital technologies - most notably the Internet - in search of information on products and making trade-offs, as well as the completion of purchase transactions (Alturkestani, 2004). Correspondingly, the current study adopts the definition of consumers’ propensity for online shopping as consumers’ tendency to use digital channels in search of products and collect information about product features and prices for the purpose of the trade-offs, and making shopping transactions. Regarding the measurement of the consumers’ propensity for online shopping, some measures were used in the previous studies. Lian and Lin (2008) measured the extent to which consumers like to buy online, the attractiveness of this kind of purchase to consumers, the consumer’s likelihood to return to the store website and purchase within the next three months or during a year, and the consumers’ intention to increase their online purchase. The likelihood of ever purchasing from a particular store again was used by Jarvenpaa et al. (2000). Similarly, Jahng et al. (2001) measured consumers’ acceptance of online shopping and their attitudes towards certain electronic stores. Along the same lines, Domina et al. (2012) measured consumers’ online shopping intention and their willingness to recommend others to purchase online. In the same context, a number of studies measured consumers’ attitudes to perceived risks of online shopping, e.g., financial, performance, physical, time, psychological, social, and security-related risks (Jahng et al., 2001; Griffin et al., 2011).

 

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Human Resources Management Model oriented to the Sustainability of Family Businesses - A proposal from the Comparison Between Italy and Colombia

Orlando E. Contreras, Universidad Industrial de Santander, Bucaramanga, Colombia

 

ABSTRACT

There is no doubt that dynamics of productive sector in Europe, especially in Italy, have been constructed through a genuine and collaborative work, which has its deepest roots in the gentle spirit of its people and in the influence of families, which in its role of the relational core of society, have over the decision process of human resource management in organizations. Unfortunately, this reality has not been taking place in other latitudes, such as Latin American countries, where despite the potential of its resources and talent of its people, phenomena such as the formation of long-term business alliances based on overall goals (environmental, social and financial) is the exception rather than the rule. This paper makes a previous analysis and formulates a proposal in the line of making an integral comparison between Italy and Colombia, in terms of societies, leadership styles, but especially in human resource management practices in order to create a managerial model oriented by sustainability principles for Colombian family businesses, which would be developed in further research process. The broadly shown interest in business-environment-related topics raises the need to be permanently looking for research alternatives in the area of management and business administration. This is carried out in order to achieve a methodological contribution to practices, which are consistent with the objectives of harmony for such relationship. Nevertheless, there has been a tendency to focus on the impact produced by the actions of companies on the environment: Clean Production, Sustainable Development, Zero Emission as well as the recurrent claims from several sectors towards Ecological Philanthropy. All of these are examples of a wave of applications from the business management area, which is motivated by actual problems that mankind will have to face to a greater or lesser extent if a possible future is wanted. Later, new elements are presented by means of initiatives such as the United Nations Global Compact (UNGC), which are a fundamental part of the actions of different organizations in their environment. Besides this, topics such as business ethics, dignity of labor and children’s exploitation, among others, have emerged. Hence, organizations have been invited to seek after the transcendence of their purely financial goals. This document comes from the meaning of Corporate Social Responsibility by doing a brief theoretical summary from its initiation as subject, to its current mention. It suggests its evolution itself as a model of Business Sustainability. Then, this is addressed through the participation of human talent in the organizational purpose of transcending in time due to bold proposals such as Sustainable Performance. The former is addressed again with more direct contributions, for instance, Green Human Resource Management. Likewise, it is expected to create a simple parallel between Italy and Colombia, which look very different but whose inhabitants have identical levels of welfare perception. The aim of this is to find a relevant connection to demonstrate cross learning potential actions on the issue of sustainability of small and medium businesses. It is concluded with a proposal for deepening on the subject in order to schematize a valid model, which can contribute to the development of that kind of ventures in emerging economies based on that comparison. Barnard (1938) has schematized theoretical and practical approximations of Corporate Social Responsibility from the contextualization of executive functions. It has gone from the pragmatism of Levitt (1958), the utilitarianism of Friedman (1970), to the development of Freeman’s Stakeholder Theory (1984). Of course, it is essential to bear in mind the likely first relation between the company’s competitive capacity and the need to report back to its environment throughout its framework of reference. This perspective is based in the resources of the firm (RBV) which was initially addressed by Wernerfelt (1984) and retaken by Hart (1995) in a practical context with a single approach to environmental impairment of the environment, which was then called Environmental Social Responsibility. However, McWilliam, Siegel and Wright (2006) managed to make an alignment between Corporate Social Responsibility and Strategy. Such alignment was retaken by Porter and Kramer (2006) who stand out the need to deepen on this topic as well as the concern raised of members of senior management of large organizations. It was no longer a matter of somehow giving back to society and the environment because of the excessive actions of companies. It was now a matter of survival, which then would be coherent with the actions developed in all organizational levels. That is, Sustainability had officially arrived as a concept and as one of the dominant paradigms in the field of formulation and implementation of a strategy to ensure the survival of society and by definition of business. There was a strong evolution of concepts since the proposal of union of these two issues, which were then supported by Pinillos and Fernández (2011). They assured in a word game that “Corporate Sustainability had won the battle between Corporate Social Responsibility and Business Philanthropy”. This was directly associated with the creation of long-term value, which transcended purely to technical and financial scenarios due to the creation of metric such as Dow Jones Sustainability Index (DJSI).  Since then (2006) topics such as the use of alternate energy systems have been cataloged as sustainable businesses and have been required as well. It has also happened with other issues as the search of guarantees to maintain the global food chain, the business potential in working for the bottom of the social pyramid, the so-called “industry without chimney” whose leading example is eco-tourism along with the social inclusion of employees. In the same way, the raise of innovation as sine qua non factor for organizational success matched perfectly with all of the previously mentioned concepts. As defined by Nidumolu, Prahalad and Rangaswami (2009), sustainability is the new key driver for it to be started. This statement was ratified by Kiron, Kruschwitz, Reeves and Goh (2012) later.

 

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Exploring Perceived Product Knowledge, Credibility, and Attractiveness of Celebrity Endorsers on Influencing Teen Purchase Intentions

Dr. Scarlett C. Wesley, University of Kentucky, KY

Dr. Minyoung Lee, University of Kentucky, KY

Behnoosh Ghaani Farashahi, University of Kentucky, KY

Laura ParksUniversity of Kentucky, KY

 

ABSTRACT

Retailers and branded products use celebrity endorsers in their advertisements as a way to entice shoppers to purchase their products. The celebrity attributes of product knowledge, credibility, and attractiveness can determine a celebrity’s effectiveness as an endorser. Teens are a group that is heavily influenced by celebrities because they emulate celebrities’ actions and personalities to better fit in with their peers. For this study, surveys of 246 teens were collected asking them to rate endorsers’ product knowledge, credibility, and attractiveness based on their intention to buy an advertised product.  Celebrity endorsers were found to influence teens’ purchasing decisions.  Product knowledge, credibility, and attractiveness all have an effect on teens purchasing intentions with endorser’s product knowledge and credibility have the largest influence on whether they purchased a product.  Retailers and branded products use celebrity endorsers in promotions and advertisements as a way to entice shoppers to purchase their products (Keel, 2012; McCracken, 1989). A celebrity endorser is “any individual who enjoys public recognition and who uses this recognition on behalf of a consumer good by appearing with it in an advertisement” (McCracken, 1989, p. 187). One quarter of American commercials and advertisements use celebrity endorsements, and those endorsers have a great impact on product sales because celebrities create a higher instance of recall and attention (MarketWatch, 2006; Shimp, 2000) for a product over non-endorsed items. One quarter of all advertisements feature celebrities as an endorser of a product or brand (Shimp, 2000), indicating the validity of this strategy as a means of persuasive communication (Biswas, Hussain, & O’Donnell , 2009).  The teen market segment more than most other consumer groups is known to be heavily persuaded by their peers and often looks towards celebrities to determine what is and is not popular (Yarrow & O'Donnell, 2009).  The purpose of this research study is to determine whether or not celebrity endorsers influence the purchasing intentions of teen consumers, to discover which celebrity attributes (credibility, attractiveness, and product knowledge) affect teens’ decisions to purchase endorsed products, and to identify gender differences.  The use of celebrity endorsers represents a major monetary investment for a company, with organizations finding celebrity endorsements to be beneficial because consumers try to emulate the  people they idolize.  When a celebrity endorses something, they are in a sense lending their own selves to the brand or product. A celebrity endorser can operate as a co-brand for the endorsed brand and this could create an equity for both endorsing celebrity and endorsed brand (Seno & Lukas, 2007).  Celebrity endorsements produce more positive responses toward advertised items and greater purchase intentions than non-celebrity endorsed products (Biswas et al., 2009).  Celebrities provide symbolic aspirational reference group associations making them effective product endorsers. Pairing a celebrity with a brand in an efficient way will persuade consumers to visit the retailer being endorsed (White, Goddard, & Wilbur, 2009). In this way, brands and retailers use celebrities to broaden the appeal of advertised products, and the celebrity endorser becomes an effective way of transferring meaning to something (McCracken, 1989).  The celebrity makes the advertised product appear more desirable and glamorous, which enhances audience attentiveness resulting in a more memorable advertisement (Byrne, Whitehead, & Breen, 2003). When assessing a celebrity’s influence, consumers most often use attributes of the celebrity endorser such as credibility, attractiveness, and product knowledge.  These attributes influence a consumer’s ability to recall an advertised product (Ohanian, 1990;  Ferle & Choi, 2005) and then in turn influence their purchasing decision. Credibility is defined as the belief by a receiver that a source makes honest assertions (Hovland, Janis, & Kelley, 1953) when endorsing a product. Attractiveness is defined as whether or not the endorser is found to be pleasing in appearance or manner or that they are simply found to be good-looking to the consumer (Ohanian, 1990).  Product knowledge is the perception of the endorser’s ability to make valid assertions about the product (Hovland et al., 1953), in other words does the endorser really know what they are talking about.    Today the celebrity culture is such that individuals in entertainment and athletics enjoy immense fame and influence, providing consumers with role models of behavior.  Today’s teens have grown up in the glare of the media spotlight, having unprecedented access to advertising messages through a wide variety of sources. The teen market is highly coveted due to their spending power, ability to be trendsetters, receptivity to new products, and tremendous potential for becoming lifetime customers (Wolburg & Pokrywczynski, 2001). Teens are now an important part of retailers’ target market because of their exponential spending power of $100 billion annually and heavy influence on their parents’ spending (Magie & Young, 2010; Gil, Kwon, Good, & Johnson, 2012). Teens today are also more resistant to advertising efforts, more individualistic, and anti-corporate than any generation that has preceded them (Wolburg & Pokrywczynski, 2001).

 

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An Examination of the Impact of Social Isolation in the Workplace

Dr. Charles Chekwa, Troy University, FL

Eugene Thomas, Jr., Dillard University, LA

Dr. Akins Ogungbure, Troy University, GA

Dr. Conrad Francis, Texas Tech University, TX

 

ABSTRACT

“Social isolation” and “loneliness” can be viewed as related or causational, one to the other. However, the authors recognize a distinct difference. The authors believe that while loneliness draws more association with the immeasurable and internal emotion one has for dependencies on others, social isolation represents the manageable external variables that affect, and motivate or demotivate, individual behavior. Therefore, the authors seek to delve into social isolation within the workplace and, more particularly, where technology has supplanted human interaction. In doing so, the authors seek to answer the questions: What is social isolation?  How does social isolation affect employees within the workplace? What is the residual impact of social isolation on employers?  Recently, a bank television advertisement aired displaying customers having an objectionable experience with a non-human approach to customer service. The underlying idea was the importance of human interaction and the consequences of its absence. The authors noted the implication or suggestion that technology in the form of self-service substitutes can be a poor replacement for “oh-so-valuable” social interactions. Despite this, and independent of it, among business models today, the authors note that technology self-service models have become more prominent; call any service line and you will surely be greeted by an automated call distributor (ACD).  Companies view this as a means for businesses to “utilize web-based Self Service Technologies (SSTs) to minimize costs, provide readily available resources as needed, and reduce latency while simultaneously serving multiple customers”  (Boyette, Thomas, & Rankin, 2009). While the authors can accept that self-service does give some remedy to the customer and business alike, the objection unfolding, as illustrated by the aforementioned advertisement, is that removal of human interaction may not be a workable alternative.  Also, exploring the paradigm of the worker working within a human-less environment as a daily routine, this “social isolation,” if you will, may have adverse economic and/or interpersonal effects on all parties involved.  For the sake of this research, the authors define social isolation as “distancing of an individual, psychologically or physically or both from his or her network of desired or needed relationships with other persons” (Biordi & Nicholson, 2012). However, it is important to mention that being socially isolated should not be generalized or pooled with the term “loneliness.”  Social isolation, like loneliness, affects both the isolated and those around or in support of them. However, unlike loneliness, social isolation can be by design or necessity (Biordi & Nicholson, 2012).  The authors believe that social isolation is more of an epistemic phenomenon that can be accepted or not and separate the term into “social disconnectedness (or choosing to have small social networks) and “perceived isolation” (or loneliness) (Cornwell & Waite, 2009). While social disconnectedness and perceived isolation allow for grouping, they do not eradicate confusion. Thus, the authors streamline these terms and present them as the “choice” (social disconnectedness) and the “effect” (perceived isolation). While the choice may be preferred by seasoned, experienced employees, the authors believe that social isolation in either form, whether by design or consequence, can be more negative than positive.  Isolation within today’s technologically enhanced workforce is not limited to the self-starting/self-motivated employee within a private office behind a closed door. As technological advancements feed the needs of a more diverse and flexible workforce, employees are moving away from the old all-hands-on-deck office. With the opportunity to provide 24 by 7 services in a global marketplace, technological advancements have made the world smaller and fed the ever changing need and opportunity to be professionally or socially isolated.   Working away from the “office” is becoming more the norm. It is estimated that some “16.5 million regularly employed Americans telecommute at least one day of their normal work schedule” (Cooper & Kurkland, 2002). Just as impressive, and since the smart phone has become so prevalent,  “according to an industry trade group, from June 2009 to June 2010, cell phone subscribers sent 1.8 trillion text messages. That was up 33% from the year before” (Cafferty, 2011). Furthermore, managing desktops, applications, and data centrally and delivering them efficiently over networks opens up the user/worker ability to work away from the office. To address this, virtualization (simulation of the actual hardware to allow software, which typically consists of a guest operating system, to run unmodified) “has provided IT [information technology] with a powerful and proven approach to addressing an organization’s evolving workspace needs” (http://www.cisco.com/en/US/ netsol/ns1135/index.html).   However, what impact does this have on the isolated employee? Does the trade-off of telecommuting and use of virtual options create detrimental effects on the positives within personal interactions? Despite the authors’ speculation of adverse impact, some reports have suggested that there is “no correlation found between times spent teleworking and professional isolation” (Dino, Golden, & Veiga, 2008). Employees and the circumstances to which they are subjected during periods of isolation can lead to costs for the employer, both direct and indirect.  Primary to costs associated with employees in isolated environments or circumstances are illnesses that affect the cost of insurance coverage. These illnesses can be varied and have varying impacts and costs.  One study reported that “[b]ased on average impairment and prevalence estimates, the overall economic burden of illness was highest for hypertension ($392 per eligible employee per year), heart disease ($368), depression and other mental illnesses ($348)” (Goetzel, Hawkins, Long, Lynch, Ozminkowski, et al., 2004).  

 

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