The Journal of American Academy of Business, Cambridge

Vol.  21 * Num.. 2 * March 2016

 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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Economic Impact of Aviation in the South East Asian Region

Dr. Cindy Greenman, Embry-Riddle Aeronautical University, AZ

Dr. Ricardo A. Carreras, Embry-Riddle Aeronautical University, AZ

 

ABSTRACT

South East Asia has emerged over the past decade as one of the fastest growing aviation markets in the world. Despite the recent economic downturn around the world, South East Asia is still achieving significant growth. With the amount of discretionary income on the rise for the people of the region, the aviation industry can expect to continue this trend.  In 2006, the then Prime Minister of Vietnam, Mr. Phan Văn Khài, announced the approval for the construction of a new international airport for Ho Chi Minh City. The current airport, built in the 1930s,Tân Sơn Nhất International Airport (SGN), is to become, exclusively, the domestic terminal while, the newly approved airport, Long Thanh International Airport, was to become not only Ho Chi Minh City’s international airport terminal, but a hub passenger/cargo airport for Vietnam and for all of southeast Asia. The original objective was also aimed at making the new airport to be, the number one hub airport for the entire region sometime during the second half of the 2030s.  That is, an airport envisioned to compete, or ideally replace in regional hub importance, the current prime regional hub status of Changi International Airport in Singapore (SIN), or the secondary hub status of Bangkok International Suvarnabhumi Airport (BKK) in Thailand and Hong Kong International Airport (HKG) in China’s SAR  (Thanhnien News, 2015). Upon learning of such an ambitious plan, this paper has been developed with the purpose of researching the aeronautical viability of Vietnam’s original objective in approving building Long Thanh International Airport. To be built in three phases during the span of 34 years and breaking ground in 2016, this paper analyses the socio-economic dynamics of this massive project. Most especially, discussing and evaluating the claimed purpose and true viability for this new airport to eventually cast a shadow over Singapore Changi International Airport’s present status not only as the undisputed passenger/hub airport in Southeast Asia, but also currently in 2015 being considered by Business Insider, the world’s number one airport for the third consecutive year. (Zhang, 2015). Singapore and Vietnam are both members of the following two regional organizations:  1. The Association of South East Asian Nations, ASEAN, where all 10 southeastern Asian countries belong with the pursuing objective (among other specified aims, purposes and fundamental principles) of accelerating economic growth and social progress of member states through the expansion of trade, transportation and communications facilities, within a frame of close and beneficial international and regional cooperation. (ASEAN, 2015) 2. The Asia-Pacific Economic Cooperation, APEC, where 21 selected member nations located on each side of the Pacific Ocean, established in order to leverage a sustainable and integrated economic growth for the peoples of the region, by collaborating effectively in the greater use of the primary economic activities, and by expanding trade, improving transportation and communications facilities in order to raise the standards of living of peoples of member countries. It also promotes investment in goods and services across borders through the facilitation of trade and the alignment of regulations and standards across the region. (APEC, 2015).

 

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The Leadership Challenge: Caribbean-American Leaders in United

Dr. Shelly Cameron, Nova Southeastern University, Davie, FL

Dr. Ahmad Ahmadian, Colorado State University-Pueblo, CO

Dr. Fereshteh Amin, California Polytechnic University, CA

 

ABSTRACT

The United States is becoming increasingly diverse (Grieco, 2009). The U.S. Census Bureau projected that the ethnic population would grow at a considerably faster pace than the overall population. The Hispanic, African American, and Native American students would account for over 30% of the growth by 2020 (Alliance for Excellent Education, 2006).  However, in May, 2013, the Census Bureau revised the projection that the United States is expected to become a majority-minority nation in 2041, for the first time.  Many questions were contemplated. How could minorities prepare for the workforce of the future? Would ethnic minorities be prepared to make a positive impact on the country’s economy? More specifically, keen attention was placed on the Caribbean American populace and their quest, as in other ethnic groups to achieve the so-called American Dream. The question was also raised as to whether identifying the strategies of successful ethnic minority leaders would help stimulate the potential growth or possibility of success among ethnic minorities. As a consequence, the focus of this paper is on the personal traits that contributed to Caribbean-American leaders’ successes, the challenges, and strategies they have used to overcome the challenges. The study documented the unique traits and success strategies of each participant.  Caribbean Americans are immigrants from the English-speaking Caribbean islands who settled and attained citizenship in the United States. The countries include Antigua and Barbuda, the Bahamas, Barbados, Belize, the Cayman Islands, Dominica, Grenada, Guyana, Jamaica, Montserrat, St. Lucia, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago (Henke, 2001). In addition, non-English-speaking countries of Cuba and Haiti were included in the study because of their location. Little is known about this population, which may be because the Census Bureau provides information in different ways to identify this group. Information revealed depends on the data source that is used (Shaw-Taylor & Tuch, 2007).  This gave rise to the establishment of the Caribbean American Heritage Month (CAHM) that was established to fill the need to create and disseminate knowledge about the contributions of Caribbean immigrants to America. In addition, the organization was created to accomplish the goal of open dialogue between Caribbean people and the American public.  Congresswoman Barbara Lee (2012) in her keynote address to the CAHM, communicated that Americans of Caribbean ancestry reside in all areas of the United States. Throughout history, Caribbean Americans have served and contributed to the heritage of the United States through the arts, science, education, business, sports, military, and government. Examples include Cicely Tyson, Colin Powell, Sir Sidney Poitier, Jean Baptiste du Sable, Jim Russworm, Claude McKay, Malcolm X, Governor David Patterson, Honorable Shirley Chisholm, and Dr. Muriel Pettioni. Historically, in 1965, Congress passed the Immigration Act that lifted the quota system established in the 1920s and opened the United States to a wave of new immigrants from around the world.

 

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 Financial Markets, Corporate Governance and Information Quality

Dr. Clifton Clarke, Brooklyn College, City University of New York, NY

 

ABSTRACT

The objectives of financial markets are to support economic development and growth and to maximize investors' wealth. For centuries, investors have relied on financial markets to achieve these objectives. However, occasionally, crises that threatened the achievement of these objectives have  emerged in these markets.  Solutions designed to ameliorate the frequency and impact of these crises have not always succeeded. Modern financial theories, such as the efficient market hypothesis (EMH) have been widely accepted by academic financial economists as a defense against unpredictable market changes (Fama, 1970). The EMH assumes that information flows unfettered throughout  the  economy  and  financial  markets  and  that  investors  are  capable  of  quickly  acting  on  any  new information.   However, recent and past financial crises have challenged the practicality of these assumptions. This paper finds that, for centuries, financial crises have been the result of unethical corporate behavior and information distortion within the financial system.  It  concludes  that  financial  crises  are  largely  the  products  of  corrupt "plumbing" in the financial system and argues that corporate  governance and information quality are prerequisite conditions for efficient markets. The  year  2008,  with its  tumultuous  financial  market  collapse,  was  among  the  most  memorable  in the history of Wall Street. J.P. Morgan's purchase of the once-proud Bear Sterns in a fire sale and the demise of Lehman Brothers were the precursors of the ensuing financial catastrophe.  The government takeover of the mortgage giants Freddie Mac and Fannie Mae exposed not only serious issues in the housing market but also the pervasive culture of corruption within and among financial institutions. Its bailout of the world's largest banks, quasi-banks, two of the three American   automakers and the insurance giant AIG demolished the facade of market efficiency. This cataclysmic event raised the question of whether the US financial  watchdogs, the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC), were either asleep at the switch or were themselves foxes in the hen house. One of FINRA's responsibilities is to educate and inform the public. However, FINRA had an undisclosed balance sheet "ranging between $4 billion and $6 billion" (Doyle, 2014, p. 9) and investments in a variety of high­ risk securities.  Whether FINRA is a part of the solution or part of the problem, Doyle invites us to "follow the money and embrace the fact that information is everything" (p. 9). Other regulatory lapses have contributed to lack of adequate information for investors.  The phasing out of Regulation Q allowed banks to invest their deposits in highly  speculative   ventures,  such  as  high-yield  debts,  securitization, quantitative  arbitrage  trading  and  exotic derivatives,  without  the knowledge  of depositors.  

 

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Over-the-Counter Bonds and the Stock Price Response to Earnings Announcements

Dr. John R. Wingender, Jr., Creighton University, Omaha, NE

Melissa Woodley, Creighton University, Omaha, NE

 

ABSTRACT

Related markets have efficiency externalities.  This paper examines the impact of the existence of traded bonds on the informational efficiency of the issuing firm’s equity by examining the equity price response to earnings announcements.  We find that traded bonds increase the price efficiency of the firm’s equity market as demonstrated by a lessened response to earnings surprises announcements based on analyst forecasts.  The mitigation of the response to earnings surprises is larger for companies with more actively traded bonds.  This result is consistent with our hypothesis that information gleaned from trade in the over-the-counter bond market is reflected in equity market prices. How does the existence of traded bonds impact the response of a company’s stock price to earnings surprise announcements?  Does the additional disclosure by the company associated with debt and the information contained in the bond’s price carry over to the equity market and preempt a portion of the information content of earnings announcements? If trade in related markets makes for a richer information environment, uncertainty about the value of equity should be reduced, making announcement of quarterly earnings comparatively less informative and leading to a smaller stock-price response to earnings announcements.  Prior research has shown that earnings surprise announcements are less informative for large companies (Atiase, 1985), companies with a larger analyst following (Shores, 1990), and companies with traded equity options (Skinner, 1990; Ho, 1993).  For these companies, more information is produced between the time analysts release their earnings estimates and the announcement of actual earnings.  Earnings surprises based on comparatively stale analyst earnings estimates are less surprising for these companies and the equity price response to the earnings surprise is muted.  Our first hypothesis is that having a traded bond provides another venue for information revelation, making the equity market more efficient. In this case, we would expect the price response to earnings surprises for companies with traded bonds to be muted because the information contained in earnings is more anticipated due to the richer information environment. On the other hand, an alternative venue for trading on company information provides more potential trading strategies and could provide informed investors with the opportunity to conceal information in complex trading patterns, reducing the information set of investors and making the equity market less efficient (Biais and Hillion, 1994).  Boehmer, Chava, and Tookes (2015) find that firms with bond information disseminated in the Trade Reporting and Compliance Engine (TRACE) maintained by the Financial Industry Regulatory Authority (FINRA) have less liquid equity markets and that the equity market is less price efficient.  Similarly, Das, Kalimipalli, and Nayak (2014) find that the development of credit default swaps is associated with a decrease in the efficiency of the corporate bond market.  Our competing hypothesis is that the existence of traded bonds leads to a less efficient equity market, making the announcement of quarterly earnings a comparatively larger information event and resulting in larger price reactions to earnings surprises for companies with traded bonds. The corporate bond market is dominated by institutional investors, who are skilled at information generation, but may also use their trading skill to disguise this information, so the net impact on the efficiency of the equity market is an empirical question.

 

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Glӓce Luxury Ice Co.

Dr. Marjorie Chan, California State University at Stanislaus, CA

 

ABSTRACT

This study examines the ideation and development of an entrepreneurial venture, Glӓce Luxury Ice Company.  The founder, Roberto Sequeira, created the luxury drink-ice segment of the packaged ice industry with his Glӓce Luxury Ice brand.  He uses a proprietary manufacturing technology to produce ice with purified water which results in consistent quality and zero taste.  The ice pieces are beautifully designed and crafted, and they provide premium drinks with a captivating presentation.  Sequeira focuses on building up brand equity with social media, and his ice brand is associated with luxury, innovation, quality, and consistency.  Sequeira sells his ice products to upscale hospitality establishments.  He is the sole owner of the company and self-finances his venture;  he outsources all functions.  He had no competitors when he first started, and current copycats have failed to come up with ice products that measure up in quality to Glӓce ice pieces.  The American Immigration Council (2014) has lauded the great contributions of immigrant entrepreneurs to the United States (US) economy.  Based on 2010 data, Fairlie (2012) reported that 10.5% of immigrants and 9.3% of non-immigrants owned a business.  Furthermore, the immigrant rate of 0.62% (or 62 per 100,000) with respect to business formation each month was higher than the non-immigrant rate of 0.28% (or 28 per 100,000). This paper reports on an entrepreneurial venture, Glӓce Luxury Ice Company, which is located in Davis, California.  Glӓce Luxury Ice is the world’s leading brand in the luxury drink-ice segment of the packaged ice industry.  The venture was founded in 2007 by an immigrant entrepreneur, Roberto Sequeira, who came to the U.S. at the age of 14 from Nicaragua.  At that time, Sequeira could not speak English.  He graduated with an Engineering degree from California State University at Fresno and earned a master of business administration (MBA) degree from the Anderson School of Management at University of California, Los Angeles (UCLA) (Epstein, 2011).  Each of the following concepts pertaining to Glӓce Luxury Ice Company is discussed below: venture ideation; current packaged ice industry; philosophy, trademark, and mission; blue ocean strategy and proprietary manufacturing technology; products; brand equity and marketing; distribution and pricing; competitors and market share; financing, organization, and management; social responsibility endeavors; expansion strategy; major challenge; and exit strategy. While Sequeira was attending an entrepreneurship and venture initiation class at UCLA’s Anderson School of Management, the thought occurred to him that he could tap the knowledge and background experiences of his fellow classmates to come up with “the ultimate” business.  Each student had to communicate in class ideas for an entrepreneurial venture, and Sequeira provided his criteria for a “perfect venture,” which included a high-end niche with minimal startup capital required and immediate profitability.   His idea was not at first supported by the professor, who was later won over by Sequeira’s success in getting classmates to work with him to create a product that would satisfy his ideals of a perfect entrepreneurial business.  After examining different product ideas, Sequeira’s group finally decided to work on “packaged ice” as a business project (R. Sequeira, personal communication, March 6, 2015).  After graduation, each member of his team who worked on the ice project for the entrepreneurship class pursued his or her own career.  Sequeira founded Glӓce Luxury Ice Co. in 2007, and his friends and classmates offered him assistance in building up the drink-ice brand (Epstein, 2011).  In a personal communication, Sequeira further explained his decision to go into the packaged ice industry.  At the time of his founding of Gläce Luxury Ice Company, the totally commoditized packaged ice industry accounted for around $4 billion in annual sales.  Historically, ice companies were regional family-owned businesses with centralized production facilities.  A regional ice business protected its territory by lowering prices when a competitor tried to take over the region.  Therefore, the industry operated in a series of regional distribution networks, and the family owners used antiquated equipment. 

 

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Accounting Emotional Intelligence and Professional Survival: Evidence from Bookkeepers in the Northeastern of Thailand

Mujarin Kaewyong, Mahasarakham Business School, Mahasarakham University, Thailand

Dr. Kesinee Muenthaisong, Mahasarakham Business School, Mahasarakham University, Thailand

Dr. Phaprukbaramee Ussahawanitchakit, Mahasarakham Business School, Mahasarakham University, Thailand

 

ABSTRACT

The objective of this study is to examine the relationships among the five dimensions of accounting emotional intelligence, accounting judgment, accounting practice efficiency, accounting professionalism, professional success, and professional survival through a moderating role of environmental pressure. Accounting emotional intelligence consists of self-awareness orientation, self-regulation commitment, self- motivation focus, empathy mindfulness, and social skills concern. In this study, 219 bookkeepers in the Northeastern of Thailand were chosen as the sample of the study. The results indicate that three of the five dimensions of accounting emotional intelligence (including self-awareness orientation, self-motivation focus, and social skills concern) have a significant positive association with accounting judgment, accounting practice efficiency, accounting professionalism, professional success, and professional survival; whereas empathy mindfulness only has a significant positive influence on professional success. Likewise, accounting well-roundedness, professional training, accounting experience, environmental learning, and stakeholder expectation are the antecedents of accounting emotional intelligence. The findings indicate that antecedents of accounting emotional intelligence has a significant positive relationship to accounting emotional intelligence, except accounting learning has no significant influence on all dimensions of accounting emotional intelligence.  Additionally, the potential discussion with the results is implemented in the study. Theoretical and managerial contributions are presented. The future study should collect data from a different sample in order to verify the generalizability of the study and increase the level of reliability. Finally, this research suggests that bookkeepers should maintain and develop accounting emotional intelligence for professional success and survival. The accounting profession has been accepted from society that is a key role in the business success (Shafer, Lowe and Fogarty, 2002). Bookkeeper is one of the accounting professions. Bookkeepers are responsible for providing financial information quality through an act with accounting professionalism in the accounting practice. Accounting professionalism requires more than technical skills in accounting alone. The prior research indicates that in addition to technical skills and accounting skills such as communication skill, exchange of information skill, analytical thinking skill, problem solving skill, the ability to negotiate is an important role to professional success (AICPA, 2008). In addition, to increase the success and survival in the accounting profession, they will still need to have strong technical skills and required soft skills. This includes skills interpersonal skills, as well as speaking skills, writing skills, presentation skills (Beard, Schwieger and Surendran, 2008), also known as the “Emotional Intelligence (EI).”  EI is important for accounting professionals because a bookkeepers require interaction with others during operation (Akers and Porter, 2003; Stalker, 2008). Previous research indicates that emotional intelligence is the key to succeed in work and life success (Goleman, 1995). Moreover, EI is recognized as a key skill that allows accountants to operate better in a variety of area, including leadership, business growth, team building, decision making, and customer relationships management. Including integrity of collecting, keeping, recording, and financial reports the correct (Cook et al. 2011; Daff, Lange and Jackling, 2012). Also, EI is very important for accounting judgment, operational efficiency, and success and survival in the profession (Akers and Porter, 2003; Matherly, McWhorter and Frizzell, 2005; Esmond-Kiger, Tucker and Yost, 2006; Liu, Liu and Hu, 2010).

 

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Using the Indicator-Based Evolutionary Algorithm (IBEA) for Finding the Efficient Frontier in the Presence of the Typical Portfolio Selection Constraints

Dr. Kostas Metaxiotis, University of Piraeus, Piraeus, Greece

Kostas Liagkouras, University of Piraeus, Piraeus, Greece

 

ABSTRACT

The indicator-based evolutionary algorithm (IBEA) is discussed with respect to its efficiency in solving the portfolio optimization problem under the presence of the typical constraints. In particular we extend the standard model to include cardinality constraints that limit a portfolio to have a specified number of assets, and we impose limits on the proportion of the portfolio held in a given asset. The assessment of the IBEA for solving the constrained portfolio selection problem is based on experimental study, where two-objective portfolio optimization problems were used as tests for finding the cardinality constrained efficient frontier. The problem of optimal portfolio allocation is one of the most widely studied problems in the field of finance. Harry Markowitz proposed a quadratic program for selecting a diversified portfolio of securities [1]. Markowitz, proved that the formulation of efficient portfolios will diversifies away the unsystematic risk, which is risk that is unique to a certain asset. As a result of portfolio diversification, the investor will command higher levels of return for the same level of risk or lower risk for the same level of return. However, only the unsystematic risk or asset specific risk can be diversified away. Market or systematic risk cannot be diversified away as it depends on country or industry risk or even the global economy risk. Figure 1, displays the portfolio diversification benefits. The graph also indicates the widely accepted opinion, supported by many empirical studies [2, 3, 4] that the full diversification benefit is realized for portfolios sizes up to twenty securities. Markowitz’s model can be mathematically formulated either as a maximization problem, of the expected return where risk (variance of return), is bounded or as a minimization problem of risk where expected return is bounded. Thus, Markowitz’s approach to portfolio selection reduces the problem of two objectives optimization to a one objective optimization where the second objective is converted to a constraint. Markowitz’s framework makes some assumptions.  One of the most important assumptions is that asset returns follow a multivariate normal distribution. Practically this means that the return on a portfolio of assets can be completely described by the expected return and the variance. However, a number of studies [5] in the field indicate that the underlying assumption of multivariate normality is not sustainable. According to these studies, the distribution of individual asset returns tends to exhibit a higher probability of extreme values than is consistent with normality. This phenomenon is called leptokurtosis. Given the fact that the multivariate normality assumption does not always holds we need to consider higher than the first two moments (i.e. expected return and variance) in order to fully describe portfolio’s behaviour. Another issue with Markowitz’s framework is the difficulty to apply integer constraints that limit a portfolio to have a specified number of assets, or to impose limits on the proportion of the portfolio held in a given asset. In this paper, we investigate the efficiency of evolutionary multiobjective optimization algorithms [6], [7] and in particular of the indicator-based evolutionary algorithm (IBEA) in solving the constrained portfolio selection problem.

 

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Audit Morality Commitment and Audit Survival: An Empirical Research of Tax Auditors in Thailand

Saithip Jannopat, Mahasarakham Business School, Mahasarakham University, Thailand

Dr. Suparak Janjarasjit, Mahasarakham Business School, Mahasarakham University, Thailand

Dr. Phaprukbaramee Ussahawanitchakit, Mahasarakham Business School, Mahasarakham University, Thailand

 

ABSTRACT

The objective of this study is to examine the relationships among the audit morality commitment and audit survival. The model test using data collected from a mail survey of 365 tax auditors in Thailand that were chosen as the sample for this study. The results reveal that audit morality commitment has a positive relationship with audit survival. This research provides the directions and suggestions for auditors to identify and justify key components of audit morality commitment. Particularly, auditors who have moral are likely to audit survival. Therefore, auditors should be promoting audit morality commitment which provides audit survival. The further research should examine the effects of moderators in the different constructs or attempt to posit other moderator variables for the analysis. Furthermore, future research could be conducted on different samples and on a larger scale to widen the generalizability of its findings. The audit is vital to the economy in order to create confidence among investors. The financial statements that are certified by auditors have been prepared to comply with the generally accepted accounting standards. To build confidence to investors in the application of information for use in decision making whether the financial statements are prepared correctly under accounting standards that are predicted return in the future. Which, tax auditor must perform the audit and certification procedures and conditions as the Revenue Department determine, and TAs are required to have knowledge, skills, expertise, cover the experience to perform, circumspection very seriously. Especially, on the issue of morals in auditing practice of a TAs to consider the morality of auditor consisting independence, fairness and honesty (Anandarajan, Chiang and Lee, 2010), which has received more interest from stakeholders after the issues of lack of morality in accounting, and auditing, involving corporate scandals accountants regularly appear in the news headlines. There is a good reason to believe that accountants have lost sight of their moral compass. Similarly, there is a reason to be critical on accounting’s professional bodies, which are supposed to regulate their members and fulfill certain ethical norms and standards in exchanging for their monopoly privileges (Altman, 1984 and Antonio and Gómez 2003). Thorne, Massey and Magnan (2003) show that the practice is committed to adherence or moral, is of fundamental importance to help monitor the practice of the auditor to establish credibility and lead to the adoption of the stakeholders. And Thorne and Hartwick (2001) found that the auditor has the morality are likely to provide financial information that is reliable and useful to the good decision of the stakeholders. Including, Thorne, Massey and Magnan, (2002) showed that audit survival does not depend on intellect alone, but must take into account the moral of the work. The auditor has a high intelligence quotient, but if the level is low moral, it may take intelligence to the wrong effect both to themselves and others. Moreover, McLaren (2008) found that the performance with adherence or a commitment to morality is an important foundation that allows to perform an audit of the auditor to establish credibility and leads to adoption of stakeholders. Therefore, the subject of morality in auditing has become one of the virtuous practice and norms of professional auditors that must be considered first place, which is critical to the reliability of the work, the practice audit and survival of the auditor (Arena and Jeppesen, 2010; Covaleski, Dirsmith and Rittenberg, 2003). Wherewith, Kohlberg (1969) believed that moral development is more advanced as a result of the development of the structure of thought and understanding about moral consists of pre-conventional level, conventional level and post-conventional level. Pre-conventional level morality of obedience and the morality of instrumental egoism exist.

 

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On the Value of Strategy in Determining Executive Salaries

Dr. Jeff Trailer, The California State University, Chico, CA

Dr. Bonnie Persons, The California State University, Chico, CA

 

ABSTRACT

The basis for determining executive compensation remains a hotly debated issue.  Past studies have shown a high degree of correlation between organizational size and CEO compensation, but have been inconclusive as to whether size appropriately reflects the drive to increase profit margins and the economic value of the CEO’s strategic decision making capabilities.  By examining profit margin as the measure of strategic competitive advantage rather than simply organizational size, we can assess whether executives are rewarded for increasing strategic competitive advantage or simply enlarging the organization.  Using data from mandatory regulatory filings, cross-sectional multiple regression analysis was used to examine the correlation of compensation to profit margins.  The results of this work do not show a correlation between profit margin and compensation.  Accordingly, the data fails to reject the contention that executives are rewarded for simply enlarging their organizations.  As a result, any competitive advantage gained by executive action appears to be rewarded only indirectly through compensation based on the size of the firm. Incentive systems influence the context within which executives formulate and implement competitive strategies (Sterman, 2000).  Compensation systems, as an integral part of an organization’s incentive system, represent an important structure element in understanding business strategies. (Fisher and Govindarajan, 1992). Recent legal events, including the passage of the Dodd-Frank Wall Street Reform and Protection Act in 2010 and the implementing rules proposed by the Securities and Exchange Commission in April of 2015, signal the importance of understanding how CEO compensation is tied to company performance in practice, and consequently how this might be improved in the future.  This shift in the legal landscape mandates greater transparency to assure that shareholders are better informed when voting to elect directors and affords shareholders the opportunity to be heard with advisory votes on executive compensation. Business strategy is generally conceptualized as the domain of top management, specifically, the chief executive officer (CEO).  This implies that CEO compensation would strongly reflect strategic decision making abilities.  Interestingly, past studies have clearly identified firm size as the most substantial single determinant of CEO cash compensation level (c.f. Finkelstein and Hambrick, 1989).  This finding has created a debate between neoclassical economists, who contend that this reflects executives’ attempts to maximize profits, and managerialists  who argue that executives are simply maximizing organizational size (Ciscel and Carroll, 1980).  The latter reflects the agency problem, where the separation of ownership from management creates an environment where the agent (manager) may take advantage of the principal (shareholders) (Eisenhardt, 1989).  Unfortunately, firm size is highly correlated with income.  Thus, it has yet to be conclusively determined whether CEOs are indeed being rewarded for profits resulting from strategically creating competitive advantage or for simply enlarging the organization. This paper proposes to study the problem from an unconventional perspective by using profit margin as the measure of strategic competitive advantage. It is argued here that the neoclassical argument is supported if profit margin is found to be a determinant of CEO compensation. Furthermore, the extent to which profit margin determined CEO pay reflects the economic value of the CEO strategic decision-making abilities.

 

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Audit Review Proficiency and Audit Goal Achievement: Evidence from Tax Auditors (TAs) in Thailand

Sukasem Langkhunsaen, Mahasarakham Business School, Mahasarakham University, Thailand

Dr. Phaprukebaramee Ussahawanitchakit, Mahasarakham Business School, Mahasarakham University, Thailand

Dr. Sutana Boonlua, Mahasarakham Business School, Mahasarakham University, Thailand

 

ABSTRACT

Audit review proficiency in this study focuses on the following monitors and assesses the process with criteria about the performance of the audit plan that has been placed. Thus, this study attempts to integrate the key components of internal audit proficiency in a new model. The main aim of this study is to investigate the effects of audit review proficiency on audit goal achievement of tax auditors (TAs) in Thailand. Accordingly, this study provides an important contribution to theory by advocating and expanding the knowledge-based view and contingency theory which are used to explain the conceptual model. Additionally, guidelines about the planning and developing of audit review include human resource management which is appropriate for the audit task and provides managerial contributions. Future research should be examined in terms of different groups by the collected data from certified public accountants (CPAs) in Thailand, in order to confirm the ability to generalize it for the research and to improve reliability. Auditing industry is still trying to recover from a damaged reputation from events of the large global companies, bankruptcy continues as a result of a financial scandal. In recent years, the audit firm has been involved with several financial scandals. The financial statements of Enron was audited by Arthur Andersen, who involved fraud in financial statement manipulation in order to increase the company's share price and create wealth for business that It brought to the bankruptcy of Enron and affected the reliability of Arthur Andersen significantly (Al-Ajmi, 2009; Konishi, 2010, Phillips, 1999). Enron is not the final that the auditors involved in financial fraud, WorldCom, Tyco International Xerox, and Adelphia were facing bankruptcy as a result of lacking transparency with the financial statement manipulation as well as Enron while shareholders and investors must rely on the honesty of the company's auditor about considering investment (Bedard and Johnstone, 2004; Peecher, Schwartz, and Solomon, 2007). Therefore, it is not surprising about the financial scandal that continuously appears and will result in a dramatic change in the auditing industry. Awareness about the reliability of financial statement, executive keeps the certification and the auditor has commented that results in the issuance of new auditing standards and regulations related issues. Especially, the International Standard on Quality Control (ISQC) 1 was determined for control of the audit quality and creates confidence in the auditing industry again (Ghosh and Olsen, 2009; Thitiyapramote, and Ussahawanitchakit, 2013). The main role of the auditor is to audit report presented to the executive, creditors, investors and other stakeholders involved. Therefore, the auditor must have the same standard practices for the audit report has been known that the financial statements are accurate and reliable including disclosures are necessary to avoid misunderstanding on the financial statements.Normally, the audit service of auditor usually performed according with the auditing standard, which follows International Standard on Auditing (ISAs) (Peecher, Schwartz, and Solomon, 2007). However, these auditing standards are only a guideline for the auditor.Therefore, to make audit reports reflect information provided the quality and the confidence even more, audit should have quality control since the start of the auditing operations (Kotha, Rajgopal, and Rindova, 2001; Sharma, Boo, and Sharma, 2008).

 

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Complexity in Equity Markets

Dr. Deniz Ozenbas, Professor of Finance, Montclair State University, Montclair, NJ

 

ABSTRACT

Equity markets have seen increasing complexity and innovation over the last two decades. During this period there has been one global financial crisis, multiple significant regulatory changes and continuous technological innovation affecting the equity markets worldwide. This study reviews the current state of the US equity markets and describes the most significant developments that led to this point. Regulatory initiatives and policy suggestions for the future are discussed. A well-functioning financial market is critical to the healthiness of an economy. It is through the securities markets that both small and large companies raise the capital they need to grow and succeed. It is also through investing in the securities markets that individuals earn a return on their savings and plan for their futures. Confidence in the efficiency, transparency and fairness of a market is essential for that market to thrive over the long term. Efficient trading between willing parties is a necessary component of the healthiness of any market. In a healthy trading environment buyers and sellers find each other easily, and create a liquid market in that asset class. Values of the underlying assets are established through the continuous interaction of many market participants. In other words, the price discovery function of a market is achieved much more efficiently in a liquid and well-functioning market. A well-functioning trading environment also attracts more equity investors over the long term since a trading environment with relatively lower market frictions and trading costs provides better returns, hence possibly higher alphas, for these investors. Last but not least, firms that need external financing are also better served as capital would be more available in well-functioning markets, making growth and long-term planning less uncertain for firms of all sizes. Over the last two decades the US equity markets has seen significant change. The dominance of large stock exchanges such as the New York Stock Exchange were shattered and gradually replaced by a complex web of about a dozen exchanges and around fifty private trading venues. Trading is mostly computerized, dominated by high frequency trading firms, and highly fragmented across these trading venues. While such changes certainly heightened competition and lowered spreads they also came at the expense of having a more complex and arguably fragile trading environment. In this study I review the current state of the US equity markets and describe the most significant developments that led to its current state.  A flow chart of these developments are provided in Figure 1 and described in detail in the following sections. In an academic article published in 1994, William Christie and Paul Schultz found that in 70 of the 100 most heavily traded stocks, Nasdaq dealers avoided quoting prices in odd eighths of a dollar. This raised the possibility that the dealers, known as market makers, were tacitly colluding to keep the gap between the price they paid for a share and the price at which they sold it wider than it would have been in a truly competitive market. In response to this the Securities and Exchange Commission (SEC) started an investigation and 30 securities firms ended up paying $910 million to settle a class-action suit alleging price-fixing on the Nasdaq stock exchange. More importantly, this investigation also led to sweeping changes in 1997 in the rules governing share trading in the US, most of which mainly affected Nasdaq, the world's second-largest stock market at the time.

 

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The Role of Strategic Marketing Flexibility as Dynamic Capability and Marketing Survival

Kumpanat Siriyota, Mahasarakham Business School, Mahasarakham University, Thailand

Dr. Prathanporn Jhundra-indra, Mahasarakham Business School, Mahasarakham University, Thailand

Dr. Kesinee Muenthaisong, Mahasarakham Business School, Mahasarakham University, Thailand

 

ABSTRACT

The study provides a new perspective on strategic flexibility and marketing in term of strategic marketing flexibility. Strategic marketing flexibility facilitate firm capabilities to continuously adjust  the activity, operations and processes for creating value for customers to responsive to customer need in dynamic competitive environments. The purpose of this study is to assess the role of strategic marketing flexibility on marketing survival from dynamic capabilities perpective.This study performed on 802 furniture exporting businesses in Thailand. The findings indicate that strategic marketing flexibility provides firm approach marketing survival, and firm’s internal factors that are dynamic learning culture and marketing knowledge strength are determinant of strategic marketing flexibility. The business environment has become more complex due to changing customers’ needs and demands, intense competition, globalization, crises, and technological development. As a result of this unstable and turbulent dynamism, a firm faces an unpredictable environment by rapidly variations in customer demand and intense fluctuations in supply of materials (Yang and Li, 2011). Changes in the environment mean new threats and opportunities that firms must face by adjust their strategies to achieve the environment change (Torres, Moreno and Verdú, 2010). Due to rapid and unpredictable changes in competitive environment, firms are emphasize on flexibility as a way to achieve new forms of competitive advantage (Jordan and Graves, 1995). In such complex and dynamic environments, strategic flexibility grants organizations the capacity to respond to environmental changes in the required direction. Organizations need to develop flexibility at strategic level in order to respond changes in customer demand, changing market trends and competitor move (Shimizu and Hitt, 2004). The organizations can respond to unpredictable environments and those that change by means of the concept of strategic flexibility (Ansoff, 1965). Strategic flexibility that provides organizations with the ability to change levels of production rapidly, to develop new products and to respond quickly to competitive threats (Singh, Oberoi, and Ahuja). The previous literature review found that flexibility literature is rarely conceptualization to consider strategic marketing perspective or incorporate a market linking strategies. Also, extant conceptualizations give few considerations to options arising from strategically crucial marketing linking activities. Assuming that a goal of the firm is the creation of a superior value proposition for its customers, and therefore sustainable competitive advantage; an advanced conceptualization of strategic flexibility should incorporate a marketing perspective for the firm’s long-term well being (Johnson et al., 2003). This research provides an assessment of the state of the field of marketing strategy and strategic flexibility research that is strategic marketing flexibility. In order to respond to dynamic environment, firm requires valuable resources and capabilities to develop and renovate their organizational resources and capabilities (Teece, Pisano and Shuen, 1997). These dynamic capabilities are necessary to enhance the flexibility of the firm at strategic level (Eisenhardt and Martin, 2000). The aim of this paper is to examine the impact of strategic marketing flexibility on marketing survival. To fulfill these goals, we analyze the concepts of strategic marketing flexibility as dynamic capabilities, and its determinant.

 

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Development of a Graduate-Level Information Systems Quality Course

Dr. Barbara D. Klein, College of Business, University of Michigan-Dearborn, Dearborn, MI

 

ABSTRACT

An Information Systems Quality course was developed in a college of business during a major revision of the Masters of Science in Information Systems.  The course includes modules on project management, systems analysis and design, information quality, and information systems ethics.  The goal of the course and of each of the four course modules is to teach students how to avoid problems in information systems projects and in their careers.  Student feedback on the course is generally positive.  Like many colleges of business, the college in which the course discussed in this paper was developed faces challenges in delivering adequate preparation for professional practice in the business disciplines.  The Masters of Science in Information Systems degree offered by the college was recently substantially revised, and in the course of revising the degree program innovative strategies were adopted in order to deliver essential course content in the face of pressures to reduce the number of credits making up the degree. The remaining sections of this paper discuss (1) the redesign of the Masters of Science in Information Systems, (2) the development of the Information Systems Quality course, (3) course modules on information quality and information systems ethics, and (4) student feedback on the course.   The Information Systems Quality course was developed and implemented in the context of a major revision of a Masters of Science in Information Systems offered by a mid-sized public university in the Midwest region of the United States.  The College of Business at the university had offered an online Masters of Science in Information Systems consisting of 48 required credit hours including twelve courses in information systems for more than a decade.  The Masters degree had been taken primarily by domestic students working full time and taking courses on a past-time basis.  In response to declining enrollments, the Masters of Science in Information Systems was revised to appeal to both international and domestic students taking courses on both a full-time and part-time basis.  Additionally, the Masters degree was moved from an online environment to a traditional classroom environment. When the Masters of Science in Information Systems was revised, the number of required credits was reduced to thirty credits and the number of required courses in information systems was reduced to seven.  This allowed full-time students to complete the degree program in one calendar year.  Table 1 shows the required courses in the new Masters of Science in Information Systems.  In addition to the required courses in information systems, students are required to complete three elective courses in other business disciplines. Computer and Information Systems: Information Management: Enterprise Architecture and Networking Information Assurance: Information Technology Policy and Strategy: Business Intelligence: Information Systems Quality. The compression of the degree requirements into seven required information systems courses stimulated new approaches to the design of courses and the delivery of essential course material.  In order to provide adequate professional preparation, course material had to be delivered in a compressed fashion; and, in some cases, courses were redesigned to meet more degree goals and objectives.  The course described in this paper was developed as part of this effort. The overall goal of the Information Systems Quality course is to prepare students to be effective managers of information systems projects.  This goal is achieved through course modules in four areas:  (1) project management, (2) systems analysis and design, (3) information quality, and (4) information systems ethics. 

 

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Internal Audit Creativity Strategy and Firm Performance: An Empirical Investigation of Exporting Gem and Jewelry Businesses in Thailand

Natthanan Thitiyapramote, Mahasarakham Business School, Mahasarakham University, Thailand

Dr. Phaprukbaramee Ussahawanitchakit, Mahasarakham Business School, Mahasarakham University, Thailand

Dr. Sutana Boonlua, Mahasarakham Business School, Mahasarakham University, Thailand

 

ABSTRACT

The purpose of this study is to investigate the relationship between internal audit creativity strategy and firm performance.The components of internal audit creativity strategy are a compound of proactive internal audit planning orientation, new internal audit method implementation, technology-based internal audit practice concentration, integrative internal audit resource focus, and internal audit teamwork awareness. The 208 exporting gem and jewelry businesses in Thailand and OLS regression are examined in this study. The results indicate that internal audit creativity strategy has partial supported with internal audit innovation, corporate practice efficiency governance outcome, and risk management effectiveness. Meanwhile, stakeholder expectation as an antecedent of internal audit creativity strategy is strongly supported. Conclusions and suggestions for future research are presented accordingly. The global competitive environment and big accounting scandals requires organizations to change companies’ control systems and governance. Crisis of financial fraud is leading to the corruption that has caused loss of about $460 billion in the market capitalization, reliability of financial reporting process, transparency, and audit quality (Erkan and Arici, 2011; Rezaee, 2005). In some companies, there are insufficient of professional care, monitoring evidence, financial information, audit reports quality, and detection fraud under the management’s scandalous behaviors occurring (Messier, Kozloski and Kochetova-Kozloski, 2010). Stakeholders make investment decisions based on quality, reliability and transparency of financial information. A crisis will be creating the condition for organizational and innovative change. The organizations maybe find the new ways, new ideas, and new processes to success in a long time that now creativity and innovation are the ways of doing business.Organizations are more likely to solve the crisis problems or provide better method to improve their performance and competitive. Moreover, today knowledge-based organizations lead to success and survival base on creativity, innovation and inventiveness (Mostafa, 2005). The effect of situation is not only individual’s changes, but also changes in organizations to make their survival. Creativity and innovation are a role in this changing process for sustainable survival (Martins and Terblanche, 2003). It will be an important tool in manager’s capability, if firms are without creativity may be not competitive advantage because they can lead to new or better solutions for business operation.The concept of creativity involves the production of new ideas that can solve some new problems, so knowledge and expertise have influence on creative problem solving (Mumford, 2000). Some studies consider creativity as an internal and intellectual process lead to new product that is different qualities and outcome (Udwadia, 1990). It is seen that term of creativity includes variety attributes, skills, abilities, technologies and external influences.

 

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Investigating the Satisfaction of e-store Content and its Association with the Amounts of Online Purchasing

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

 

ABSTRACT

This paper is aimed at achieving two goals. The first goal is to identify to which extent consumers are satisfied with the e-store-website content and the amounts of their online purchasing. The second goal is to investigate the association of consumers’ satisfaction of e-store-website content with the amounts of online purchasing. The study was conducted on a convenience sample of 293 consumers in Saudi-Arabian market. Data were collected through a questionnaire contained four measures of consumers’ satisfaction of the e-store-website content, and a measure of amounts online purchasing. The findings revealed significant associations of consumers’ trust in the website information; their appreciation of the website’s customer support; and their evaluation of the product variety as independent variables with their amounts of online purchasing as a dependent variable. Differences have been found in consumers’ amounts of online purchasing between the groups of consumers’ trust in information; appreciation of customer support, and evaluation of the product variety on the e-store-websites, but not between the consumer groups in considering the company information on the website. Based on the research findings, marketers are recommended to pay high attention when developing their website contents as a competitive arena in the e-business world; providing the consumers with the trusted and credible information and support that help them in making online purchase decisions.  With the development of the Internet usage during the last two decades, Online shopping has grown up rapidly to be a major class for service operations all over the world (Field et al., 2004; Smith et al., 2007). 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 break into 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. Growth of the Internet applications in business encouraged business to invest large investments in e-business, so that research has been done to evaluate the success of the e-business (Delone and McLean, 2003; Zhu and Kraemer, 2002). In the regard, several studies have concluded that less than 25% of don’t.com companies last longer than 2 years (Irani and Love, 2002; Nataraj and Lee, 2001). Some studies attributed this failure to neglecting consumers' needs on the websites (Nielsen, 2000; Rosen and Purinton, 2004). Other researchers linked it to the design of the website (Richard, 2005; Song and Zahedi, 2005).  In the framework of the business concern to study consumers in the electronic markets and the factors influencing their behavior and purchase, marketers are interested in the differences in consumers’ satisfaction of their website contents associated with online shopping transactions; to be guided in making proper marketing decisions in several areas, e.g. market segmentation, targeting, building competitive positioning and strategies in e-markets, including website content. Previous studies that examined the research topic could be classified into four categories: the consumers’ willingness to make online purchases, e-market uncertainty avoidance, perceived risk associated with online shopping (Al Kailani and Kumar, 2011), and the quality of e-store website, Including factors such as website design and customer service (Ha and Stoel, 2009).

 

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Professional Accounting Practice Orientation and Firm Goal Achievement: Evidence from SMEs in Thailand

Prapaipit Liubsuethagun, Mahasarakham Business School, Mahasarakam University, Thailand

Dr. Suparak Janjarasjit, Mahasarakham Business School, Mahasarakam University, Thailand

Dr. Saranya Raksong, Mahasarakham Business School, Mahasarakam University, Thailand

 

ABSTRACT

In recent years, professional accounting practice is an important role in accounting due to increase the efficiency and effectiveness for accounting work. This research develops dimensions of professional accounting practice orientation and examines the effects of professional accounting practice orientation on firm goal achievement from SMEs in Thailand. Moreover, this research tests the effects of executive long-term vision, best accounting knowledge, dynamic accounting learning, ethical awareness, and stakeholder force on professional accounting practice orientation. The results indicate that professional accounting practice orientation support to SMEs in Thailand be achieved their goals, they can meet the needs of stakeholders and accounting information that is used for decisions-making about the operations higher quality. In addition, the results were shown that executive long-term vision, best accounting knowledge, ethical awareness, and stakeholder force is a factor that encourages SMEs in Thailand attention to professional accounting practice. Increasing attention to professional in accounting can be found in the business firm, because the firm regards to the quality of accounting operation. Accounting practice helps to support the success of firm operation, accounting practice related to classify, record, and data collected for summarizing and preparing accounting information and financial statement for support decision-making both external and internal information users (Hollister and Shoaf, 2010; Copeland and Dascher, 1978). Professional accounting practice will bring the concept of professional accounting implementation to practice as a framework for accounting operations efficiency, by making accounting operations be accurate, transparent, recognizing the regulations and ethics. In Thailand, economic environment is highly competitive due to Thailand will join the member of Association of South East Asian Nations (ASEAN) into ASEAN Economic Community (AEC) in 2015.Therefore, professional accounting practice will support the accounting operation and lead to firm accounting information quality. The manager and stakeholders need accounting information that are accurate and reliable to be a resource for decision-making.  In the past, firm maybe focuses on creating maximized profit only. But in the present, the firm attention to stakeholders has a role in firm goal achievement and sustainable growth. The prior research found that the large firm with focus on stakeholders and aware of the professional in the accounting practice (Akadakpo and Enofe, 2013; Cullinan, 1999). However, prior research indicates that lack of research about the professional accounting practice in small and medium sized enterprises.  This research develops dimensions of professional accounting practice orientation and examines relationship between professional accounting practice orientation including six dimensions (accounting regulation awareness, accounting policy independence, accounting method transparency, accounting measurement accuracy, accounting ethics mindset, and accounting reasoning competency) and firm goal achievement. Moreover, we test professional accounting practice orientation consisting of five factors, long-term vision, best accounting knowledge, dynamic accounting learning, ethical awareness, and stakeholder force.

 

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New Venture Sustainability

Dr. Dennis F. X. Mathaisel, Professor of Management Science, Babson College, Babson Park, MA

 

ABSTRACT

This paper presents a sustainability strategy for new business ventures based on five “abilities” to help them be sustainable: availability; dependability; capability; affordability; and marketability.  The strategy should be considered throughout all phases of the life cycle of the new venture. This paper focuses exclusively on entrepreneurial endeavors because these entities are especially prone to failure early in their lives. According to data from the Small Business Administration, seven out of ten new firms survive at least two years, half at least five years, a third at least ten years, and a quarter stay in business fifteen years or more (SBA 2015). This is of major recent concern in the U. S. because small businesses employ 53 percent of the workforce (Arslan 2015). Hence, they are major job creators.  The trend is the same regardless of the industry. This paper documents six recent case studies on the use of the sustainability strategy by entrepreneurial ventures. Sustainability is an ability - the ability to endure. In ecology, sustainability describes how biological species survive. For the environment, it is assessing whether or not project outputs can be produced without permanent and unacceptable changes in the environment. For humans, it is our long-term physical and cultural well-being. For mechanical systems and structures, it is maximizing reliability while conserving required resources and reducing waste. For an entity or an enterprise, it is the ability of the enterprise, its products, and its systems to remain competitive and productive long term, without failure, while minimizing waste. Entrepreneurship includes everything from idea conception to managing the idea for the long term. According to the Small Business Administration (SBA), an entrepreneur is a person who organizes and manages a business undertaking, assuming the risk for the sake of profit (SBA 2015).  An entrepreneur sees an opportunity. Sustainability entrepreneurship involves the three “P’s”: people, planet and profit.  In order to gain a sustainable competitive advantage all businesses need to have locational excellence, operational excellence, product excellence, and customer excellence.  All these types of excellence relate to the five abilities for sustainability (availability, dependability, capability, affordability, and marketability) (Mathaisel and Comm 2011). The challenges of new ventures, particularly small and medium-sized enterprises, are very unique. New ventures face an environment in which their brands and culture may still be evolving, and the quality of their products and services may change. This evolution could cause them not to be sustainable in the long run. Thus, this paper focuses on applying the five abilities for sustainability to new ventures. Blumberg and Hindi (2013) recently published a book, Startup CEO: A Field Guide to Scaling up Your Business that describes five main facets to scaling a business. Focusing on storytelling, building human capital, execution, the board of directors, and personal management, Blumberg and Hindi imply that all businesses are scalable given careful growth management. The first two considerations, storytelling and building human capital, address early-stage components of scaling a business.  Explaining the importance of developing a compelling and well-meted story, Blumberg and Hindi suggest extensive testing and explanation of why a business was started.  Building human capital addresses the needs of a growing business to develop a corporate culture, and structure payment, promotion, and firing of personnel.

 

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Strategy Fitness and the Performance of Taiwanese MNCs

Te-Hui Chang, Graduate Institute of International Business Administration,

Chinese Culture University, Taiwan

 

ABSTRACT

The purpose of this paper is to construct an analytical structure to explore the impact of the synchronization of industry globalization and cross-border integration strategy on operational performances. Empirical studies are performed on 152 Taiwanese companies investing overseas in order to validate the explanatory power of the model. The empirical data suggests that the operational performances of multinational companies are indeed subject to the effects of synchronization of cross-border operational integration and industry globalization. The higher the degree of cross-border operational integration, the better the performances are. The more synchronized the degree of cross-border operational integration and degree of industry globalization, the better the performances are. Given the differences in technical characteristics of value chain activities, this paper does not explore the variances in the integration of activities serving different functions, or conduct cross analysis on the internal factors of the sampled manufacturers. It is suggested that follow-up studies investigate further in order to provide more effective suggestions to practitioners. The differences in economy structure, technology development, and competitive pressures result in significant variations in international competition across industries (Porter, 1986). The pressure from external environments sometimes forces companies to closely integrate their value activities in different countries. This approach is often called “global integration” (Barlett and Ghoshal, 1989), which covers tangible assets, intangible assets, and human assets. Meanwhile, pressure prompts firms to design a specific combination of value activities that address the characteristics of their environments, usually called, “local responses” (Prahalad and Doz, 1987). Environmental characteristics include the differences in channel networks, local preferences, and government regulations. Firms adjust the combination of their value activities to cope with regional differences. In the context of industry structure, all the environmental pressures driving cross-border integration enhance industry globalization.  According to industry organizational economics, industry structures affect the strategies and performances of companies. Strategic adjustments that address the characteristics of the business environment will result in better synchronization and improved performances. Therefore, the main task of management is to integrate corporate resources in response to environmental changes. Rather, organizations must adjust their behavior dynamics to fit into the context of external environments. Fitness is often the determinant of organizational performances. It is worth noting that the environmental conditions associated with industry globalization are rarely the same for different industries (Yip, 2003), as management and organizational formations differ in different industries and environments, thus, business activities and cross-border integration strategies will also be varied (Bartlett and Ghoshall, 1989).  

 

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Russian Oil and Gas: Global Impacts and Trends

Dr. Anatoly Zhuplev, Loyola Marymount University, CA

Dr. Nikita Golubnichiy, Tyumen State Oil and Gas University, Russian Federation (1)

 

ABSTRACT

The paper examines political-economic role and influence of changes in the Russian oil and gas sector and critical strategic alternatives for development. It explores trends in global energy market, new technologies in the energy-value chain, and pertinent changes in the global economic environment. The oil and gas sector is the main source of the Russian federal budget revenues and driver of economic development. Viewed in the sustainability context, the oil and gas sector emerges as top strategic priority, socio-environmental concern, and subject of fierce strategic competition. A growing power of large emerging global actors such as China and India amplifies the challenge. At the same time the energy sector itself is beginning to experience profound changes being increasingly driven by global environmental dynamics and politics. Those translate into regional and national legislative-regulatory agenda emphasizing new energy-saving sustainable/renewable technologies in the energy production value chain, energy consumption, and the development of new energy carriers.  The paper explores two main research issues: (1) Critical megatrends in global energy and their impacts on Russia; (2) The dynamics, trends, outlook, and policy implications for Russia and the Russian oil and gas industries (interchangeably referred to as the oil and gas sector). Given Russian oil and gas industries’ paramount domestic role and geo-regional role in Eurasia, they are in urgent need for development and growth in order to stay globally competitive as well as ensure Russia’s domestic energy security, meet export demands, and continue fulfilling their broader domestic mission. Challenges along the way are many: Russia’s vast geography and harsh climate, depletion of traditional oil and gas fields with the best geological and socio-economic conditions, massive requirements in investment, technological and managerial knowhow, and other dynamics and their strategic impacts. These are aggravated by Russian government dominant ownership and control of oil and gas sector resulting in inefficiencies, corruption, and limited global exposure, complicating international commerce, strategic alliances, and global competitiveness. Additionally, oil and gas have long been treated by Russian government as cash cows designated to prop up non-energy related priorities and national programs, as well as a broad foreign policy agenda. That has been taxing, detrimental for efficiency and global competitiveness of the oil and gas sector.  The paper contends that the growth needs and priorities in the Russian oil and gas industries exceed the scope of Russia’s own internal development capabilities. This calls for broader international alliances in energy development. 

 

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A Country’s Competitiveness Evaluation using DEA-SVM Approach

Hachicha Ridha, MOCFINE Laboratory, Higher Institute of Accounting and Business Administration, University of Manouba, Tunisia

Dr. Slim Chokri, MOCFINE Laboratory, Higher Institute of Accounting and Business Administration, University of Manouba, Tunisia

 

ABSTRACT

This paper proposed an integrated model, which hybridized data envelopment analysis (DEA) and support vector machine (SVM) together, to class countries according to their efficiency and performance. This model takes into account aspects of multi-dimensional indicators, decision-making hierarchy and relativity of measurement. Starting from a set of indicators of performance as exhaustive as possible, a process of successive aggregations has been developed to attain an overall evaluation of a country’s competitiveness.  In this paper, we use data envelopment analysis (DEA) and Support vector machine (SVM) on the development of a generic Model of Hierarchical Evaluation and of Competitiveness Analysis (DEA-SVM). The proposed model is characterized by competitiveness evaluation flexibility through its care for the decision-making hierarchy aspects, the multi-dimensional aspects of analysis and the relativity in measurement. In other respects, the model presents a generic aspect which allows us to evaluate the competitiveness of any Decision Making Unit (DMU) that presents a set of elementary performance indicators and a decision-making hierarchical structure. We focus on the performance assessment since we believe that performance will become strategic variables in tackling the increasing competitive pressure and structural changes within these countries. We incorporate an operation mechanism DEA-SVM approaches to our analysis since we consider that the unpredictability of environment change makes these countries input-output relationship vary. In the literatures, mathematical and statistical methods are usually used. For instance, data envelopment analysis (DEA) is a popular method that is widely used to measure the performance of alternative countries (Baker and Talluri. (1997), Lin and al (2000), Talluri and Sarkis (2002), Raja and Shanmugam (2011), Heisele et al (2003)). However, these methods are not appropriate to predict and evaluate new country. Machine learning is an alternative methodology for classification problems where the model is trained based on the historical data and then it is applied to decision making on new candidates. The classification process is too simple to discover the potential indices that deserve selection for countries. As one of machine learning methods, support vector machine (SVM) has been successfully applied to a lot of classification problems (Cao and Francis (2003), . To our best knowledge, however, there not exists focuses on using DEA-SVM approach to process aggregations and to attain an overall evaluation for country’s competitiveness and prediction. Data envelopment analysis (DEA) is a non-parametric mathematical programming tool that is able to determine the efficient frontier of the most efficient decision making units (DMUs) and to calculate the efficiency of each DMU with respect to the efficient frontier based on multiple inputs and outputs.

 

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Using Newton’s Method to Compute Bond Yields in ExamView

Dr. Jeff Whitworth, University of Houston-Clear Lake, TX

Dr. Stephen Cotten, University of Houston-Clear Lake, TX

 

ABSTRACT

ExamView is a versatile testing software package utilized by instructors in a variety of disciplines. Among its features is the ability to create algorithmic problems, in which the instructor can generate numerous variations on a single question by having the software select random values within prescribed ranges for the input variables and automatically calculate the answer each time. This allows instructors to create multiple versions of practice problem sets, quizzes, or exams quickly and easily. Algorithmic questions are particularly useful in finance courses where students are frequently given computational problems. While ExamView lacks the time value of money functions built into most spreadsheets and financial calculators, it is still generally straightforward to program the solutions to these problems algebraically. However, coupon bond yields present a challenge, as they cannot be computed using standard algebraic techniques. This article shows how to use Newton’s Method to program algorithmic versions of bond yield problems in ExamView. The procedure is effective and converges to the solution with a high degree of precision in only a few steps. An algorithmic problem is an assessment item (such as a test question) that can be presented to students in different ways based on randomly generated values so that the solution method is the same between questions but the actual answers are different. Algorithmic problems are most commonly used in “quantitative” courses where students are frequently asked to solve computational problems. Several programs now allow instructors to program their own algorithmic questions, after which the software can produce a virtually unlimited number of variations on a single question. This greatly facilitates the generation of (1) additional homework/practice problems for students, (2) quiz and test questions that are similar but not identical to the practice problems, and (3) multiple versions of quizzes and tests that are equal in difficulty but have different answers to deter cheating. ExamView Assessment Suite is a product of eInstruction that is commonly distributed with publisher-provided test banks and is compatible with over 11,000 textbooks. In addition to allowing instructors to easily generate tests from multiple combinations of test banks and to scramble question and answer orders, it also allows for the design of algorithmic problems. Instructors can have the program select random values within specified ranges for a problem’s input variables, and then automatically calculate both the correct answer and plausible incorrect answers (distractors). In addition to random number generation and the usual arithmetic operators, many other built-in functions (e.g. logarithms, absolute values, maximums and minimums, logical operators, and rounding functions) can be quite useful both in designing the questions themselves and in calculating answers. In finance courses, students are frequently asked to solve time value of money (TVM) problems involving present and future values of cash flows. While ExamView lacks the built-in TVM functions of many spreadsheets and financial calculators, it is generally straightforward to program algorithmic problems and answer choices algebraically. However, there is no algebraic solution method to find the yield to maturity for coupon bonds; an iterative approach must be used. At first, this makes it seem impossible to generate algorithmic problems for this very common type of question, but we show that a numerical solution akin to that used by financial calculators and spreadsheets is possible in ExamView through the Newton-Raphson method (commonly known as Newton’s Method). Newton’s Method is a powerful iterative technique that for many real-valued functions converges to a solution with a high degree of accuracy in only a few steps. It works extremely well for finding bond yields since the bond pricing function is well-behaved – i.e., continuously differentiable and monotonically decreasing with respect to the yield.

 

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An Assessment of the Relationship Between Organizational Culture and Organizational Reputation: The Example of Hospital Management

Dr. Emre Isci, Marmara University, Department of Health Management, Istanbul, Turkey

Dr. Sibel Aydogan, Marmara University, Bahcelievler Campus, Istanbul, Turkey

Yasemin Koca, Health Manager, Private Capa Health Vocational High School, Istanbul, Turkey

 

ABSTRACT

Organizational culture is the sum of beliefs, values and attitudes shared by members of an organization as they act inside the organization. Organizational culture is essential in hospitals, as in any other organization. If the organizational culture causes the employees to have a positive perception of the organization’s reputation, this will have a positive impact on the organization’s relations with consumers and will make the organization more attractive to the employees. In this regard, a descriptive and cross-sectional research was designed in order to study the relationship between organizational culture and organizational reputation, with participation of 162 employees from 5 hospitals operating within the borders of the Istanbul province.  The research revealed that a strong positive relationship exists between organizational reputation and organizational culture in terms of transparency and participation, whereas a positive relationship of medium strength exists in terms of innovation (p<0,05). Competition between corporations increases constantly due to unavoidable advances in information and communication technologies as well as globalization. This has given rise to new approaches, concepts and practices that have significant effect on sustainability of organizations. The fact that technological innovations and changes can be copied swiftly by competitors led organizations to seek sustainable competitive advantage through intangible resources and ingredients rather than tangible resources and ingredients. Basic values carried over from personal traits to organizational traits, such as culture, identity, respectability and image, have increasingly attracted the attention of managers. In parallel with increased emphasis placed globally on respectability management, this topic has become the subject of various efforts in Turkey as well. Tough market conditions created by heavy competition force organizations to focus on respectability. The fact that organizational respectability takes years of work to build and a much shorter time to lose makes it essential to implement a policy to manage and maintain respectability. Respectability is an indispensable value for organizations. In order to keep up with rapid changes and developments caused by globalization in information, communication, health, services and all other sectors while gaining competitive advantage, these changes and developments must be supported by the corporate culture. Managers must pay close attention to how cultural structures will be created in the face of changing market conditions and to what types of organizational cultures are conducive to sustainability of organizations by promoting competitive edge. Fombrun defines organizational respectability as “a perceptual representation of an organization in terms of its part behavior and expectations on its future behavior, which determines the total attractiveness of an organization when its key assets are compared to those of its close competitors” (Fombrun, 1996).  Schein defines organizational culture as “a collection of assumptions or beliefs created, discovered, developed by a group as they solve problems caused by internal integration and external adaptation, which are effective enough to be considered as valid and to be taught to new members as the method to perceive, think about and sense common problems” (Schein, 1990).  Is organizational culture an indication of organizational respectability? Can organizational culture, which consists of various subdivisions, help in explaining the perception of organizational respectability?

 

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An Empirical Study on the Consumer Price-Perceived Quality Heuristic on the Hotel Industry

Dr. Freddy Su Jin Lee, California State University at Los Angeles, CA

 

ABSTRACT

In this paper, we further develop and test the three propositions in Lee (2012), which shows how the consumer uses the price-perceived quality in the hotel industry. The three factors influencing these propositions are the hotel star ratings, the brand name of the hotel or the capacity of the hotel.   Our goal in this paper is to empirically validate these propositions. The findings will point to several ways that hotel managers and owners can realign programs and reallocate resources to raise profitability levels and reduce costs. Primary among them are the development and articulation of whether to upgrade to meet the star criteria, whether to invest in the brand name or to increase or decrease capacity.  The price-perceived quality heuristic is one of the most important heuristics in consumer behavior (Chao and Schor, 1988; Zeithaml, 1988;Lichtenstein and Burton, 1989; Monroe and Krishnan, 1985; Stafford and Enis, 1969; Erickson and Johansson, 1985).  Other studies found that the use of this heuristic is a common behavioral feature among consumers (Stafford and Enis, 1969; Erickson and Johansson, 1985; Zeithaml, 1988; Monroe and Krishnan, 1985), and that even though the heuristic exists in many product categories, it is particularly strong for status-oriented products, durable goods, and products that are difficult to evaluate (Chao and Schor, 1988; Gerstner, 1985; Owen, Wright and Griffin, 2000; Lichtenstein and Burton, 1989). A hotel room purchase can also be viewed as a product consumers purchase.   The relationships between hotel quality and price per room per season are also of great interest.   This is especially so given the growing hospitality industry in developing countries, the high expectations of the growing middle class as well as the importance of tourism in today’s changing world economy.   Government officials concerned with hospitality capacity and the MICE (Meetings, Incentives, Conference and Exhibition) industry will be very interested as to how the hotels complement the revenue generating events.  Hotel owners and managers also need to know the consumer’s-perceived quality heuristic to be able to better price the rack rates and position the quality perception in the consumers’ mind. In the hotel industry, the quality of a room is often reflected in the rack rates. It is generally believed that the higher the price, the higher the quality.   Also, the available infrastructure and modern technology will further enhance the customers’ experience.  Thus higher rack rates translates into more resources to employ better customer service personnel, purchase better facilities, equipment, and develop good entertainment programs and services.   This will ultimately result in greater customer satisfaction while staying at the hotel, as well as the possibility of repurchase at the same location or of the same brand in another place in the future., So definitely price plays a very important role on room occupancy for a hotel.   Our goal in this paper is to offer propositions and empirically validate the factors that influence how consumers use the price-perceived quality heuristic to determine whether the hotel room is worth the money that they are paying for.   We identify three potential areas that become salient in these circumstances and in which hotels can better understand their threshold market behavior: Hotel Star Ratings, Hotel Brand Perception and Hotel Capacity. Price plays 2 roles here.  It is associated with expenditure.  The theory of resource allocation explicitly states that consumers see it as a sacrifice of monetary resource as spending in one product necessarily decreases the possible purchase of another.  Second, a higher price is usually taken as an indication of higher quality, even though the significance of such perceived correlation may vary across product categories (Lichtenstein and Burton 1989). 

 

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