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



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). As co-participants in these two regional memberships, this research paper focuses in a blended comparative analysis of the aeronautical industries of Singapore and Vietnam. This study is framed on the premise that while Singapore developmental goals are aimed at maintaining its regional advantage in airport/airline socio-economics, Vietnam is considering the viability of investing in a new airport that will eventually challenge Singapore’s current supremacy.  Originally founded as a British colony in 1819, Singapore, officially known as the Republic of Singapore, is an island country in South East Asia. They are a tiny country, with less than 270 square miles of land space and 5.4 million people. Their natural resources include fishing and access to their deep-water ports.  Because of these deep-water ports Singapore is the focal point for the South East Asian shipping routes; they are one of the world’s busiest shipping ports in terms of tonnage handled (About Singapore, 2015). Singapore has been ruled by the People’s Action Party (PAP) since gaining their independence in 1965.  They are purportedly a democratic state, but freedom of speech and freedom of assembly are both restricted. The World Bank’s control indicators have rated Singapore favorably on rule of law, effectiveness of the government and the control of corruption. However, it has been noted that some attributes of their processes, civil liberties, and human rights qualities are deficient (About Singapore, 2015). Singapore utilizes the parliamentary system of government.  There are three branches of government: Executive, which includes the prime minister and the cabinet who are appointed by the president and are responsible to parliament; Legislative, where parliament is unicameral and modeled after the Westminster system of parliamentary democracy; and Judiciary, made up of the State Courts and the Supreme Court (About Singapore, 2015).  According to the 2015 Index of Economic Freedom, Singapore’s score is 89.4, which puts their economy as the 2nd freest in the 2015 index. Singapore has continued to reinforce its commitment in becoming a world-class financial center and in opening their market to global trade. They are known to have a highly educated and motivated workforce (Singapore – GDP, 2015). Singapore was the third fastest growing economy in the world in 2010.  The government of Singapore is committed to a free market and has been aggressive at pursuing foreign investment as major part of their overall economic strategy. Thus far, this approach has enabled Singapore to become a base for multinational corporations. The average tariff rate is 0 percent. Some imports are restricted, such as chewing gum and other “objectionable” items.  Singapore welcomes foreign investment but is restricted in several sectors, such as professional services, media, and financial services. According to researchers at Embry-Riddle Aeronautical University – Asia, the government of Singapore is investing vast amounts of money on tourism and infrastructure.  Gross domestic product (GDP) is a significant way of measuring the strength of a national economy. The Singapore Department of Statistics publishes their GDP on a quarterly basis. According to the World Bank, Singapore’s GDP in 2013 was $297.9 billion. Just 15 years before, in 1998, their GDP was $85.7 billion. Singapore’s highly developed, open market, trade-oriented economy has enabled this country to more than triple their GDP in 15 years (The Economy of Singapore, 2014).


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



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. Waters (2007) related that in the last decade of the 20th century, the United States welcomed a multiracial influx of immigrants from all regions of the world. Fifty-one percent came from Latin America, the Caribbean, Asia, Africa, the Middle East, and Oceania. These groups have transplanted cultural and social forms as they continue to participate in the core immigrant traditions. Such traditions included establishing permanent communities; obtaining security; gaining citizenship; and seeking economic, familial, and personal betterment.  A variety of aspects assisted the formation and adaptation of Caribbean Americans in their new home. Like all other immigrants, Caribbean people in the United States regularly compared their memories of home to the realities of their life in the new country. Caribbean people make efforts to retain their traditions of values and attitudes that create trust, justice and social capital even under adverse conditions. They gained strength because they were socialized under relatively less oppressive environments. This led to greater self-confidence and self-worth despite the fact that in earlier decades the ruling elites were Whites and light complexioned Creoles. On arrival in the United States, they approached the question of job search and willingness to work certain professions with attitudes different from their native Blacks. They were prepared to accept jobs that African Americans often shunned because of their low wages, low status, or generally poor working conditions. Hence, these natives often reported negative impressions of native Black Americans; they looked down on this group for not being as enthusiastic enough about all the opportunities in the United States (Henke, 2001; Shaw-Taylor et al., 2007). New York City became their preferred place of settlement and led to the integration of West Indian immigrants into the economy during the first 3 or 4 decades. Therefore, the New York City’s Black community grew. Because they were not welcomed into White establishments, the Caribbean people acquired their own stores, shops, beauty parlors, ad barbershops, bars, real estate agencies, and restaurants. The skilled, White-collar, and semiprofessional occupations others had hoped to secure because of their middle-class status and education did not materialize. As a result, they had to settle for the unskilled jobs even though these jobs were not commensurate with their education and skills. Many therefore, opted for service-sector occupations. Unskilled workers were categorized as menial service workers, operatives, and manual laborers. They held jobs like porters, waiters, or elevator operators in the economy. Later, they did jobs such as chauffeuring, occupations in the garment industry, and domestic work (Henke, 2001). Greenbaum (2002) described the plight of Cubans who historically took a different route. Geographically, Cuba and Florida have been drawn together throughout time because thetwo countries are separated by only 90 miles of water between Havana and Key West.


Financial Markets, Corporate Governance and Information Quality

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



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.  The collapse of the big banks in 2008 revealed the secrets of those banks operations.  The Securities and Exchange Commission's failure to discover the Bernie Madoff Ponzi scheme and other financial malfeasances was also caused by an information failure. Financial regulatory cracks might have facilitated the 2008 economic crises, but the lack of transparency, in "dark pools" and other opaque trading activities that occur outside the public view, undoubtedly played a central role. These activities, such as credit default swaps, which played a major role in the near demise of AIG, often occurred in the presence of limited information even among the participants.  A credit default swap is an unofficial insurance policy, usually on a corporate bond. In credit default swaps, risk is limited to the premiums the buyer pays. Therefore, the buyers' downside is defined and certain, while their potential upside is several multiple of the premium. The role of credit default swaps in the subprime mortgage market debacle is discussed later. The western financial system has experienced financial crises frequently over the past two hundred years and more frequently since the 1980s (Reheinhart & Rogoff; 2009). Therefore,  such crises are not 'black  swans'  (rare, unpredictable  events)  but rather  are  'white  swans'  (normal  events  that follow  a predictable  pattern),  as Taleb (2007)  described them. Much has been written about the causes of past major financial crises, and even more has been written about the causes of the 2008 financial mayhem.  Such  explanations  include  loose monetary policy, inadequate  financial  regulations,  inept  financial  regulators,  failure  of  risk  management  systems,  and  incentive schemes  that  encouraged  and  rewarded  high  levels  of  risk  taking.  None of these explanations, however, have identified the failure of corporate governance, and by extension deceptive information, as the central causes of these crises. In response to this omission, this paper has two purposes. The first is to demonstrate that there is a historical connection between information generated and disseminated by corporations and financial crises. The second is to emphasize the role of ethics in corporate governance within financial institutions. My research is inspired by a reflective question that Martin Wolf (20I4) posed in his book The Shifts and the Shocks: What makes the 2008 crisis so significant? Wolf opined: It emanates from the core of the world's most advanced financial system and from transactions entered into by the most sophisticated financial institutions, which use the cleverest tools of securitization and rely on the most sophisticated risk management ... (p. 19).


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



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. We find that companies with traded bonds do have a muted reaction to earnings surprise announcements, supporting our first hypothesis that having a traded bond makes the information environment richer and the equity market more efficient.  The attenuation of the negative response is most pronounced for small companies, while the smaller response to positive surprises is more pronounced for large companies.  Companies with high pre-announcement period bond trading volume have more preemption of earnings information than companies with low trading volume, but this reaction also differs by firm size.  While negative surprises are anticipated for small companies with traded bonds, there is also a strong anticipation of positive surprises if the small company’s bonds are actively traded.  The inverse is true for large companies – positive surprises are anticipated for large companies with outstanding bonds, while negative news is only anticipated if the bond is actively traded. This work contributes to the literature by measuring the impact of traded bonds on the issuer’s equity securities.  To our knowledge, this is the first look at informational externalities associated with publicly traded bonds and complements the existing work on listed options (Conrad, 1989; Holland and Wingender, 1997).  We also contribute to the robust accounting literature on market reactions to earnings announcements by documenting a differential reaction by companies with and without traded bonds. Through the lens of option pricing theory, a credit-risky bond can be viewed as a risk-free bond combined with a short put position written on the issuer’s assets, while equity can be viewed as a long call option on those assets (Merton, 1974).  While both the stock and the bond markets trade claims on the same underlying assets, the information content of trade is likely different between the two markets due to the differing investors in the two markets.  Trading activity in corporate bonds is dominated by institutional investors who are more likely to be sophisticated and possess better information, while many more individual investors are active in the equity market. Indeed, Edwards, Harris, and Piwowar (2007) report that just over 74% of the dollar volume of trade in corporate bonds is trade by institutional investors. Information linkages between the bond and equity markets are well documented.  Early research found that the bond market is as informationally efficient as the equity market, with both bonds and equity incorporating new information quickly (Hotchkiss and Ronen, 2002).  More recently, Bittlingmayer and Moser (2014) find that the bond market is more likely to lead the stock market in reflecting negative information, with a more pronounced effect for lower credit quality bonds. 


Glӓce Luxury Ice Co.

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



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.  Very often, the family-owned ice businesses were acquired by larger companies such as Reddy Ice Holdings, Inc. and Arctic Glacier.  However, the acquirers kept the antiquated equipment, employees, centralized production facilities, and regional distribution networks.  The acquirers simply rebranded the ice products.  Price was the only differentiator for competitors.  As for the hospitality industry, the liquor distributors refused to deliver anything without liquor in it on their trucks.  To avoid the costs involved in buying refrigerated trucks and regional warehouses, Sequeira decided to use FedEx and UPS to distribute his company’s products.  Most hospitality establishments were making their ice in-house with tap water, with variations in taste and quality from one location to another.  Therefore, Gläce Luxury Ice was launched as a luxury brand in a commoditized packaged ice environment.  The brand was also intended to overcome the inconsistent drink experience with ice made with tap water.  Because of the company’s innovative manufacturing technology to produce ice with purified water, the Gläce ice pieces give the drink experience quality and consistency.  Sequeira emphasized that “delivering consistency in a trusted, branded product is the one differentiator supporting the brand” and “this is essential to our messaging” (R. Sequeira, personal communication, April 4, 2015). The packaged ice industry’s current production and transportation setup is similar to the historical model described by Sequeira.  The setup involves packaged ice manufacturers producing and distributing packaged ice from a central production plant within around 100 miles of their customers.  They engage in direct store delivery (DSD) by using refrigerated trucks.  Some companies use third-party distributors to deliver packaged ice.  Today, the process of freezing and packaging ice is almost totally automated.  At retail locations with high traffic, automated in-store bagging (ISB) machines can be found on site to produce and package ice.  Ice vending stations from which consumers can buy ice cubes in bulk are also available.  Ice manufacturers sell products through supermarkets, convenience stores, mass merchandisers, hospitality establishments, vending machines, and special events.  Material costs average about 20% of annual revenue for ice companies.  The packaged ice industry has seasonal sales, and demand is highest during the summer.  The Packaged Ice Quality Control Standards (PIQCS) are self-imposed by the packaged ice industry, and the International Packaged Ice Association inspects its members’ plants to ensure compliance with these standards.  According to the industry forecast, revenue for US water and ice manufacturing will grow at a 4% annual compounded rate between 2015 and 2019.  The major industry drivers include energy prices, consumer spending, and government regulations.  The most critical issue for the packaged ice industry revolves around transportation expenses (First Research, 2015). With the company’s founding in 2007, the MBA class project was transformed into a “philosophy on life”; as a company press release stated: 


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



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). Therefore, EI is very important for bookkeepers. Bookkeepers should develop emotional intelligence in accounting for interactions with others while working to improve accounting practice efficiency, efficiency of decisions-making and judgments, accounting professionalism, leadership, relationships customers to deliver superior service order to advantage compete with fellow professionals has resulted in a success in professional and survived sustainably. From the existing literature, there are a few empirical researches on the dimensions of accounting emotional intelligence and the relationships of accounting emotional intelligence. Therefore, this research provides clarification of the new dimensions, measurement and conceptual model for accounting emotional intelligence. Not only does it propose the new empirical investigation, but it suggests the relationships among dimensions of accounting emotional intelligence, antecedents, and consequences which are examined also. Accordingly, this research purposes at investigating accounting emotional intelligence that affects accounting judgment, accounting practice efficiency, accounting professionalism, professional success, professional survival of bookkeepers in the Northeastern of Thailand. Accounting emotional intelligence includes 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 are samples of the study. The key research questions are: (1) How does each dimension of accounting emotional intelligence (self-awareness orientation, self-regulation commitment, self-motivation focus, empathy mindfulness, and social skills concern) have an influence on accounting judgment, accounting practice efficiency, accounting professionalism, professional success, and professional survival?; (2) How do accounting judgment and accounting professionalism have an influence on accounting practice efficiency?; (3) How does accounting judgment, accounting practice efficiency, accounting professionalism have an influence on professional success?; (4) How does professional success have an influence on professional survival?; and (5) How do accounting well-roundedness, professional training, accounting experience, environmental learning, and stakeholder expectation have an influence on each dimension of accounting emotional intelligence?. This study is outlined as follows.


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



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. The paper is organized as follows. In section 2 the multi-objective portfolio optimization problem is outlined and in section 3 we provide an explanation of the imposed constraints. Section 4 describes the selected multiobjective optimization method (i.e. IBEA) and its characteristics. In section 5, we analyse the obtained results and the extracted efficient frontiers. Section 6 draws conclusions. Evolutionary algorithms (EAs) have received considerable attention due to their fundamental ability to handle optimization problems with both single and multiple objectives. In particular, problems that belong to the category of financial optimization in most of the cases are multiobjective. Multiobjective optimization deals with simultaneous optimization of multiple objective functions. A multiobjective optimization problem (MOP) is defined as the problem of estimating a vector of decision variables that satisfies the imposed constraints and optimize a vector function whose elements represent the objective functions [8]. In this paper, we consider the constrained bi-objective portfolio optimization problem. The first objective corresponds to the expected return, which is maximized and the second objective corresponds to the variance of return, which is minimized. where σ_ij is the covariance between assets i and j,  σ_p^2 is the variance of the portfolio and N denotes the number of assets available. w_i and w_j is the proportion of the portfolio held in asset i and j respectively. Regarding the constraints handling, assume that K represents the number of assets needed to be selected in portfolio, ε_i αnd δ_i represent the lower and upper bound of the i-th asset, respectively. z_i is a binary (0-1) variable, when z_i=1 the i-th asset is included in the portfolio, whereas when z_i=0 the i-th asset is not considered in the portfolio.  Budget constraint, requires that 100% of the budget be invested in the portfolio. Non-negativity constraints imposed in the original Markowitz model and in our model as well. Most of the times non-negativity constraints satisfy regulatory restrictions imposed to portfolio managers that prohibit short selling. These constraints may represent institutional restrictions or legal obligations on the composition of the portfolio. For example it is well known that many mutual and pension funds apply restriction to the maximum holding of any security in the portfolio in order to avoid excessive exposure to the asset’ specific risk (unsystematic risk) even though the portfolio’s overall risk may remain intact.


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



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. Moreover, Bandura (1981) found that social pressure and stakeholders is a key factor that enables the auditor to focus on morality in the audit profession more. Therefore, the relationship between audit morality and audit survival is necessary to examine in detail about the relationship of audit morality-audit survival is the dependent variable of the study, and it is also an outcome audit regulation compliance, audit practice excellence, audit planning efficiency, audit report quality, financial information usefulness under, activities and audit survival for the independent variable of the study, audit morality is the auditors who will highlight the determination, willingness, recognizing the value of the action to assert the audit practice accurate to build the reliability and the trust of all stakeholders (Bakre, 2007; Norcia, 2002). Here, it includes conscience awareness, self-efficacy focus, kindness commitment, social responsibility orientation, self-control concern, respect mindset, and integrity concentration. In sum, audit morality commitment is hypothesized to have positive relationships with audit performance in the audit survival and four antecedents. In this study, audit morality commitment is a key driver of determining and explaining audit survival. Hence, the key research questions; how audit morality commitment has an influence on audit survival?. And the objective of this study is to investigate the relationships between audit morality commitment and audit survival of tax auditors (TAs) in Thailand, which are the sample population of the study. So, the audit morality commitment is the independent variable and audit survival is the dependent variable of the study.The remaining parts of this study are organized as follows; the relevant literature review of audit morality commitment, audit regulation compliance, audit practice excellence, audit planning efficiency, audit report quality, financial information usefulness an audit survival are addressed and criticized with the significant research proposition development also presented. Next, the study concludes discussing theoretical and managerial contributions, and conclusion. Figure 1 is a conceptual framework for the following discussion. The framework comprises three sets of factors, including audit morality commitment orientation, its consequences, and  control variable Lawrence Kohlberg (1969) developed a theory of moral development that has its roots in the work of the Swiss psychologist Jean Piaget, who he intends to apply to moral education which both Piaget and Kohlberg shared belief that the moral concepts consist of values, virtues and ethics that help individuals distinguish their actions as being morally right or morally wrong, by Kohlberg focused on moral judgment or moral reasoning in deciding to act on good or bad. Moreover, Kohlberg believed that the moral development represents thought development processes and understanding of the individual about morality (Blatt and Kohlberg, 1975). So, to apply reasons for the decision to take an action, either to demonstrate the growth of the mind of the person as Thomas (2004) has suggested that it is related to the extent to which ethics can develop in later stages of life. In the existing literature, there are three levels of moral development of the individual, with each level, having two different stages (Kohlberg, 1976). First level: Per- conventional, individuals behave according to the rules defined authority, regardless of the rules, standards, or social beliefs, also think only their own interests, regardless of the consequences to happen to others. Pre-conventional contains stage 1 – Obedience to morality is the recognition of what is right or wrong, to prevent being penalized, then step 2 - selfishness is the exchange the benefits not caused by justice. Level 2: Conventional, individuals behave according to the law and expectations of society for the social order. Associated with step 3 - kindness, best wishes and cares for others wanting to be good in the sight of others, and step 4 - respect for authority, maintaining the rules of society and have suggested social responsibility. Level 3: Post-conventional is that individuals for decisions to be made by a conflict situation into consideration and decide what is more important and is based on justice. Embraces step 5 - moral and legal rights agreement has been accepted and democratic by the person will have reason to choose act with due regard for the interests of the majority, not violate the rights of others, and have the ability to self-control. Step 6 - universal principles of morality and ethics of recognizing the accuracy of Justice recognized the value of humanity While the individual's success in more advanced stages of morality commitment, they are expected to behave more moral (Blasi, 1980).


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



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. Directors face increasing challenges to attract and retain top talent who will deliver upon a strategic plan which translates into long term business success as well as to shareholder value.  It is incumbent upon directors to assure that a CEO compensation package will motivate the correct business behaviors and outcomes in support of established strategic goals and in alignment with shareholder interests.  To accomplish this goal, generally accepted best practices dictate that the board of directors appoints a compensation committee composed solely of independent directors to avoid any conflicts of interest.  In fact, for companies to be eligible for listing on national exchanges, Section 10C of the Securities Exchange Act of 1934 (which was added by the Dodd-Frank Act) now requires that both compensation committees and compensation advisers satisfy established criteria demonstrating their independence.  In practice, compensation committees commonly rely on compensation advisers to assist in the development of compensation recommendations.  In the authors’ experience, while board members frequently have familiarity with compensation systems and alternatives, they are rarely experts in the area.  Moreover, even where in house expertise may exist, the individuals having this expertise typically have the inherent conflict of serving as a direct report to the CEO.  Accordingly, to gather suitable data necessary to efficiently conduct the due diligence required to support any recommendation by the compensation committee, directors seek the advice of outside compensation advisers or consultants.  The pool of well reputed executive compensation consultants is relatively narrow.  Boards understand that the compensation numbers are often significant and thus seek the credibility and support necessary to achieve shareholder acceptance.  In the past, CEOs were frequently tasked with identifying and hiring the independent compensation consultant.  The board would typically oversee the process and the consultant would, in concept, work for and report to the board.  In practice, the compensation consultant worked closely with the CEO while developing their recommendations.   The best practices have shifted and now dictate that the responsibility of hiring and managing the expert compensation consulting relationship lies with the board of directors’ compensation committee.  Even with the more stringent emphasis on independence and the clearer structure for reporting, the methods employed often leave much to be desired.  As Warren Buffet stated in his Letter to Shareholders of Berkshire Hathaway in 2007, “CEO perks at one company are quickly copied elsewhere. ‘All the other kids have one’ may seem a thought too juvenile to use as a rationale in the boardroom.  But consultants employ precisely this argument, phrased more elegantly of course, when they make recommendations to comp committees.” 


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



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). In Thailand, the Federation of Accounting Professions (FAP) is a member of International Federation of Accountants (IFAC).FAP has appointed a subcommittee to control the quality of the audit firm to serve on the preparation of the criteria and guidelines for the audit firm.These guidelines are consistent with audit quality control standards issued by IFAC. Currently, there are 2 issues; International Standard on Quality Control (ISQC1) and International Standard on Auditing No.220 (ISA 220).The international standard on quality control has been defined the office to establish a quality control system to create a standard in quality and reliability of the audit. Consistent with prior research suggests that the factors about the system of audit firm which has systems and procedures as standard will result in audit to be accurate and comment on the financial statements properly (Brocheler, Maijoor, and Wittelstuijn, 2004; Sarkis, Gonzalez-Torre and Adenso-Diaz, 2010). The main purpose of the international standard on quality control is used as the criteria to governance and develop audit firm for audit service in accordance with the regulation and auditing standards effectively and efficiently. Audit review process is an important step of audit quality control about monitoring the audit task of the auditor that has been practiced correctly and comply with the auditing standard. Therefore, the reviewer who does above functions must have the knowledge and ability to consider the validity of the practice including monitoring and make recommendations appropriately until led to the comment on the financial statements accurately and in accordance with the goals of the audit (Agoglia, Hatfield, and Brazel, 2009; Favere-Marchesi, 2006). Reviewers have an important role in using ability for monitoring and evaluating the auditor as the criteria about the audit that follows the audit plan in accordance with professional standards and follows the recommendations of consultants or experts to verify the accuracy and completeness of recording important information until bringing appropriate and sufficient evidence to express an opinion on the financial statements (Favere-Marchesi, 2006; Guiral, Ruiz and Rodgers, 2011; Wilk, 2002).  Based on the importance of the audit quality control, the key process is audit review.


Complexity in Equity Markets

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



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. These set of rules are known as Order Handling Rules aimed to end the market makers' dominance of price setting. More transparency was mandated. For example, the SEC directed Nasdaq to make customers' orders public. Moreover, the previously exclusive electronic systems used to trade big orders were opened up, so that prices on these systems, which were often better than those offered by the market makers, would be visible and available to the public. The price collusion happened at Nasdaq and the order handling rules mainly initially impacted them more because at the time Nasdaq was primarily a “dealer” market versus the “auction” market structure employed by the New York Stock Exchange. In primarily auction markets prices are set by the investors placing orders to trade at a given price, with buyers and sellers being paired off by a specialist or a central computer. On the other hand, at primarily a dealer market, market makers compete for orders by quoting prices at which they are willing to buy or sell. As a result, in a pure dealer market, the investor must trade on whatever terms a market maker offers or not at all, hence giving the market makers the opportunity to fix prices prior to the order handling rules.  In the aftermath of order handling rules competition in trading venues became substantial leading to the creation of several new execution venues including Alternative Trading Systems (ATSs) and Electronic Communication Networks (ECNs). These execution venues would go through several changes and consolidations especially around early 2000s but advanced technology and lower trading costs they offered started a steady decrease in the market share of all traditional stock markets that would continue to the present day. Over the longer term not only Nasdaq was impacted but also NYSE and other traditional exchanges also lost their market shares of trading volume. Figure 2 shows the steady decline in the market share of NYSE compared to the increase in newer trading venues. In 1997 another new rule took effect and dealers had to quote prices in sixteenths of a dollar, instead of eighths. This rule change was followed in 2000 by a sweeping rule, generally referred to as decimalization, when the SEC ordered all U.S. stock markets to convert to trading in decimals by April 9, 2001. In other words in all US markets the quotation of prices had to be done in dollars and cents and not in fractions as was the norm prior to this date. The main aim of this rule was to decrease the bid-ask spread and hence decrease the cost of trading for the ordinary trader. This rule would also bring the pricing rules of US equity trading more in line with other markets around the world.  Despite accomplishing the goals of decreasing the spreads, making trading more frictionless, increasing both liquidity and electronic trading, and diminishing the role of market makers decimalization also had other unintended consequences and by 2013 SEC was reconsidering this rule. A paper released by Grant Thornton in 2009 described decimalization as a "death star" for U.S. equities markets, adding that it had eliminated nearly all of the economic incentives for trading in small-cap stocks and hence decreased the interest for the IPO market.


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



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. Finally, we present the contributions of this study. Strategic flexibility is critical term in products, manufacturing processes, markets, distribution channels and competitive environments. Strategic flexibility is ability of the firms to respond to various demands of dynamic competitive environments (Sanchez, 1995). It enables firm to modify its resources and capacities to respond to environmental changes (Hitt, Keats and DeMarie, 1998). Strategic flexibility enables firms to modify strategies which assets and capabilities are deployed to achieve the objectives (Evan, 1991). It encourages firms in managing environments with high competitive intensity (Grewal and Tansuhaj, 2001). Strategic flexibility is implicit in marketing concepts, because implementing suggests that firms should change to sustain potential customer need (Combe and Greenley, 2004). The firm’s objective is the creation of a superior value proposition for its customer, and therefore conceptualization of strategic flexibility should incorporate a market-focused perspective with regard to products and markets (Johnson et al., 2003). The market-focused approach firms able identify and adjust themselves towards the demands of their markets (Mason and Mouzas, 2012).  Market-focused strategic flexibility as a resource identification capability is necessary to build a portfolio of marketing resources (Johnson et al., 2003). Flexible marketing system concerns sensing changing customer needs, anticipating competition and adjusting the firms marketing (Singh, 2010).  In this study, conceptualize of strategic flexibility and marketing in term of strategic marketing flexibility defined as an ability of the firms to continuously adjust  the activity, operations and processes for creating, communicating, delivering, and exchanging offerings value for customers to responsive to customer need in dynamic competitive environments. Dynamic capability has been extended to consider the unique ability of firms to integrate, build, and reconfigure internal and external competences to address rapidly changing environments (Teece, Pisano and Shuen, 2007). Dynamic capabilities are a set of specific and identifiable processes that integrate or reconfigure resources (Eisenhardt and Martin, 2000). Fan et al. (2004) viewed that the dynamic capabilities as competencies that allow a firm to quickly reconfigure its organizational structure and routines in response to new opportunities. Barreto (2010) argued that dynamic capability formed by sensing opportunities and threats, and market-oriented decisions, and to change its resource base. Firms with dynamic core competences are able to respond quickly to unpredicted and thereby unexpected changes in the environment (Hitt, Keats and DeMarie, 1998).


Development of a Graduate-Level Information Systems Quality Course

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



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.  The overarching theme of the course is to teach students how to avoid problems while working on information systems projects and throughout their information systems careers generally.  This goal is emphasized in all four course modules.  A brief description of each course module is presented in Table 2.  The course uses two textbooks and a set of journal articles on information quality.  The textbooks used in the course are shown in Table 3, and the journal articles on information quality are shown in Table 4.  Students in the Information Systems Quality course complete three course projects:  the first project applies the material in the project management and systems analysis and design modules, the second project applies the material in the information quality module, and the third project applies the material in the information systems ethics module.  The project management and systems analysis and design project assignment is presented in Table 5.  The group project allows you to demonstrate that you have synthesized the materials covered in the course.  The group project is an opportunity for you to create an integrated set of design specifications for an information system.  You will also use project management tools to ensure that the project is completed on time.  The system for which you create the design specification should be designed to support a subset of the activities of an actual organization.  Your system could provide support to a department within a large business organization, a recreational organization, a home-based business, etc. Specific Project Requirements.  Your project work will include the following:  (1) a project workbook, (2) a project plan including Gantt charts and network diagrams, (3) a narrative description of the information requirements for your system, (4) a complete set of data flow diagrams, (5) a conceptual  and logical data model for the system, (6) logic models for the system, (7) mock screens and reports for the system, and (8) a dialogue sequence diagram for the system.  Additionally each member of the group will keep an individual journal that will be used to record and reflect upon his or her experience working on the project.  This document discusses each part of the project.  A. The Project Workbook: 1. The project workbook will include all of the material generated or reviewed during the information requirements phase of the project, all of the project plans, and all of the final work products that are part of the project.  2. Your group should outline the materials that will be included in the project notebook and find a way to keep the materials organized. B.  Project Plan: 1. Create an initial project plan at the beginning of the semester.  List the activities, time estimates, and precedence relationships for the project.  Find the critical path for the project.  This document will help you create your initial project plan.  You may also want to skim the parts of the textbook that we will read this semester. 2. Determine the dates on which you will update your project plan.  You should update completely update your project plan at least times during the semester.   3. You will submit your initial project plan and all of your updated project plans (with at least two updated project plans). C. Information Requirements: 1. Describe the strategy your group used for information requirements determination (e.g., interviews, analysis of documentation, and so forth). 2. Include any materials created or reviewed during information requirements determination in your project workbook (e.g., summary of reviews, copies of documentation that was analyzed, etc.) 3. Write a narrative summarizing the information requirements of the function to be supported by your system. D. Data Flow Diagrams: 1. Develop a set of data flow diagrams for your system.  Provide enough detail so that it is clear what the system will do and what computer programs will be needed to create the system. E. Conceptual and Logical Data Model: 1. Create a conceptual data model for the system. 2. Create a set of normalized relations for the system. 3. Identify the primary key and any foreign keys in the relations for the system.


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



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. Thus, creativity is a key to improve operation efficiency (Herbig and Jacobs, 1996).Moreover, creativity and innovation have the relationship with corporate governance change, because the objective of corporate governance is monitored by outsiders and insiders (Shadab, 2008), which internal audit can lead corporate governance management through the internal audit planning to cover business risk (Morariu et al., 2009; Sarens, Abdolmohammadi and Lenz, 2012).Hence, organizations have to change their internal audit process and auditing systems within the context of management process change (Sisaye, 1999). Internal audit can lead creditability to firm’s financial information by reducing the risk. At the same time, many organization requires more creative of their solutions and more effective in their resources by increasing the creativity in solving problems to maintain a competitive advantage (Kletke et al., 2001).This situation is led the corporate to increase internal auditor training, new techniques for fraud detection and setting standards for accepting customers (Yakhou and Dorweiler, 2005). Meanwhile, The Institute of Internal Auditors’ (IIA) improved the professional practice of internal auditing according to the complexity of the regulation and environment. Thus, this study focused on the internal audit creativity strategy that is the ability of an organization to change, develop, and transform the current internal audit processes to include new ideas that lead to long-term competitive advantage (Basadur, Pringle, and Kirkland, 2002; Ernst & Young, 2012). The purpose of this study is to examine the relationship between internal audit creativity strategy that consist of five dimensions: proactive internal audit planning orientation, new internal audit method implementation, technology-based internal audit practice concentration, integrative internal audit resource focus, internal audit teamwork awareness and firm performance.The remainder of this study is outlined as follows. The next section discusses the theoretical foundation that explains the relationship between internal audit creativity strategy, its consequences, and its antecedents. The second one provides the literature review and hypotheses. The third section shows the details of the research method, including sample selection and data collection procedures, the variable measurements of each construct, the instrumental verification, the statistics, and equations to test the hypotheses. The fourth distributes the results of the analysis and discussion that compares and explains between previous studies and the empirical results of this research.Finally, provides the suggestions for further research and the conclusion of the study.This study investigates the associations among internal audit creativity through the mediating functions of internal audit innovation, corporate practice efficiency, governance outcome, risk management effectiveness, and firm performance. Moreover, proactive vision, organizational encouragement, internal audit experience, organizational climate and stakeholder expectation are determined as the antecedents of internal audit creativity strategy with in the exporting gem and jewelry businesses in Thailand. Thus, the conceptual, linkage, and research models present the associations between internal audit creativity strategy and firm performance as shown in Figure 1. Internal audit creativity strategy is started from the concept of organization creativity and internal audit process.


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



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’ 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). Despite the global concern in studying topics related to consumers’ satisfaction of e-businesses, the researcher did not find similar studies concerning the Arab or Gulf regions. Accordingly, this study is aimed at identifying to which extent consumers are satisfied with the e-store-website content and the amounts of their online purchasing, as well as to investigate the association of consumers’ satisfaction of e-store-website content with the amounts of online purchasing in the Saudi-Arabian market. The findings from this study could guide both national and international businesses in e-commerce to understand some of the dimensions of doing e-retailing business targeting the Saudi market, especially with the rarity of studies and information regarding consumers’ online purchasing transactions and 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., 2002), 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 to 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); Li and Zhang (2002); and Doolin et al. (2005). Similarly, Jahng et al. (2001) measured consumers’ acceptance of online shopping and their attitudes towards certain electronic stores.


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



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. In this research, stakeholder theory and contingency theory were used to describe research model and hypothesis development, stakeholder theory was applied to describe the consequence of professional accounting practices orientation and contingency theory was applied to describe the antecedents.  Most of the prior researches on professional accounting try to give meaning and definitions of professional in accounting but the lack of empirical research. This research will be the first empirical evidence that supports causal relationships between professional accounting practice orientation and its antecedents and consequences in SMEs Thailand.  This research attempts to conceptually link professional accounting practice orientation including six dimensions and firm goal achievement through impact on mediators, accounting information transparency, financial reporting quality, superior information usefulness, information value, and decision-making efficiency. Moreover, the relationships among antecedents of professional accounting practice orientation consist of five factors, executive long-term vision, best accounting knowledge, dynamic accounting learning, ethical awareness, and stakeholder force.  All hypotheses of this research were proposed to have a positive effect. The conceptual model presents the relationship between all constructs in Figure 1. This research explains and predicts relationships among variables under the concept of stakeholder theory and social learning theory. Firstly, stakeholder theory by freeman in 1984, presents the concept of firm having responsibility to stakeholders due to stakeholders are individual or group affected by the achievement firm objectives or a failure that may have occurred also stakeholders will be affected to firm success or failure (Freeman, 1984).Therefore, the firm should be interested in needs of stakeholders and relationship with stakeholders(Argandona, 1998).The prior research found that stakeholders request to the quality of accounting information to be usefulness for the decision-making(Barth and Schipper, 2008). In addition, stakeholder who is an important role pressuring firm to concentrate on professional in accounting practice(Jensen, 2001).In this research the stakeholder theory is explained the relationships among the firm to have behavioral of professional accounting practice orientation, six dimensions of professional accounting practice and consequence.  Secondly, the contingency theory is the concept by Fiedler in 1967; the concept explains that managerial organization is necessary to comply with the organizational environment so that the firm can survive. Therefore, firm should set the operational system in accordance with the firm environment (Fiedler, 1967).


New Venture Sustainability

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



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. The Execution component of Blumberg and Hindi’s guide is of interest because it addresses the specifics of raising capital for growth, structuring a “Company Operating System,” and managing the company through troubled times. The last two tenants of the book focus on building and managing a Board of Directors and concepts of a “Personal Operating System,” which they use to describe a framework for marketing yourself. Gartner et al (1998) used the criterion for determining if a new venture had survived over a four year timeframe.  New ventures that survived were more likely to have: entrepreneurs who gained knowledge and ability during the founding process, devoted greater efforts to dealing with suppliers, analyzed potential new entrants, and devoted less time to determining the identity of the business. Survival was also more likely for businesses that had fundable resource requirements, focused on products or services that were designed or produced to order, and were in high growth industries. Of the 27 businesses profiled at the beginning of the comparison, 17 were still in operation four years later. The Small Business & Entrepreneurship Council (2011) published the Small Business Survival Index 2011, which describes the overall climate for small businesses in every state.  Focusing on the impact of public policies, such as taxes, regulatory costs, government spending, and energy costs, the report covers 44 individual factors.  One aspect of the research conducted by the Small Business & Entrepreneurship Council is the correlation that they found between sustainability costs and small business survival. A March 2012 survey that they cite in TechnoMetrica states that 41 percent of small business owners said higher prices were affecting their plans to hire. Sutton and Rao (2014) examined over 400 companies. Their premise was that, although situations vary greatly, there are common lessons learned. One is that many entrepreneurs take on too much, too soon. They also found that it is important to take the time to do things right, and forming a culture is important for success. Emphasizing the need for adaptive practices, they advocate flexible practices and roles for the sake of fostering an empowering culture. To achieve this goal it is important to use “hierarchy to defeat bureaucracy.”


Strategy Fitness and the Performance of Taiwanese MNCs

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

Chinese Culture University, Taiwan



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).  Porter (1986) indicated that global integration, coordination, and allocations of cross-border value activities form competitive advantage as the core of globalization strategies. The key issues include marketing, sales, services, R&D, procurement, and manufacturing. This paper adopts the perspectives developed by Porter to examine the determinants of cross-border integration strategies adopted by Taiwanese companies. The purpose 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 Taiwanese companies investing overseas in order to validate the explanatory power of the model.  The drivers in the context of business environments toward industry globalization can be divided into four dimensions, such as economies of scale, comparative advantages, market homogeneity, and government policies (Yip, 2003). The importance of individual dimensions is different from one industry to another. Regarding economies of scale, the indivisibility of costs is the main cause. Hout et al. (1982) argued that the benefits of quantities on a global scale can create huge competitive potential in the global market. Kobrin (1991) argued that these benefits include large-scale, efficient production activities, extensive distribution networks, and high-level R&D initiatives. Regarding comparative advantages, different countries are endowed with different production factors of varying costs. Each activity across a value chain, such as R&D, production, and marketing, and requires different degrees of factor density. Therefore, manufacturers can allocate their value activities according to the comparative advantages of different countries in order to obtain cost advantages. Regarding market homogeneity, the homogeneity of customers’ needs and the transferability of marketing assets are the market factors that influence industry globalization. The homogeneity of customers’ needs reduces the list of product categories, rendering it easy for multinational companies to enter major markets. Product standardization can also create economies of scales and lower production costs. The global utilization of branding power as a marketing asset can enhance the barrier to entry. With regard to government policies, Yip (2003) suggested that friendly trade policies, compatible technical standards, common business norms, state-owned competitors, and customers, are the factors that influence the degree of industry globalization. The reduction of trade barriers encourages globalized market participation, globalized products/services, globalized allocation of production sites, and globalized marketing of multinational companies. The variances of marketing environments, such as the norms and restrictions regarding the use of marketing media, will affect the implementation of globalized marketing.  


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)



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.  Additionally, while Russia’s continuing extraordinary political-economic reliance on oil and gas may be further justified in the short to medium term perspective, this development model can erode Russia’s long term global competitiveness. Russia’s emerging trend in strategic re-positioning of its oil and gas export flows from Europe to Asia also has large-scale stakes and policy implications for both Russia and Eurasia.  Energy system (Figure 1) is complex and often driven by controversial forces. Globalization facilitates interdependency and has fundamental implications for economic development. Russian oil and gas critically affect domestic and international politics and play fundamental national and geo-regional role. They also exert critical political-economic impacts in Europe has been Russia’s important regional market and a playing field.  The annual World Energy Outlook (2013) identified government policy and action, level of economic activity, demographics, energy prices, and technological advances as main impact factors in global energy. Globalization facilitates interdependency and has critical implications for economic development. Russian oil and gas strongly affect domestic and international politics and play fundamental geo-regional and national role. Furthermore, they exert serious impacts in the greater geographic and political-economic context, where Europe has long been Russia’s important regional market and a playing field. Several major trends shaping the world energy landscape are summarized below.   (1) Energy demand will continue rising long-term with a projected global economy’s expansion of almost 140% and a 1.7 billion increase in the world population. Under the “New Policies” scenario, world energy demand increases over the 2010-2035 projection period by 35%. (2) Energy demand and market dynamics will be largely determined by emerging economies and by sharpening global competition for energy resources, particularly China and India. The non-OECD share of global primary energy demand, which has already increased from 36% in 1973 to 55% in 2010, continues to rise. (3) Fossil energy (oil, natural gas and coal) will continue to play dominant role in global energy supply. Fossils that represented 81% of the primary fuel mix in 2010 will experience by 2035 only modest reduction of their share to 75.5%. (4) Limited fossil energy resources push extraction farther into inhospitable territories and deeper underground. Limited availability of fossils depresses supply and strengthens global suppliers’ bargaining positions; on the other hand, it facilitates renewable energy and improves efficiency in energy consumption. (5) Slow economic recovery and growth worldwide temper energy demand, but also limit vital investments in the highly capital intensive energy sector (globalEDGE. Energy, 2014). (6)


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



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. The basic ideas of DEA can date back to Farrell (1957) and the recent series of discussions started with the article by Charnes, Cooper, and Rhodes (1978). More detailed information can be found elsewhere (Banker et al (1984), Charmes et al (1993). The DEA formulation is given as follows. Given a set of n DMUs to be analyzed, each uses m common inputs and s common outputs. Let k (k=1, 2…, n) denote the DMU whose relative efficiency or productivity is to be maximized.  where urk is the variable weights of given to the rth output of the kth DMU, vik is the variable weights of given to the ith input of the kth DMU, urk and vik are decision variables determining the relative efficiency of DMUk, yrj is the rth output of the jth DMU, and xij is the ith input of the jth DMU. It assumes that all yrj and xij are positive, and hk is the efficiency score and is less than or equal to 1. When efficiency score of Hk is 1, DMUk is called the efficient frontier and the other is called the inefficient frontier. Support vector machine (SVM) developed by Vapnik (1998) has gained popularity due to many attractive features and excellent generalization performance. Given a training data set {(xi, yi)}, xi is the weighted feature vector of the ith and yi ∈{1, -1} is the label of this sample. For linearly separable problem, we can determine a hyperplane f(x)=0 which separates the positive and negative samples.The plane creating the maximum margin is named as the separating hyperplane which can be confirmed by the vector w and the scalar b. By introducing slack variables ξi and penalty parameter of the error term C (C>0), the optimal hyperplane can be found by solving the following problem.  where ξ is the distance lying on the wrong side of the margin between the margin and example xi. SVM requires solving the following optimization problem [19]. where αi is the Langrage multiplier for each training sample i. The function k(xi, xj) returning a dot product of feature space mappings of the original data points is called a kernel function which can map the training vectors xi into a higher dimension space, and the SVM model finds a linear hyperplane which has the maximal margin boundary in order to separate the data. There are three popular kernels, namely linear, polynomial and radial basis function (RBF). The most commonly used and effective kernel is the RBF kernel. In this work, we consider the RBF kernel functions to train the model. We start from a perspective according to which competitiveness is regarded as the synthesis of a country’s performances in relation to a set of elementary competitiveness indicators. These indicators are supposed to cover all the nation’s activities (economic, financial, governmental, managerial, etc.). This variety of indicators will allow the emphasis of the multidimensional feature of the proposed measurement.  The Hierarchical Analysis of Competitiveness is ensured by the fact that the model is likely to take care of every country’s decision-making level. Decision-makers at the lowest level of the decision-making hierarchy with an important amount of data at their disposal (elementary performance indicators) will find it hard to use such data, and therefore will only have partial knowledge of the system’s global performances. In view of this situation, we are faced with the need to aggregate these data so that information can be submitted hierarchically from one level to a higher one. This aggregation process, dictated by the hierarchical decision-making levels, will generate the conceptual stages of the suggested methodology. The data structure adopted by the World Bank, which confirms a hierarchical structure, may provide a context for implementing the current model. According to this structure, a country’s competitiveness is grasped through five fields supposed to cover all of a country’s activities.


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



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. Although the algorithm is not specifically built into ExamView, it is possible to create a short function definition that will execute each step in succession. In the next section, we show the basic bond pricing function and how Newton’s Method can be applied to find the yield. We will then demonstrate how to set up an algorithmic problem in ExamView where the student is asked to compute a bond’s yield, as well as how to program the solution and plausible distractors. We conclude with a short discussion on the benefits of this method and its potential application to other types of problems. The yield to maturity (YTM) for a coupon bond is computed by solving for the interest rate r in the following equation: where C is the bond’s annual coupon payment, N is the number of years until maturity, M is the face value paid at maturity, and P is the bond’s current market price. Unfortunately, it is impossible to solve this equation for r using standard algebraic techniques. However, it is possible to obtain the solution numerically.  Since the bond pricing function is monotonically decreasing and continuously differentiable for interest rates r > 0, Newton’s Method converges to the solution without difficulty. To set up an algorithmic bond yield problem, we begin by either creating a new question bank in ExamView or opening an existing one.  We then create a new question, either by pressing Ctrl-N and then selecting “Bimodal” in the dialog box that pops up, or by selecting Question, then New and Bimodal from the menu along the top of the window. (Although it is possible to specify the new question type as “Multiple Choice,” bimodal questions offer more flexibility since they can displayed either in multiple choice or short answer format.) After the new question window appears, we specify the desired number of answer choices and columns and then enter the question stem as shown on the previous page. Note that for now, we have also entered “A1%” through “A5%” as possible answer choices and specified the correct answer to be choice “a” (although this selection is arbitrary). Later we will define how ExamView should compute the correct answer and the various incorrect answer choices. Our task now is to specify how the random values for M, N, C, and P are to be chosen.


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



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? A literature scan conducted in order to ascertain the impact of organizational culture on organizational respectability revealed a research made by Mohamad, Abu Bakar and Abdul Rahman (2007) in institutions of higher education in Malaysia. However this research aims to assess the impact of three variables including organizational culture on organizational respectability. It does not mention that organizational culture on its own could have an impact on organizational respectability.  Maslow’s Theory of Hierarchy of Needs considers human needs under five categories and health can be considered as a physiological need. However, health refers not only to an individual’s physiological well being, but to his/her psychological and social well being as well. When health is considered in this respect, it must be stated that every person’s and every society’s health status is different. This is where the essential but hard to access nature of medicine derives from. The aim is to provide the highest capacity of health for everyone and to maintain this capacity. A healthy person is a person who is free from illnesses, injuries, mental and emotional problems that hinder normal human activities. Parsons and other functionalists state that individuals as members of a society can perform their respective social roles only if they are healthy. According to Parsons, illnesses decrease a person’s ability to perform the roles imposed by being a member of the society, posing a danger for social order (Demirbilek, 1999). Issues such as culture, organizational culture, corporate identity and cultural change are among the most popular topics covered by organization management in recent years. There is extensive research on the relationship between management practices and techniques and culture of society in general and culture of organizations in particular. The fact that management is ultimately linked to human beings and that human beings are a product of society has given prominence to the phenomenon of culture that creates a society. Each organization is a micro society. Hence this micro society is bound to have its “set of shared values”, namely its own culture (Koçel, 2003). The concept of organizational culture emerged in 80's and began to be used extensively in the fields of management and organization.


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



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).  This positive role exists as price helps to form a belief or perception about quality, which then influences the purchase intention (Erickson and Johansson, 1985; Monroe and Krishnan, 1985).  The conceptual framework of Erickson and Johansson (1985) compactly joins these two distinctive effects.  Figure 1 illustrates this framework, which helps construct a consumer utility function that incorporates the price-perceived quality heuristic into classic quantitative setups (Mussa and Rosen, 1978; Moorthy 1984, 1988). We state that the overall value of sh is derived from two components – s and p, and that sh is an increasing function of both since perceived quality (sh) is formed based on true quality (s) and the price level (p), Parameter δs (0 < δs  1) is used to represent the fraction of true quality information that is known to consumers, and parameter δp represents the weight that consumers place on price p when assessing perceived quality sh.  That is to say, for the average consumer, a higher price and a higher product quality will result in higher perceived quality.  Besides the support from the behavioral literature discussed earlier, studies that indicate product quality information cannot be fully conveyed or evaluated by consumers prior to purchase (Chang and Wildt 1996; Nelson 1970; Shapiro 1982) provide further support for such parameters.   To ensure that the effect of price on quality is not greater than its effect as a budgetary constraint, we confine our analysis to 0  δp  1. Another issue in the formulation is the degree of dependence between the use of price-perceived quality heuristic and the amount of true quality information available.  No conclusion can be drawn from existing research.   On one hand, one may argue that the more information is available to consumers, the less they will rely on price to judge quality.  For example, Zeithaml (1988) shows that the availability of intrinsic cues to quality affects the price-perceived quality relationship.  On the other hand, other studies suggest that the use of price-perceived quality heuristic is an intrinsic behavioral characteristic of consumers, and they still adopt it even if their knowledge of the products is increased by communication or personal usage (e.g., Lichtenstein and Burton 1989).  In light of these differing views, we allow the degree of dependence to vary and in this paper, δp and   (see equation 1) will be the parameters that captures the three potential areas that may affect the consumer price perceived-quality heuristic usage:  Hotel Star Ratings, Hotel Brand Perception and Hotel Capacity. Parameter   captures the strength of this dependence.    = 0 implies no dependence, and   = 1 implies complete dependence.  If δp = 0, price plays no role in quality perception. 


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