The Journal of American Academy of Business, Cambridge

Vol.  8 * Num.. 1 * March 2006

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

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Ex Ante Recognition of Bubble Stock Gauges and Forecasts of Their Bursting in the United States and Japan

Dr. Robert H. Parks, The Lubin School of Business, Pace University, New York, NY

 

Section I of this article summarizes the ex ante identification of four major stock gauges as bubbles fated to burst. Section II presents the pure theory of a fully integrated stock valuation model coupling the Gordon (1962) dividend model with the Miller-Modigliani dividend irrelevancy model (1961), hereafter the G-MM model. Section III, the applied analysis, presents four matching valuation recipes I used to identify bubble stock gauges. Given its still current relevance, I devoted the core of this article in Section III (A) to the bursting of the S&P 500 in 2000. Section III (B) reviews the predicted collapse of the “megabubble” Nasdaq Composite. Section III (C) tracks, but briefly, my forecast of the bursting of the S&P 500 in 1987. Section III (D) also reviews briefly the predicted crash of the megabubble Nikkei 225 in 1990.  I stressed throughout the role of fiscal and monetary policy. A principal theme is that Federal Reserve policy 1997-2000 fueled and fired an overinvestment boom that collapsed and bubble stock gauges that crashed, predictably. A related thesis is the failure of the regulatory officials and the central bank to suppress systemic financial fraud.   Section IV sets forth my conclusions and suggestions for further research. The appendix lists all ex ante bubble recognition and forecasts. All forecasts there are press documented, and each bubble burst as forecasted. The footnotes include additional press documentation and further ex ante evidence of bubble gauges in published articles.   Defining and identifying bubbles ex ante are inseparable tasks. In addition to the valuation analysis I constantly tracked the emerging systemic depressants. The two analyzed together put in stark relief the theoretically maximum valuations under ideal conditions versus the depressants that lay waste to valuations.(1)  For  immediate perspective just glance at the treacherous roller coaster ride of the major stock indexes for the S&P 500, Nasdaq Composite, and Japan’s Nikkei 225.    [Insert Figure I here.] The legacy of bursting stock gauges included damaging and dangerous recessions, except for the 1987 crash. (Bubbles can sometimes exist in otherwise healthy economies.) But Japan after 1990 and the United States after 2000 suffered recessions, widespread bankruptcies, evaporating profits, major unemployment, outright deflation in Japan, and the specter of deflation in the United States. Massive boom-to-bust cyclical swings and crashing stock gauges contradicted the prematurely celebrated “wealth effect” and “new era” views. Crowd mania crowded out efficient market theory.(2)  A simple hypothetical example (Parks, 1998) may help in following easily the applied theoretical, mathematical, and empirical evidence in Section III. Assume two companies A and B with identical growth rates (g) = 8% for earnings, dividends, and capital gains; a 10% required return (k); and starting identical earnings (E0 = 200). To show maximum potential valuations and price-earnings ratios under extremely optimistic but highly unrealistic assumptions one must posit (a) that earnings are always honestly reported and forecasted and (b) that the required return always matches realized return.  Assume further that the only difference in this ultra happy hypothetical example is that A distributes 50% of its total earnings and plows back the 50% retained earnings into growth, and B plows back 100% of total earnings but pays zero dividends.   Consider first Equation (1) for A under the Gordon dividend discount model standing alone with dividend distribution of 100. If the analyst mistakenly overlooks the additional 100 of retained earnings beyond the 100 of dividend distribution, the price, Po would be 5,400 on trailing earnings, and the price/earnings ratio, PO/EO, 27.   P0 = (1+g)(D0)/(k–g)  (1)             5,400 = (1.08)(100)/(0.10–0.08)               PO/E0 = 5,400/200 = 27  Consider next in Equation (2) a fully integrated G-MM model with complete accounting of total earnings of 200, just as MM would insist. Assume now that A pays 100 in dividends but also plows back profitably 100% of the 100 of retained earnings. The alert analyst would calculate P0 at 10,800 and the P0/E0 at 54. 

 

Fiscal and Monetary Policies Under Zero Interest Rate Regime: A Brief Exploration

Dr. Ali Reza Jalili, Stetson School of Business and Economics, Mercer University, Atlanta, GA

 

INTRODUCTION

Charging interest on commodity or monetary loans is an old practice throughout the history.  As noted by Spiegel (1991: 9), interest probably originated with commodity loans such as cattle and seeds.  Under those circumstances, the borrowed commodity, through work of nature, could produce a surplus.  Emergence and expansion of opportunities for productive usage of money and possibility of earning surplus via its employment, gave birth to the practice of lending money at interest.  Without the invention of money and inauguration of an interest regime, it would not have been possible for many economic institutions, commercial activities, and managerial practices to be devised, developed, and maintained.  Today, interest plays such a vital role in practically all aspects of contemporary capitalist economies, that it is almost inconceivable even to imagine its abolition.  Despite such importance, however, some writers do contemplate an interest-free economy and there are countries that indeed engage, albeit with varying degrees, in such experimentation.  Iran, Pakistan, Malaysia, Saudi Arabia, and other Emirates of the Persian Gulf region are but a partial list of such countries.  In fact, it has been reported by Khan and Mirakhor (1987: 9) that 45 countries, in one form or another, have experienced “Islamic Banking.”  Today, the scope is probably even wider.  This behavior is deeply rooted in religious convictions and stems from some moral and ethical opposition to the act of usury. Whatever the rationale, true prohibition of interest will have substantial and profound consequences for virtually all aspects of economic lives in these countries.  The entire developmental strategies, their executions, and outcomes depend so crucially on this issue, that a thorough study of the subject is an indispensable endeavor for anyone who ventures to study these societies and contemplate solutions to their problems.  This paper, via focusing on the fiscal and monetary policy aspects of the ban on interest, may be considered as a step in that path. In the first part, the paper briefly investigates the background of the issue of usury and traces the origin of opposition to it.  The second part states the issue within confines of Classical and Keynesian IS-LM frameworks and arrives at formal equilibrium solutions under both conventional and interest-free economy.  The third section, then, evaluates and discusses these results.  Evaluation of other works on the subject and proposed solutions for operation of an interest-free system has been largely omitted from this work and deferred to a later date.  Opposition to charging interest is almost as old as the practice itself.  Throughout the history, a host of writers, philosophers, and social leaders have denounced usury on moral, ethical, and economic grounds and sought various measures against it.  The antagonism, wherever found an opportunity, manifested itself in actions ranging from regulating the practice, imposition of ceilings on the interest rate and the amount of interest, to its outright prohibition.  The oldest documented attempt at controlling usury can be found in article 93 of The Code of Hammurabi, (1792-1750 B.C.), which prohibits compound interest and limits the total amount of interest equal to the principal. (Cook 1903).  Similarly, Pharaoh Bocchoris in Egypt (720-715 B.C.), forbade the lender to earn more than double the principle from interest.  (Rodinson ,1973:240).  Practice of usury, which has no reference in the writings of Homer and Hesiod, spread to Greece shortly after the invention of coined money in Asia Minor and Lydia early in the seventh century B.C. and reports of these transactions began to surface in the writings of the second half of the seventh century B.C. (Spiegel 1991: 8-9).  Charging interest, however, was not viewed as an honorable act.  Plato (427- 347 B.C.), in his writings, particularly “The Laws(1960), strongly advised against credit transactions in general and against charging interest in particularAristotle (348-322 B. C.) mostly in his “Politics” (1925) and also in “Ethics” (1925), condemned interest and proclaimed it to be “contrary to all nature.”  Similar opposition to charging interest can be found in other societies and works of other writers.  Manee (215 A.D.) and Mazdak (418 A.D.), originators of two socio-religious movements in Iran, both condemned charging any amount of interest.  The prohibition of interest, along with other teachings of Mazdak, was officially adopted by King Ghobd I (448-531 A.D.), albeit in much lesser degree than proposed by Mazdak. (Ravandi, 1975: 650-653; Rodinson , 1973: 22).  Bishop Jacob of Saroug (451-521 A.D.), in his writings, refers to usury as Satan’s tool of recovering the power that he lost due to the breakdown of paganism. (Cited in Rodinson ,1973: 239).  Justinian (527-565 A.D.) passed a law in which charging compound interest was illegal, and the amount of interest was limited to twice the sum of the original loan. (Rodinson, 1973: 240).  Roman’s imposed an upper-limit of 12% interest on money loans and 50% on commodity loans.  In 325 A.D. the clergy were forbidden to charge interest by the Council of Nicaea and in 789 A.D. Charlemagne passed a legislation that extended this prohibition to all people.  The extension was reaffirmed by the Second Lateran Council in 1139 A.D. (Spiegel 1991: 63-64).

 

Muse Air: Management in Crisis

Toby Pratt, Embry-Riddle Aeronautical University

Dr. Marian Schultz, The University of West Florida

Dr. James Schultz, Embry-Riddle Aeronautical University

 

ABSTRACT

This paper details the variables which led to the incorporation, operation and eventual demise of Muse Air. The individuals involved with Muse Air, and its inexplicable ties to Southwest Airlines, make this story unique. After its launch bad timing, poor strategy, grueling competition, and unexpected obstacles plagued the fledgling airline. After four years of operation in a post-deregulation environment with no operating profits, Muse Air is sold to Southwest Airlines and eventually, liquidated. This paper not only includes historical facts regarding the organization of the airline, but also tells a story of a company, and the affect it had on customers, employees and the management team. Lamar Muse is at the head of Southwest Airlines as the first flight takes to the skies in June 1971.  Muse is the company President and CEO. Years later, Muse finds himself at the helm of another airline, but this carrier bears his own name, Muse Air (Muse, 2002).  Lamar Muse is no stranger to the airline industry. His experience within commercial aviation is extensive, having worked in senior positions with Trans-Texas Airways, American Airlines, Southern Airways, Central Airlines and Universal Airlines (Leary, 1992).  During his 12 years at Trans-Texas Airways (TTA) as Secretary-Treasurer and Chief Financial Officer, Muse helps to transform the carrier into one of the most profitable in the industry. TTA becomes only one of two carriers to make a profit, and his success at TTA attracts the attention of American Airlines, where he is recruited as Assistant Vice-President for Corporate Planning (Leary, 2002).  At American Airlines (AA), one of Muse’s tasks includes the recommendation for a new airplane to replace AA’s aging Convair fleet. But despite his recommendation that the airline purchase the Boeing 737, AA selects the BAC One-Eleven, a decision the airline would later regret due to performance and maintenance problems. Additionally, when Eastern Airlines begins a competitive shuttle service out airports in Boston, New York and Washington, D.C., Muse recommends providing a free flight for their customers if they can not provide them transportation on their next flight within 30 minutes.  But AA selects a different strategy, one that causes them to lose market share in the shuttle market. After the two situations at AA where his advice was not followed, Muse accepts a position in Atlanta where he becomes Vice President for Finance at Southern Airways. Under Muse’s guidance, Southern soon becomes the most profitable carrier in the airline industry (Leary, 1992).  After three years of success at Southern, Muse accepts the position of President for Central Airlines. But after two years, and the merger of competitors Southern and Frontier Airlines, Muse moves to Detroit to become President, Chief Executive Officer, and part owner of Universal Airlines (Leary, 1992).  Universal is in major financial trouble when Muse arrives, but by developing a unique freight rate, and introducing to the airline industry “hubbing” the practice of bringing flights into a single airport, a “hub”, and sending them back out to their ultimate destinations along “spokes”. These improvements resulted in $2.8 million profit for the carrier after Muse had only been the job for only a year. The following year the profit increased to $4.8 million. But when the company’s majority owners want to begin using the Boeing 747, Muse disagrees, believing that the aircraft is not right for their market. Lamar is fired over this disagreement, and the remainder of his contract, along with his share of the company is settled for cash, making extremely him rich, but unemployed at the age of 49 (Leary, 2002).  Two years later Muse is hired by Southwest Airlines as Chief Executive Officer by Rolland King and Herb Kelleher. Muse is tasked with launching of Southwest. Their initial market was providing service to Dallas, Houston and San Antonio with three Boeing 737’s (Muse, 2002)   Seven years later, despite intense competition from local carriers Texas International and Braniff, Southwest becomes extremely profitable. Over this period however, co-founder Rolland King is increasingly hostile towards Muse and his aggressive leadership style. At a Southwest board meeting in 1978, King effectively lobbies for and receives Muse’s resignation (Leary, 1992).  Almost immediately following Muse’s departure from Southwest Airlines, President Jimmy Carter signs the Airline Regulatory Reform Bill in November 1978. “The United States Airline Deregulation Act was a dramatic event in the history of economic policy. It was the first thorough dismantling of a comprehensive system of government control since the Supreme Court declared the National Recovery Act unconstitutional in 1935” (Kahn, 2004, ¶ 1).

 

Twenty Years of Advances in Accounting—1984 - 2003

Dr. Jeffrey J. McMillan, Clemson University, Clemson, SC

Dr. Daryl M. Guffey, Clemson University, Clemson, SC

 

ABSTRACT

This paper provides a description and categorization of the topical content appearing and research methods employed in Advances in Accounting (AIA) since its inception in 1984.  AIA was established to provide an important forum for discourse among and between academic and practicing accountants. Its goal of being an outlet for quality research across a wide spectrum of topics based on varying research methodologies has resulted in a journal that arguably has the most unique mix of articles among quality accounting journals.  For twenty years Advances in Accounting (AIA) has provided researchers an outlet for disseminating new conceptual arguments, models, and proposals that enhance our existing knowledge base.   AIA was established to provide an important forum for discourse among and between academic and practicing accountants on issues of significance to the future of the discipline. Emphasis was placed, and still is, on original commentary, critical analysis and creative research that would substantively advance our understanding of financial markets, behavioral phenomenon, regulatory policy, and accounting education. Over the years the trends in contributors, topical content, and research methods utilized in various research outlets has been examined (Hutchison and White 2003; Meyer and Rigsby 2001; Urbancic and Zimmerman 1994; Carnaghan et al. 1994; Mitchusson and Steinbart 1993; Heck and Bremser 1986; Dyckman and Zeff 1984). Periodic analyses of the content and methods used in an academic journal help identify the trends and the most prolific authors that have had significant influence on the evolution of accounting knowledge.  It also helps one to better appreciate and understand what the journal has been able to achieve over a time period. To that end, this article presents and categorizes the topical issues addressed and research methods employed in AIA articles. In addition, an analysis of AIA’s contributors and an evaluation of AIA’s impact are provided. Since its inaugural volume in 1984, AIA has been issued once a year with one supplemental volume published in 1989.  Thus, over the past 20 years there have been 295 articles published in AIA’s 20 annual and one 1989 supplemental volumes – slightly over 5,600 pages in total. The number of articles per volume range from 18 articles to 12 articles. The longest article published in AIA was 47 pages and the shortest 5 pages. The median article length was 18 pages and the mode was 14 pages. Unlike many other academic journals (e.g. Journal of the American Taxation Association (JATA), Behavioral Research in Accounting (BRIA), Auditing:  A Journal of Practice and Theory (AJPT)), AIA has not emphasized one area of interest.  From Volume 1 (1984) through Volume 20 (2003) AIA has been true to its stated mission of publishing articles focusing on a wide array of topics and differing research methodologies.  Thus, in order to try and gain an understanding of the vast and varied makeup of AIA’s content over the past 20 years a logical and rational classification system of some nature had to be applied.  Accordingly, every AIA article published in the past 20 years was reviewed and classified according to the primary topic being addressed and the primary research method utilized in conducting the research.  Table 1 presents a breakdown of the eight major topical areas addressed in AIA - auditing, financial accounting, education, managerial accounting, governmental, tax, ethics, and international.  Audit and financial accounting issues are by far the most commonly addressed topical areas comprising approximately 72 percent of the articles published by AIA. The percentages of articles in these two critical areas were quite close as there are 112 audit articles (37.97%) and 101 financial articles (34.24%).  Forty-eight articles (16.27%) address educational issues while 23 articles can be categorized as covering managerial accounting subjects (7.80%).  The remaining 11 articles (3.72%) that appear in AIA are spread among government (4), tax (3), ethics (3), and international topics (1).  An assortment of research methods have been employed in the articles published by AIA.   As was done with the topics addressed, the research methods employed in AIA articles were categorized into some broad logical groupings.  The categories utilized are – Behavioral, Modeling, and Conceptual. Behavioral research by definition involves the examination and study of responses and decisions made by human subjects.  Since AIA is an accounting journal the humans subjects most often utilized were in some fashion associated with or affected by the accounting profession (i.e., auditors, accountants, bankers, students, etc…). By far, the two most studied groups were auditors/accountants and students.  The two core behavioral research methods utilized in AIA articles were Experiments and Survey/Questionnaires.  This class of articles present analytic, financial, economic, or statistical models and simulations. This type of research method is particularly common for those investigating the impact of accounting pronouncements and/or practices on the performance of firms and the financial market as a whole.  In addition, this research method has often been employed to investigate auditing issues such as risk assessment or sampling.  The vast majority of modeling studies involve the retrieval and analysis of archival empirical data (e.g., financial statement information such as earnings, assets, liabilities, etc…).

 

The Effects of Shelf Registration on Cost of Debt

Dr. Debra Skaradzinski, Siena College, Albany, NY

Dr. Allan Graham, University of Rhode Island, RI

Dr. Pamela Stuerke, University of Rhode Island, RI

 

ABSTRACT

This paper examines publicly traded bonds that were issued from 1995 through 1998 to see whether shelf-registered debt is riskier than traditionally-issued debt, as measured by issuance prices.  Using a sample of new industrial issues, we find that the yield of a bond issue is not significantly influenced by whether the debt was shelf- or traditionally-registered.  We also find that any increased risk as a result of shelf registration is impounded in bond ratings, which do significantly influence yields.  We believe this implies that the choice of registration method (shelf vs. non-shelf) is most likely an indicator of firm size and capital structure rather than an indicator of firm risk, and that potential changes in risk due to the expectation of increased leverage are recognized by market participants prior to bond issuance. This paper examines publicly traded bonds that were issued from 1995 through 1998 to see whether or not the higher risk identified in shelf-registrations of debt (Moerhle et. al., 2004) is priced at issuance.  Earlier research on shelf-registered debt (Allen, et al. 1990, Fung and Rudd 1986) found that the method of issue was not significantly associated with bond price at issue, so Moehrle et al.’s subsequent result was somewhat surprising.  Furthermore, Moehrle, et al.’s warning to regulators to consider reexamining the issue of shelf registration, and to investors that they should “beware of the inherent risks of shelf-registered securities,” emphasized that this result had considerable economic repercussions.  Shelf registration was originally intended to allow stable, highly visible firms additional flexibility in accessing capital markets.  The mechanism of shelf registration works like an option for the firms that utilize it.  Firms that shelf-register a specific amount of debt or equity securities are subsequently allowed, but are not required, to issue those securities within two years of registration.  The debt securities are priced according to the market rates and the firms’ debt ratings at the time of issuance, not at the time of registration, so it does not benefit a firm to register securities with the intent of purposely taking later action that would downgrade the debt.  On the other hand, since this prior registration speeds up the actual issuing process, firms are more readily able to take advantage of a short-lived drop in market interest rates.  This option can be considered a financial benefit to the firm.  However, if debt that is issued through shelf registration is perceived by the market to be riskier than conventionally issued debt, then shelf-registered debt should have an additional cost associated with it.  Firms would then have to weigh the benefit of a quick response to lower market rates against the inherently higher cost of their shelf-registered debt.  In contrast, if debt issued through shelf registration is not perceived to be riskier, then managers of firms that meet the SEC’s criteria may have additional incentives to consider the use of shelf-registrations. Using a sample of new industrial issues, we find that the bond market does not price the increased risk.  We believe this implies that the choice of registration method (shelf vs. non-shelf) is most likely an indicator of firm size and capital structure rather than an indicator of firm risk.  The remainder of this paper is organized as follows.  Section 2 includes a brief overview of literature concerning shelf registration and poses our research question.  In Section 3, we describe the models employed in the analysis and describe the sample.  We present the empirical results as well as an analysis and discussion of these results in Section 4.  Section 5 follows with a summary and conclusion of the paper. From February of 1982 to November of 1983, the Securities and Exchange Commission (SEC) tested Rule 415, which permitted qualifying firms to register debt or equity securities up to two years in advance of issuing.  After November of 1983 the SEC made Rule 415 permanent.  The intent of Rule 415 is to afford large and established firms greater financial flexibility.  Denis (1993) summarizes the early requirements for these firms: at the time of registration firms were required to have investment grade bonds (a minimum rating of BBB); firms were required to have both filed all SEC disclosures and made all fixed payments (interest, preferred dividends, lease payments) on time for the three years prior to registration; firms were also required to have a market value held by outsiders (market float) of $100 million and annual trading volume of three million shares.  If the annual trading volume was lower than three million, then firms could still qualify for registration if their market float was at least equal to $150 million.  In 1993, to reflect the growth in capital markets and the changing nature of information disclosures, the SEC amended all but the investment grade requirement of Rule 415.  Instead of three years of timely disclosures and payments, firms were only required to show the prior twelve months.  Instead of a minimum market value of $100 million, firms were only required to have $75 million of market capitalization held by outsiders.

 

A Conceptual Model for Operations-Analytics Convergence

Joseph O. Chan, Ph.D., Roosevelt University, Schaumburg, IL

 

ABSTRACT

As businesses are trying to differentiate themselves in a competitive market, leveraging business intelligence to enhance business operations has become a top priority in business strategies. In spite of huge investments in technologies, companies are often not reaping the anticipated benefits. The disconnection between analytics and operations prohibits the effective execution of business strategies. A critical success factor in gaining competitive advantage is the ability to apply the right analytics at the right time, to the right people, at the right place and under the right situation. This paper proposes a conceptual framework for the convergence of operations and analytics through the construct of the operational-analytic classes for an enterprise. It further describes an enterprise model for operations-analytics convergence. Applications of the model to customer relationship management and supply chain management are explored.  The capability to adapt and respond to changes quickly is a necessary condition for businesses to compete in the global economy. Making the right decision at the right time has taken special meaning in the world driven by real-time processing of information where the right time is typically now. The traditional planning-execution cycle is getting shorter and the line between analytics and operations is becoming blurred. Sub-optimal performance may result from not being able to apply the right analytical results in real-time operational situations. In today’s crowded market, traditional strategies in operational efficiencies, product excellence and price may not by themselves provide the necessary competitive advantage. Businesses are extending their value chain to include their customers, suppliers and alliance partners. The ability to coordinate business intelligence and operations across the extended enterprise in real-time is critical for businesses to be adaptive and responsive to changes quickly and effectively. While business intelligence (BI) technologies are adopted in various degrees by most companies, many fail to reap the anticipated benefits of improving operations. Critical issues include the inability to integrate disparate systems, and the inability to integrate analytics with operations. A company equipped with the most sophisticated and expensive business intelligence technology could be rendered totally incapable in operations if the analytics are not applied at the right time, to the right people, at the right place and under the right situation. Application software vendors are responding to the demand of analytics to support real-time operations by incorporating analytics into their application suites. Thus a marketing application has its suite of marketing analytics and a customer application has its suite of customer analytics, and so on. However, an enterprise operation requires the correlation of analytics from different application areas. This paper examines the need of analytics in the improvement of business operations and proposes a conceptual framework for the convergence of operations and analytics at the enterprise level by defining operational-analytic classes for an enterprise. The operational-analytic classes facilitate better business operations by knowing what analytic processes to deploy for the respective operational processes. An enterprise model is described for the operations-analytics convergence. Applications of the convergence models in customer relationship management and supply chain management are explored. Related trends in technology are examined.  Business analytics and operations nourish each other in a symbiotic relationship. Analytics creates the business intelligence for better operations, and conversely, data captured in operations provide the inputs for analytic processing. The capability of leveraging analytics in operations can be a critical differentiator for a business to stay competitive. In the following, we examine how analytics can improve business operations in the critical areas of customer relationship management, marketing and sales, and supply chain management.  Knowing one’s customers is the key ingredient for successful customer relationship management. Businesses are collecting information about customers through many channels. The challenge is to transform the mountains of information into actionable customer intelligence to enhance customer relationship operations. Better customer profiling and prediction of customer behaviors can facilitate target marketing, cross-selling and up-selling into the existing customer base. Disconnects between analytics and operations may result in negative customer experience and the loss of opportunities for the firm. Nelson (2001) described that 75% of customers who defect to a competitor claim that they were satisfied with the enterprise from which they have defected. CRM analytics can help determine the causes for defection and increase the chances of customer loyalty and retention. Customer profitability has recently become an important performance metric for CRM in addition to traditional metrics such as customer satisfaction and customer loyalty. Businesses are trying to determine the top 20% of the customers that can produce 80% of the profits. Likewise, businesses are equally eager to determine the bottom 20% of the customers (McWilliams 2004). Margulius (2002a) described the application of CRM analytics to optimize pricing based on individual customer value and transactional profitability.  Another challenge in CRM is the capability to act in real-time. Maselli (2001) described the use of analytics to let companies determine the value of any customer in real-time. Songini (2003) described the use of real-time analytics to let a company modify its marketing campaigns on the fly, based on suggestions derived from individual customer profiles. Middlemiss (2002) also described the application of analytics to analyze and segment online clients and to make recommendations in real-time. Analytics can improve customer services. El Sawy et al. (2001) described the use of artificial intelligence in customer support as product complexity increases. Analytics from multiple customer touch points can help optimize customer interactions with the firm by providing a unified view of a customer. The capability of deploying the right kind of analytics to provide the right solutions and quick responses to customers is a top priority in customer relationship management strategies.

 

Removing the Blinders: A Phenomenological Study of U.S. Based MBA Students’ Perception of Spirituality in the Workplace

Dr. Joan F. Marques, Woodbury University, CA

 

ABSTRACT

In a recently conducted phenomenological study among seven Los Angeles based MBA students some interesting findings emerged.  The students, who were all working adults, varying from 25 to 50 years of age, and enrolled in a course on Spirituality in the Workplace, succumbed to a process of in-depth soul searching by answering the questions formulated in a detailed interview protocol. The study resulted in some useful conclusions about the possibility of applying Spirituality in the Workplace at various levels, while it also reviewed, among other issues, the reasons why this trend has yet to massively break through in Corporate America. In a recently conducted phenomenological study among seven Los Angeles based MBA students, some interesting findings emerged.  The students, who were all working adults, varying from 25 to 50 years of age, and enrolled in a course on Spirituality in the Workplace, succumbed to a process of in-depth soul searching by answering the questions formulated in a detailed interview protocol. In this paper, the students’ answers to the questions will be reviewed, sometimes through paraphrasing, and at other occasions through verbatim representation. The study reviewed the students’ perspectives on their current jobs and work environments, but also solicited a more general view by asking for their outlook on Corporate America, their perceptions on Corporate America’s attitude toward Workplace Spirituality, and the impediments they distinguish toward establishing this trend massively.  Phenomenology is regarded as one of the frequently used traditions in qualitative studies.  According to Creswell (1998) a phenomenological study describes the meaning of the lived experiences for several individuals about a concept or the phenomenon (p.  51).  Blodgett-McDeavitt (1997) presents the following definition: Phenomenology is a research design used to study deep human experience.  Not used to create new judgments or find new theories, phenomenology reduces rich descriptions of human experience to underlying, common themes, resulting in a short description in which every word accurately depicts the phenomenon as experienced by co-researchers. (¶ 10)  The phenomenon to be reviewed in this paper is spirituality in the workplace, its meaning, and its application for 7 interviewees who have been sufficiently exposed to- and who have intensively considered the phenomenon through a significant period of time.  Seven MBA-students participated in this phenomenological study. Their ages varied from 20 to 50: two were younger than 30 years; two between 30 and 40 years; and three between 40 and 50 years; two of the respondents were male, five were female. The participants’ heritages, like the majority of the California population, were interestingly varied: Although all were either American citizens or green card holders, they originated from Lebanon, Iran, Los Angeles, Mexico, Cuba, Brazil, and Iraq. Their jobs represented a similarly interesting variety: Loan Consultant, Appeals Specialist, Product Coordinator, Financial Controller, Local Manager, Laboratory Technician, and Designer.  Five of the seven respondents considered themselves spiritual workers. One considered herself a spiritual worker in progress, due to the course in workplace spirituality she was following at the moment, and one respondent (the youngest of the group) considered himself still an unspiritual worker, and just now (during the course) learning about the concept of practicing spirituality at work. As an answer to the question whether the course in spirit at work, in which all these participants were enrolled at the time of this interview, was making any difference in their life in- and outside of the work environment, only one of the participants answered that such was not the case. All others indicated that learning about spiritual values encouraged them to rethink the way they were living with other human beings in and outside of the workplace, and some even affirmed that, as a result of taking this course, they were discovering an increasing desire within to search for work environments in which they would be more able to attune their creativity, talents, and yearning to connect with others. One student explained that she recently switched jobs due to this realization, while another mentioned that she had gone into part-time status to finish her degree and spend some time on seriously examining herself and the job market in order to find a productive activity that would provide her with a greater sense of meaning in the future. A few students stated that, due to the course, they felt more connected to- and thankful with the presence than they were before. One mentioned an increased sense of understanding of nature and its importance in our day-to-day being. Another student shared a specific example of bringing a more spiritual atmosphere into her current working place by applying concepts such as a personal question before a meeting to open up the conversation and to learn about each other.

 

The Investigation for the Establishment of Science Parks: The Case of Taiwan

Chun-An Chen, National Chiao Tung University, Taiwan

 

ABSTRACT

The establishment of Hsinchu Science Park in Taiwan has led to successful industrial development. However, Taiwan is a small but crowded island and establishing additional science parks will be difficult. Thus, this research will investigate the necessity of creating models for science parks. By knowing the advantages and disadvantages of current science parks, we can explore the feasibility of establishing virtual science parks in Taiwan. We believe that the establishment of virtual science parks will promote further industrial development. In light of current and planned development of industries, we can learn the most suitable models for future science parks. The establishment of Hsinchu Science Park (HSP) in Taiwan is an effective policy tool for Taiwan, a good response to the environmental changes, and excellent promotion for industries upgrade. Thus, it plays an important role in Taiwan’s advanced technology development (Lee and Yang, 2000). The science park can promote local economic development and also inspire innovations in industrial technology. Furthermore, due to the great investment in the R&D activities for the science park, there must be more cooperation between the enterprises and the R&D institutes and universities outside of the science parks (Sun, Ke-nan, 1998). The successful establishment of a science park cannot only trigger economic development, but it can also achieve district growth by concentrating development efficiency within the science park. Although science parks have numerous advantages, it is still required to consider development positioning, industrial environment, public facilities, information systems and executive management because the establishment of science parks requires a remarkable amount of capital. However, available land is at a premium in Taiwan. Thus, the lengthy amount of time that is needed to establish a science park often creates a loss of efficiency. Thus, this research will use establishment models to design more suitable establishment modes.  The Hsinchu Science Park provides incentives of free tariff and highly accessible factory land space. It also encourages investment activities to generate the capital that high technology factories require (Ma,Wei-yang,1999). To lay the foundation of high technology industries, the government integrates the low-interest international loans to create the fund for R&D aid. The imported machinery is exempted from tariffs. These favorable conditions attract local and international investment capital. High technology industries with highly dense capital infusions need considerable assistance.  In addition to investment capital, business owners can obtain the required capital from venture capital companies, bank loans, or stocks on public markets or Taisdaq (OTC) market.  The high technology enterprises in the Hsinchu Park have more access to capital sources than the others. Furthermore, the industrial policies provide guidance and support. The government offers tariff-free deduction projects and investment policies to promote industrial development. Thus, these conditions attract enterprises to shape Taiwan’s unique high technology development clusters.  The Hsinchu Science Park, in addition to its excellent investment environment, is only a two-hour drive from Taiwan’s international airport. The science park is also adjacent to the universities, ITRI and national research institutes. The science park management bureau, enterprises, official agencies, academic organizations and research institutes formed a professional environment that is suitable for developing high technology industry. Also, the facilities of the science park include bilingual Chinese-English high schools and elementary schools, banks, dormitories and athletic recreation facilities. This establishment creates the conditions for better technology development and attracts local and global talent. Porter divides industrial clusters into the upstream factories, downstream factories, service support institutes and academic research institutes. The establishment of a science park attracts the participation of like semiconductor manufacturers, information technology industries, universities, research institutes, and government agencies to form a completely functional industrial cluster. This effect has more advantages to the industrial development.

 

A Comparative Study on Corporate Political Action in China

Dr. Yongqiang Gao, Huazhong University of Science &Technology, Wuhan, PRC

Dr. Zhilong Tian, Huazhong University of Science &Technology, Wuhan, PRC

 

ABSTRACT

Corporate political action(CPA) is always an interesting topic for management scholars since 1980s. But till now, studies on this topic are almost conducted in the Western countries and cultures, and study on the CPA of non-Western countries, specifically, CPA in China is untouched. Due to the differences of culture and political economy between China and the West, CPA in China may be very different from the West’s. The paper mainly discusses the CPA in China from a comparative perspective, that is, compares corporate political strategies(CPS) and tactics  in China and in the west. The study will enrich people’s knowledge of CPA due to different CPA taking place in different countries and cultures and provide foreigners and multinational enterprises with insight on Chinese political process. Corporate political action(CPA) is always an interesting topic for management scholars since 1980s(e.g. Baron,1995; Getz, 1997; Hillman and Hitt, 1999, etc.). Political strategy has become part of corporate strategy for many firms. It is convinced that CPA can bring firms competitive advantage (Shaffer, 1995).  However, present literature on CPA is mainly conducted in Western countries and cultures, to the best our knowledge, no article appears to study the CPA in China. China is becoming a more and more important nation in the world. The huge population and rapidly developing economy turn China into the most promising market in the world. Multinationals take China as a new paradise of investment. But due to the differences of culture, political and economic systems between China and the west, west-based multinational enterprises suffer heavily cultural conflict and risks resulted from politics of Chinese government. To understand the political process in China is eagerly expected by multinationals.  This paper studies the CPA in China from a comparative perspective with the West’s. The purposes of this study are twofold: firstly, to enrich people’s knowledge of CPA since CPA is different in different countries and under different situations; secondly, to provide multinationals with insight on Chinese political process.  This paper is simply organized as follows. The following section introduces the CPAs in the west. Then we discuss the CPA in China. The fourth Section compares the CPAs between the west and China. Some other characteristics of CPAs in China are also discussed in section five. Finally, a brief conclusion is provided.  Interest groups’ (including firms) participating in the government process has a long history in the West. This phenomenon has been concerning by scholars since at least Arther Benteli’s famous work “process of government” in 1908, who discussed in detail the influence of interest group on politics. Today, the pluralism of interest groups is even taken as a component of democracy in the West.  Studies on CPA have been surging from 1970s. Scholars have explored this field with great attention and enthusiasm and achieved abundantly. For example, there are large numbers of articles attempt to explain the determinants of firms’ participation in politics (e.g. Boddewyn and Brewer,1994; Epstein,1969; Getz,1997; Keim and Zeithaml,1986; Mahon,1989; Mitnick,1993; Salamon and Siegfried,1977; Shaffer, 1995; etc.), to examine whether firms gain economic benefits from their political activities or whether CPA impedes the competition within a given industry (e.g. Dean, Vryza and Fryxell,1998; Frendreis and Waterman,1985; Grenzke,1989; Hall and Wayman,1990; Romer and Snyder,1994; etc.), to analyze the ethics of CPA (e.g. Christensen,1997; Hamilton and Hoch,1997; Weber,1997; etc.), to investigate the influence of PACs to the congress election (e.g. Craig,1998; Levitt,1994; Milyo,1997; etc.), and so on. In another stream, the corporate political strategies (CPS) and tactics/activities have received even more widespread focuses not only in academia (e.g. Davis,1998; Getz,1993; Hillman,1995; Hillman and Hitt,1999; Keim,1981; Oberman,1983; Sethi,1982etc.) but also in business circle. The present literature has uncovered many corporate political strategies and tactics/activities that commonly used by Western companies. In an article to formulate a conceptual framework for planning corporate political efforts, Keim (1981) examined some tactics/activities that corporations can influence public policy decision making, such as advocacy advertising, political coalition, political training, lobbying, and political action committees (PACs), etc. Keim, Zeithaml and Baysinger (1984) discussed the effectiveness of some political strategies, such as corporate PACs and constituency building. They suggested that traditional political activities such as campaign contributions and direct lobbying had been supplemented or replaced by corporate PACs, issue and advocacy advertising, and corporate constituency programs.

 

Establishing a Performance Prediction Model for Insurance Companies

Cheng-Ping Chang, Southern Taiwan University of Technology, Taiwan

 

ABSTRACT

The solvency and continuous growth of insurance companies depends on their performance. This study chose 20 insurance companies in Taiwan and used them to try to separate 19 items of financial ratios into five operation indicators to be the performance evaluation variables of insurance companies. The five indicators are Capital Structure, Profitability, Solvency, Management Efficiency, and Capital Operational Capability. Results indicated that both return on assets and sign of profitability influence a heavier financial ratio as well as operating index on performance. The results also indicated the overall continuance of performance of insurance companies were significant in the short run during the period 2000-2002. Beginning in 1960, the government of Taiwan allowed insurance companies to be established. By 2004, licenses had been obtained by 28 companies, including 18 domestic insurance companies and 10 foreign branches. When Taiwan joined the WTO in January, 2002, the insurance market stepped forward toward liberalization and internationalization, which caused intense competition of insurance companies in the market. In this situation, if Taiwan’s insurance companies could receive an effective performance evaluation model and ranking, it would be easier for them to understand their operating efficiency as well as helpful to them in sharpening their competitive edge and regulating their operating goal. Therefore, this study tried to apply grey relational analysis to Taiwan’s insurance companies as samples so as to establish and effective performance evaluation model for insurance companies to consult. After coordinating related performance evaluation literature and research insurance companies, the researcher found that most focused on three aspects: (1) emphasizing the establishment of financial distress prediction models (Urrutia, 1996; Ambrose & Seward, 1988; Wang, 2002; Lee & Brockett,); (2) debating the performance evaluation of insurance companies (Huang, 2002; Zeng, 2002; Hung & Kung, 2003); and (3) discussing the relation between the market structure, organizational form and operational performance of insurance companies (Lu, 1998). In the case of the research methods, factor analysis and principle component analysis were mainly applied. In recent years, categorical data envelopment analysis was applied to discriminate between relatively efficient and relatively inefficient insurance companies. As to the variables selection, most researchers used financial reports as the evaluation variables. Using traditional statistic method to evaluate the performance has some shortcomings, such as the need for a large number of data to fit the normal distribution hypothesis. Deng (1982) brought up “Gray System Method” to overcome the above-mentioned shortcomings, as it could deal effectively with “small sample,” “small data,” “uncertainty data,” “multi-variable input data,” “regressive data,” and “uncompleted data” (Deng, 2000b). According to Pai(1993), the Gray System Method has these characteristics: (1) the built model belongs to the non-function’s series model; (2) the method of calculating is easy; (3) it does not require a large number of data; and (4) the data doesn’t need to fit in with the typical distribution. According to Chaang (2004), the related applied field includes a study on the relating factors of the operating performance of financial holding companies using a grey relational analysis. Tu, Lin & Tsai (2001) also used a grey relational analysis and factor analysis approach to evaluate the operating performance of Taiwan’s banking industry. The result showed that the evaluation ability of grey relational analysis was obviously better than the factor analysis approach.  Lu (2000) tried to use factor analysis, grey relational analysis and neural networks to forecast the ranking of operating efficiency in the electronic industry. She then compared the ranking results of all models to check the use of factor analysis to collect common factors; she also tried to test and verify the methods of factor analysis, grey relational analysis and neural networks from which one can effectively forecast the ranking of operating efficiency in the electronic industry. She found in the empirical results that the grey relational distance method, one of the three forecast models in grey relational analysis, is the most accurate. Grey relational analysis and neural networks of artificial intelligent area can more effectively forecast the business performance ranking better than does factor analysis method of traditional statistics analysis. Sun (1999) also used grey relational analysis to obtain the relevant factors from hospital operating performances. In short, grey relational analysis was extensively applied on performance evaluation, project evaluation and important decision-making, with the related research results showing grey relational analysis is a tool of high reliability which is also to calculate (Chaang, 2004; Lu, 2000).

 

The Relationship Between Job Satisfaction, Occupational and Organizational Commitment of Academics

Assoc. Prof. Munevver Olcum Cetin, Marmara University, Istanbul, Turkey

 

ABSTRACT

This research has been carried out to find out if there is a significant difference between job satisfaction, occupational and organizational commitment of academics’ (N= 132) related to; a) their gender, marital status, age, experience and title variances b) and it is also aimed to emerge out whether there is a relationship between the academics’ job satisfaction, occupational and organizational commitment. In this study t-test, one-way (ANOVA) analysis, and Pearson Moments Multiple Correlation techniques have been used. The results of the correlation analysis revealed that there is positive correlation between job satisfaction and affective and normative commitments related to occupation and organization.  Academics’ having job satisfaction and their organizational and occupational commitment are as important as organizational productivity and professional qualifications. As a result of the competition for globalization and staff policy during the 1980s, a lot of organizations made lots of workers redundant in order to reduce their expenses.  As a consequence of these precautions, the relationship between the employers and employees has weakened (Noe et.al., 1997, p.241). Throughout the time, in parallel with those developments this weakening relationship has become an important issue that has drawn some researchers’ attention and it has been studied in many researches and it has also started to compete with the term of job satisfaction.  There have been many important theoretical and empirical developments, as a result of which it has been found out that occupational commitment is a complex and multi-dimensional issue. The early studies on organizational commitment (e.g.: Buchanan, 1974; Mowday, Steers and Porter 1979) tested employee’s occupational commitment and it was accepted as “organizational commitment” in the literature. In the following years, there has been an increasing tendency towards experience, expertise, career, etc. (Meyer, Allen and Smith, 1993, p.538). As the terms organizational, occupational commitment and job satisfaction are key issues in this study, these terms will be explained in advance. In the literature of organizational commitment, the term “commitment” has been used in different ways and as a result of this; there are different definitions of it. Buchanan (1974, p.533) defines organizational commitment as one’s dedication of himself to the purposes and the values of an organization and one’s role; apart from a different instructional value, it is a feeling of commitment of the organization for its own good. Balay (2000, p.18), defines this term as one’s own investments in an organization and inclining to attitudes resulting in social qualities. Organizational commitment may have several different psychological bases. For that reason, researchers have tested organizational commitment in multi-dimensional ways. Among these, the most common one that has been widely used in this field is Meyer and Allen’s (1991) classification. They classified organizational commitment into three categories and they emphasized three different themes in the definition of the term occupational commitment: affective commitment to an organization, commitment related to the possible results in case one leaves the organization, and commitment of one’s obligation of staying within an organization. They showed these three types of commitments as affective, continuance and normative. Affective Commitment: In this type of commitment, there is a positive interaction between the individual and the organization because of having similar values (Shore and Tetric 1991, p.637). Those who stay in their organizations with a strong commitment keep their existence not only because they need the occupation but also they want it (Meyer et.al.  1993, p.539). Continuance Commitment: It is related to one’s experience that has been given to an organization difficulty in giving it up and the cost of things in case he leaves the organization or having few or no alternatives when he leaves the organization. In addition, Meyer et.al. stated that skills and education are not transferred to other organizations easily so it increases workers’ commitment to their own organizations. Those who stay within their organizations with a strong continuance commitment are in their organizations just because they need it (Meyer et.al.  1993, p.539).  Normative Commitment: It reflects the feelings of an individual’s obligations about staying within an organization. These kinds of obligations are not for one’s own good but an individual reflects these behaviors just because he finds whatever he has done ethical and right. The commitment, which develops as a result of socialization, shows one’s loyalty to his employer. Those who have a strong normative commitment stay in their organizations just because they feel obliged to do so (Meyer et.al., 1993, p.539).

 

The Effect of Organizational Ethical Culture on Marketing Managers’ Role Stress and Ethical Behavioral Intentions

Dr. Chia-Mei Shih, Far East College, Tainan, Taiwan, R.O.C.

Chin-Yuan Chen, Kun Shan University of Technology, Tainan, Taiwan, R.O.C.

 

ABSTRACT

 This study applies a path analysis model to examine the relationships among organizational ethical culture, role conflict, role ambiguity, and behavioral intentions. A survey of marketing managers in Taiwan (n=121) reveals that marketing managers who work in more ethical organizations experience lower role conflict and role ambiguity than those who work in less ethical ones. Role conflict negatively affects marketing managers’ ethical behavioral intentions. Also, organizational ethical culture both directly and indirectly affects marketing managers’ ethical behavioral intentions. Implications for practitioners and future researchers are discussed.  Contemporary businesses have realized that ethics and profits are not in conflict and understand that a solid ethical foundation is an important component of long-term corporate success (Stoner, 1989). Therefore, many of today’s businesses must establish an ethical organizational culture. Organizational culture has been receiving increasing interest in the literature on marketing ethics. In particular, the cultural context of an organization is likely to influence ethical decision-making. Organizational culture is recognized as a fundamental determinant of how people behave, more or less ethically, in organizations.

 

A Study for Establishment of the Taiwan Export Processing Zone

Dr. Jiw-Hwa Wu,  National Sun Yat-sen University, Taiwan

Chane-An Lee, National Sun Yat-sen University, Taiwan

Dr. Chun-Chu Liu, Chang Jung Christian University, Taiwan

 

ABSTRACT

 During the 1950s, Taiwan successfully carried out its first successful export development policy focusing on light industrial products, replacing agricultural products as the main exports, which resulted in the birth of the first Export Processing Zone (EPZ) on the island. Due to the positive steps taken for EPZ development over the years, Taiwan has continued to flourish and has even successfully transformed labor-intensive industries into more technological and capital-intensive enterprises, despite going though uncertainties brought about by two oil crises and an Asian financial crisis. In the 39 years since the development of the initial impression of an economic-processing haven for the traditional manufacturing sector, EPZ has continued to develop and undergo a transformation to become a strategic hub for industries that focus on higher-level and more value-added production. The influences on and contributions to the industries as well as local developments during this period have not only produced significant results, but also completed a remarkable page in the history of the economic development of the Republic of China.

 

Competing in the Global Knowledge Economy: Implications for Business Education

Sunita S. Ahlawat, Ph.D., The College of New Jersey, Ewing, NJ

Sucheta Ahlawat, Ph.D., Kean University, Union, New Jersey

 

ABSTRACT

 Off-shore sourcing has become a significant corporate strategy since the 1990s. It is the most recent management tool to emerge in response to demands for more efficient ways to address organizational competitiveness. This is not new given that companies are constantly redefining value by reducing cost and/or raising quality.   While the manufacturing jobs have been moving offshore for the last three decades, the white collar jobs are now moving overseas at an accelerating pace. Although there is considerable uncertainty as to how many and what types of jobs are moving overseas, the impact of white collar job flight goes beyond current and potential displacement of workers. As the policymakers grapple with policy responses to offshore outsourcing, lobbyist offer their favorite response, better education for U.S. workers.  The importance of education cannot be emphasized enough. The ongoing shift toward economic globalization continues to raise questions about what intellectual capabilities, technical skills, and ethical sensibilities will best serve college graduates and enable them to best serve society.

 

A Study on the Motivations of Ports Seeking to Diversify Their Operations in Taiwan

Ya-Fu Chang, Chang Jung Christian University, Taiwan, ROC

 

ABSTRACT

 This paper examined the motives of ports diversifying their operations in Taiwan. Three profiles – corporate strategy, resource-based considerations, and core competence for general enterprises – have been adopted for discussing the motivations of port authorities for seeking diversification. Empirically, we have shown that, regardless of the backgrounds of the interviewees, they share a common viewpoint statistically in assessing the motivations for diversifying port operations. The consideration of core competence has been identified as the primary motivation for ports in Taiwan to diversify their operations, followed by resource-based and corporate strategy considerations.  The planning for operations diversification of international ports in Taiwan aims to enhance the function of the ports. Thus, the first consideration for port authorities in planning future development is the role their ports may play in international shipping.

 

Modeling and Forecasting the Energy Consumption in Taiwan Using Artificial Neural Networks

Dr. Hsiao-Tien Pao, National Chiao Tung University, Taiwan, ROC

 

Abstract

 Modeling and forecasting the long-term energy consumption for electricity are critical because they take up almost 50% of the total energy consumption in Taiwan. This paper uses linear regression and non-linear artificial neural network (ANN) model to analyze how the four economic factors, national income (NI), population (POP), gross of domestic production (GDP), and consumer price index (CPI), affect Taiwan’s electricity consumption and furthermore, develop an economic forecasting model. Both models agree that POP and NI are the most influence on electricity consumption, whereas GDP is the least. Then, we compare the out-of-sample forecasting capabilities of the two models. Results of the comparison indicate that the linear model is obviously of a higher bias value than that of ANN model, and of weaker ability of forecasting capability on peaks or bottoms. This probably results because the linear regression model is built on the logarithm function of electricity consumption, and ANN is built on the original data. In addition, the ANN model is capable of catching sophisticated non-linear integrating effects. Consequently, the ANN is more appropriate between than the linear regression model for developing an economic forecasting model of Taiwan’s electricity consumption.

 

Human Resources Management in the Global Environment

Dr. Sonja Treven, Univesity of Maribor, Maribor, Slovenia

 

ABSTRACT

 In the paper various approaches to the management and recruitment of employees in subsidiaries that the company has established in different countries are presented at first. Then the basic functions of international human resource management among them recruitment and selection of new employees, development and training of employees, accessment of work efficiency, compensation of employees as well as labor relations are discussed. As the expatriates are often given special attention by their work organizations, a special chapter is dedicated to the description of the additional challenges occuring in the management of these employees.  In Slovenia with a population of only two million we have a lot of organizations doing business successfully not only in the domestic but also in the international environment. Lek, one of our two pharmaceutical companies; Fructal that produces juices from various kinds of fruit, and Mura that produces men’s and women’s clothes, are some examples of our most prominent firms. In those as well as in similar organizations that function in the global environment they can use different approaches to managing employees. How they find employees, pay, train, and promote them varies with culture. They usually attempt to treat their employees equitably, yet in a culturally appropriate manner.  When the organization sends its employees to some other country, it takes over the responsibilities besides the basic functions of the human resource management. For example, the functions of staffing, training and compensating are esspeccially emphasized in this organization.

 

Transparency & Accountability: An Argument against a Socio- Economic Funding Model for Australian Schools

Dr. Kathy Rudkin,  University of Wollongong, Australia

Dr. Hemant Deo, University of Wollongong, Australia

 

ABSTRACT

 This paper questions whether the new Australian Schools’ Socio-Economic Status (SES) funding model provides adequate transparency and accountability for Commonwealth government funds allocated to schools. It is shown from a Foucauldian perspective that the SES model, when perceived from a Foucauldian power and knowledge dimension, rather than being a sound technical apparatus, is a political device to mediate relationships between government and non-government schools.  At the same time the SES model masks these relationships in the veiled rhetoric of an egalitarian technical allocation. It is concluded the SES model presents an image of education funding that has no engagement with education, and thus reifies in a state of deceit and fraud funding conditions representing the status quo of historic political allegiences. In using such a model a traditional concept of accountability is not possible.  Australia is a federation comprising six states and two territories.  It has at the federal level a Commonwealth government, and in addition each state and territory has its own government.  They operate a Westminster parliamentary system.  Constitutionally the primary responsibility for providing, regulating and funding school education in Australia is with the respective State and Territory governments.  Complicating this, due to historical factors a dual system of schooling exists comprising of both government schools (public) and non-government (private) schools. 

 

The Business of Student Retention in the Post September 11 Environment--Financial, Institutional and External Influences

Dr. Andrew W. Braunstein,  Iona College, New Rochelle, NY

Dr. Mary H. Lesser, Iona College, New Rochelle, NY

Dr. Donn R. Pescatrice,  Iona College, New Rochelle, NY

 

ABSTRACT

 Most colleges and universities have long practiced financial aid policies designed to attract and retain freshmen students.  For the institution analyzed here, the receipt of financial aid did enhance student retention, especially if aid was in grant form.  In recent years, many colleges and universities have also integrated “freshman seminar” or “experience” courses into their academic programs to enhance the retention of first-year students.  This institution implemented a required freshman experience course during the Fall 2001 academic semester.  Unfortunately, freshmen students introduced to this course were also simultaneously exposed to the September 11th terrorist attacks. The 2001 freshman class exhibited greater attrition than the previous year’s freshman class, which was not subject to the experience class requirement nor exposed to the events of 9/11.  Abstaining from the absurd conclusion that the freshman experience course exacerbated attrition tendencies, the natural implication is that the economic and psychological ramifications from the September 11th atrocities altered the academic objectives of many first-year students at this institution, particularly non-Caucasians, and compromised any potential positive impact of the experience course.

 

The Ethical Attitudes of Accounting Students

Fannie L. Malone, Ph.D., CPA, Texas Southern University, Houston, TX

 

ABSTRACT

 In the wake of apparently dishonest practices by Enron Corp. executives, and apparent negligence by members of its board of directors, many ask how people believed to be so smart could lack the moral courage to seek and tell the truth. As there is after every financial scandal, a call is being made for more courses in "business ethics" in the leading universities. Although moral development begins in the home, many schools are now incorporating character education and moral decision making as part of the overall curriculum. The purpose of this study is to measure the ethical attitudes of accounting students in a variety of academic situations. This study requires students to evaluate ethical situations that they are very familiar with as a student. The overall results indicate that most students will not engage in unethical conduct if they perceive that harm will come to themselves or others. This finding is significant in that the moral behavior of students in college today is likely to carry over to the workplace in the future. Given the importance of ethical awareness in the accounting profession, the findings of this study may have implications for ethical training in accounting.  As we listen to the daily news, a decline in moral standards is reflected across all spectrums of our society.

 

Do Humans Need GMOs?—A View from a Global Trade Market

Chi-Chung Chen and Wei-Chun Tseng, National Chung-Hsing University, Taichung, Taiwan

 

 

ABSTRACT

 As the population of the world continues to increase, it will be accompanied by an increase in the demand for food. Since the total acreage planted is no longer increasing, unless new production technology is adopted, such an increase in demand that is unmatched by an increase in supply in the world food market will raise food prices and lead to food shortages, especially in underdeveloped countries.  In this study, a spatial equilibrium (SE) model is applied to create a world trade model.  The products simulated in this study are corn and soybeans since they are the major food grains and also the most widely adopted GMO products in the world.  The empirical results reveal evidence of the adoption of GMO production technology increase the quantity traded and lessen the upward pressure on food prices, although it is the major trading countries that obtain most of the benefit.  Malthus predicted that the population would grow at a faster rate than the food supply.  His prediction, however, did not prove true.  Thanks to the green revolution in agriculture, the production of food per capita on average rose by nearly 0.5 percent per year from 1961 to 1999 and this caused the real prices of agricultural food ingredients to fall by nearly 2 percent per year over that same period (Tweeten).  However, recent statistics show that the acreage planted on a global basis is no longer increasing due to development and climate change.  If no new production technologies are developed and adopted, the food supply curve will no longer shift.  Furthermore, as the world’s population continues to grow, this will cause the demand for food to increase.  Such an increase in demand that is not matched by a corresponding increase in supply in the market for food will lead to an increase in world food prices. 

 

What Consumers Need from Restaurants: An Empirical Study on Different Classes of Restaurants in Taiwan and their Customer Service

Kai- Wen Cheng, National Kaohsiung Hospitality College, Taiwan, R.O.C.

 

 ABSTRACT

 Consumers definitely focus on different service factors of different classes of restaurants.  This research examines the attention consumers give different classes of restaurant businesses.  We expect to find different managerial strategies, each aimed at target customer groups to enhance competitive strength of the different classes of restaurant business.  In this research, we adapted an individual interview and questionnaire survey for customers from Wang Steak and 3 Royal 3 House.  600 copies of the questionnaire were issued, and we received back 517 qualified completed questionnaires.  In our questionnaire, we discuss the degree of customer emphasis for every service factor, customer satisfaction with every service factor, and the relationship of customer satisfaction with customer loyalty.  We determined that different classes of restaurant business should implement different managerial strategies to reach their highest competitive strength.  Some important facts were discovered by examining the point of view of customers regarding satisfaction and loyalty of different classes of restaurant business. We now expect to find a business niche that can be the basis for restaurants to adjust their restaurant business strategies.  With the passage of time and the change in social structure, the number of diners has increased; Chen Wen-tsung (1998) and Kuei Shih-ping (1998) point out that as restaurants in Taiwan mushroom, customer satisfaction has become an important factor to these enterprises.  In addition, Barsky (1992) and Hung Yi-yen (1999) indicate in their studies that customers’ consuming habits are changing rapidly; consumers now not only pay attention to the quality of their products, but also put greater emphasis on a sense of satisfaction. 

 

Corporate Social Performance, Corporate Financial Performance, and Firm Size: A Meta-Analysis

Dr. Meng-Ling Wu, Da-Yeh University, Taiwan

 

ABSTRACT

 Corporate social performance (CSP) and corporate finance performance (CFP) have been the focus of many prior studies. However, previous research has shown that there are no consistent linkages among CSP, CFP, and size. In response to these findings, the meta-analyses of 121 empirical studies are conducted to investigate the relationships among CSP, CFP, and size. There are four major findings: (1) Results revealed an average effect size of .166 between CSP and CFP. (2) Market-based measures are weaker predictors of CSP than other financial measure. (3) Perceptually based measures reported a stronger CSP-CFP relationship than performance based measures. (4) Fortune ratings have greater effect sizes on financial performance than KLD ratings.  Competitive advantage is the ability to outperform rivals on profitability (Grant, 1995). In the era of hyper-competition, where interaction between stakeholders and organizations becomes more and more intense, competitive advantage has been expanded to include CFP and CSP. Thus, firms attempt to devise strategies that will enable them to survive and prosper in a turbulent environment that demands both financial performance and effective stakeholder responsiveness (Johnson and Greening, 1999).

 

Patent Rights, Mergers and Entrepreneurship in the Biotechnology Industry of Sweden

Wali I. Mondal, National University, CA

Dr. Juan España, National University, CA

 

ABSTRACT

 Sweden is a small country with a 2004 population of 9 million; however it has been known for its leadership in research and development, and particularly for its output of biotechnology-oriented research papers. In relation to the size of its population, Sweden has the most biotechnology-intensive economy in the world. Again, on a per capita basis and after the merger of two of its largest pharmaceutical companies in the 1990s, the smaller pharmaceutical companies of Sweden with less than 500 employees developed and introduced the highest number of biotech products on world markets. Following Schumpeter, this paper argues that invention is the key factor of entrepreneurship and that Sweden, by virtue of its inventions of biotech products, has assumed a leading role in this industry. Although early writers of economics, starting at the beginning of the eighteenth century, recognized the contributions of the entrepreneur, the domain of an entrepreneur as distinct from that of a capitalist was clearly defined only in the 1930s by Joseph Schumpeter. Using Schumpeter's five-factor model of entrepreneurship, this paper analyzes Sweden’s leading role in biotech and the growth of Swedish entrepreneurship in this industry as a direct result of the country’s unique patent laws and the merger of Swedish with foreign drug companies, specifically Pharmacia with U.S. firm Upjhon in 1995 and Astra with the British company Zeneca in 1999. 

 

A Study of Ownership Structures and Firm Values Under Corporate Governance -- The Case of Listed and OTC Companies in Taiwan’s Finance Industry

Ming-Jian Shen, Chin Min Institute of Technology & Ph.D. Student, Da-Yeh University, Taiwan

Chung-Cheng Hsu, Ling Tung Institute of Technology & Ph.D. Student, Da-Yeh University, Taiwan

Ming-Chia Chen, Ph.D. Student, Da-Yeh University, Taiwan

 

ABSTRACT

 This study mainly used regression analysis and structural equation modeling (SEM) to examine the relationship between ownership structures, firm values, and the factors that formed the firm values. Through empirical verification, the study findings are as follows: 1) Regression analysis of ownership structures and book value per stock revealed a significantly positive relationship with the ownership ratio of the board of directors and supervisors, which indicated that when controlling shareholders operate a company, it may produce a positive inducing effect. 2) The regression analysis of ownership structures and book value per stock ratio shows that the institutional ownership ratio and ownership ratio of the board of directors and supervisors all have positive relationships. 3) The institutional ownership ratio to ownership structure presented a positive relationship. 4) The empirical analysis in this study shows that all of the ownership structures do not have relationships with price-earnings ratio (PER). 5) In the structural equation model analysis, the results showed the variables forming the firm values are net present value per stock, stock price, and the book value per stock ratio. The PER as shown in the results of the regression analysis did not reach the significant level. Looking at independence variables, the ownership ratio of the board of directors and supervisors, the managerial ownership, the institutional ownership ratio, and the ratio of the pledged stocks held by the board of directors and supervisors all have a significant influential relationship with firm values.

 

The Effect of Fit between Organizational Life Cycle and Human Resource Management Control on Firm Performance

Dr. Yao-Sheng Liao, National Pingtung Institute of Commerce, Taiwan

 

ABSTRACT

 This study examined the effect of fit between organizational life cycle (OLC) and human resource management (HRM) control on firm performance. Results from a survey of 207 firms support a contingency approach to performance. Firms use HRM control should take into account their OLC stage. Behavior control will make firm perform better in late stage than in early stage; in contrast, output control will hinder performance more in late stage than in early stage.  It has become a widely held premise that people provide organizations with an important source of sustainable competitive advantage (Pfeffer, 1994) and that the effective management of human capital, not physical, may be the ultimate determinant of organizational performance (Reich, 1991). Strategic human resource management (SHRM) researchers look more broadly at bundles of human resource (HR) practices that are implemented in combination instead of focusing on particular HR practices that are used in isolation. Meanwhile, behavioral perspective has emerged as the predominate paradigm for the research (e.g., Fisher, 1989; Schuler, 1989; Snell, 1992). One of the popular theoretical models used in the SHRM literature is the behavioral perspective (Jackson, Schuler, and Rivero, 1989; Schuler and Jackson, 1987). It assumes that different strategies require different behaviors and different HRM practices to elicit and reinforce those behaviors. A control perspective is consistent with behavioral perspective (Liao, 2005; Snell, 1992) and used in this study to integrate HRM practices.

 

The Conceptual Construction of Core Competence for Two Distinct Corporations in Taiwan

Yu-fen Chen, Ph.D., National Changhua University, Changhua City, Taiwan

Tsui-chih Wu, Shih Chien University, Taipei, Taiwan

 

ABSTRACT

 Core competence has been universally discussed since 1990. Core competence may not necessarily be “low cost,” but is nonetheless the unique power of business. From the point of view of the supply chain, core competence can include R&D, product quality, logistic technology, supply chain relationship, strategic management, etc. Undoubtedly, the survival and success of business depends on it.  High-tech firms are accustomed to possessing a short product life cycle, highly innovative R&D, etc. Therefore, the core competence of high-tech firms tends to differ from that of traditional manufacturers. The authors of the study collected the documents and reviewed the literature to examine the related dimensions of core competence, including strategic planning, production process innovation, supply chain management, logistics management, quality management and R&D.  The trend towards increasing globalization and highly intensive competition have in recent years forced companies to look for the necessary means by which they can further develop their core competencies to increase their competitive edge.

 

A Foucauldian Gaze of Mental Institution Accounting Reality: “Another Brick in the Wall

Dr. Ciorstan Smark, University of Wollongong, Australia

Dr. Hemant Deo, University of Wollongong, Australia

 

ABSTRACT

 This case study uses a Foucauldian theoretical framework to filter data for the case of deinstitutionalization from mental hospitals in the State of New South Wales (NSW) in Australia.  This case study concludes that power and knowledge are the two dominant forces motivating this change in policy and that power and knowledge have influenced the way in which the policy of deinstitutionalization was implemented in NSW. This implementation drew largely on the economic rationalist calculus of accounting based on cost-benefit analysis.  The case study further explores some of the societal difficulties inherent in using such rationalist calculus (biased towards quantified, monetary, accounting entity assumptions) as a means of evaluating social policies.  Deinstitutionalization from mental hospitals is a policy that has been adopted since the Second World War by several senior western economies.  This policy, from a Foucauldian perspective, is seen as driven by power and knowledge and has meant the replacement of a largely institutional model of caring for people with mental illness (whereby much of this care took place in large state-funded mental hospitals) with the “Community Care” model where far fewer institutional beds are provided.  This case study is located in the State of NSW (the most populous state in Australia) but illustrates well some of the problematic outcomes which can occur if accounting-related thinking is given too much emphasis in policy and funding decisions.  This shift towards “Community Care” has been accompanied by promotion of the new model of society as being more inclusive, tolerant and emancipating for people with mental illness (Scull, 1984; Johnson, 1990). 

 

Systems Model for Improving Standards and Retention in Engineering Education

Dr. Yaw A. Owusu, FAMU-FSU College of Engineering, Florida A & M University, Tallahassee, FL

 

ABSTRACT

 This paper describes a systems model for improving standards in engineering education and at the same time maintaining high retention rate for all engineering students in the educational system.  A systems approach methodology adopted for this research is a technique of taking into account all relevant factors affecting quality education and student retention.  A four-step procedure has been adopted for the model, namely: problem diagnosis, evaluation and analysis, system model design, and design implementation.  Currently, in the United States of America, the demography indicates that the traditional source of American engineering pool of labor force (mainly White males) has declined and will continue to decline while ethnic minority population of Blacks, Hispanics, and women has increased and will continue to increase.  Thus, the future of both industry and academic institutions will have to look at non-traditional sources of professional labor force, including future engineers and scientists in order to fill the thousands of jobs requiring a formal education in engineering.  Therefore, there is an urgent need for new model of engineering education in order to improve standards and retention of all engineering students including women and ethnic minorities.

 

The Impact of Dynamic Capabilties With Market Orientation and Resource-Based Approaches on NPD Project Performance

Dr. Ho Yung-Ching,  Da-Yeh University

Dr. Tsai Tsui-Hsu (Tracy), Da-Yeh University

 

ABSTRACT

 Dynamic capabilities can be defined as a set of specific and identifiable processes, or as a pool of resources that firms can integrate, reconfigure, renew, and transfer their controllable resoures. The purpose of this dissertation is to(1)focus on a more strategic level, filling in the insufficiencies of customer prospect for dynamic capabilities;(2)combine resource-based view with dynamic capabilities, and see how they form a more complete model to deal with the subject of organizational capabilities;(3)use dynamic capabilities with market orientation and resource-based view to perform empirical tests of NPD project performance in the bio-technology industry; (4) excavate variables of each construct, especially for dynamic capabilities, it is the first exploratory research of its kind.  This is a cross subject research; using the sample from the yearbook of Bio-technology 2004; the analysis cell is project-based; the methodology used is LISREL;The questionnaire is designed for two groups of answer: 1.The importance level, and 2. The present status. The results show that: (1) Market orientation is important for dynamic capabilities, but the present status has not yet caught up with; (2) Resources have been proven to be statistically significant in relation to the dynamic capabilities:a. Technology resources, b. Team work resources, c. Companies’ back ground / financial support and stock holders’ structure, d. Substitute resources, e. Geographic related resources (government regulation is even more important than industry flat-form cluster benefit); (3) Dynamic capabilities with a. Networking capabilities, b. Knowledge management system capabilities, and c. Intelligent technology for enhancing communication capabilities, are positively related to NPD project performance.

 

Stock Buy-back Effect on Firm’s Value: From Different Capital Resources Perspective

William Tsao, Cheng-Shiu University & I-Shou University, Niasong Township, Kaohsiung County, Taiwan

Dr. Wen-Kuei Chen, I-Shou University, Ta-Hsu Township, Kaohsiung County, Taiwan

 

ABSTRACT

 This article combines MM theory and stock buy-back to innovate a clear and practical concept for capital usage or even dividend policy consideration. There are two insightful implications are supported: (1) Value added is positive through stock buy-back with loan fund. (2) Stock buy-back will not change the firm’s value in idle fund.   We explain the implications of the theoretical results in this study to learn the effects of different capital sources of stock buy-back on firm’s value so as to obtain favorable operating tactics.  Public issuing company can buy back outstanding shares by financial leverage or internal fund. No matter which methods it is, the impact from that should be obvious. Previous literatures on stock buy-back focus on the fields of buy-back functions and stock performance, but rarely on the effect on firm’s value.  The issue of share repurchase (or stock buyback) is more relevant, and more important, than ever. Also, stock buyback become more prevalent in the global stock markets, reflecting easing regulations and a focus on value creation. But the following question the managements face is: “Does stock buy-back create value?” The goal of our paper is to strictly identify and persuade this critical issue. 

 

Conflict Resolution Strategy between Foreign and Local Partners in Joint Ventures in China

Dr. Lung-Tan Lu, Fo Guang University, Juaushi Shiang, Ilan, Taiwan

 

ABSTRACT

 This paper aims to examine the impact of conflict resolution strategies on international joint venture (IJV) performance. Empirical results from 76 Japanese and 89 Taiwanese senior managers, involved in joint ventures with local firms in China, were used. The findings show that compromising and legalistic strategies are positively related to IJV satisfaction in Sino-Japanese groups, but not in Sino-Taiwanese groups. Moreover, it was found that cultural similarities were positively associated with IJV satisfaction in the Japanese respondents but not in the Taiwanese. Several suggestions regarding conflict strategies and cultural similarities are provided for further research.  Over the past three decades, international business research has been characterized by increased focus on the subject of international joint ventures (IJVs) (Buckley, 2002). A recurring topic in IJV research is the conflict arising between foreign and local partners (Morris et al., 1998; Lin and Germain, 1998). This study aims to provide evidence of relationships between conflict resolution strategies and IJV performance by focusing on aspects including problem-solving, compromise, forcing and legal elements. In addition, an analysis of the influence of cultural similarities on variation in results was carried out. The study was based upon a sample of 76 Japanese and 89 Taiwanese companies, involved in joint ventures with local firms in China. An overview of the conflict issues, performance, and conflict resolution strategies allowed the development of hypotheses for data analysis.

 

Evolutionary Support Vector Regression Modeling for Taiwan Stock Exchange Market Weighted Index Forecasting

Kuan -Yu Chen, Doctoral Student, Chang-Jung Christian University/Far East College, Taiwan

 

ABSTRACT

 This study applies a novel neural network technique, Support Vector Regression (SVR), to financial time series forecasting. The aim of this study is to examine the feasibility of SVR in financial time series forecasting by comparing it with Artificial Neural Network (ANN) and the traditional RW model. To build an effective SVR model, SVR’s parameters must be set carefully. This study proposes a novel approach, known as GA-SVR, which searches for SVR’s optimal parameters using real value genetic algorithms, and then adopts the optimal parameters to construct the SVR models. Taiwan Stock Exchange Market Weighted Index (TAIEX ) during January 2, 2001 to January 23, 2003 were employed as the data set. The experimental results demonstrate that SVR outperforms the ANN and RW models based on the Normalized Mean Square Error (NMSE), Mean Square Error (MSE) and Mean Absolute Percentage Error (MAPE). Moreover, in order to test the importance and understand the features of SVR model, this study examines the effects of the number of input node.  Financial time series forecasting is one of the most challenging applications of modern time series forecasting. In 1995, Vapnik developed a neural network algorithm called Support Vector Machine (SVM), which is a novel learning machine based on statistical learning theory, and which adheres to the principle of structural risk minimization seeking to minimize an upper bound of the generalization error rather than minimize the training error (the principle followed by neural networks).

 

Competitive Analysis of Taiwan’s Information Industry

Hua-Yang Lin, Ph. D. Candidate, National Central University, Taiwan

Ping-Yu Hsu, Professor, National Central University, Taiwan

 

ABSTRACT

 The information industry is one of the most important industries that actively promoted by the Taiwan government to compete in the global market. This study reports on a competitive analysis of Taiwan's information industry. This study discusses an industry competitive model addressing a national competitiveness, SWOT analysis and industry globalization drivers, which is applied to Taiwan's information industry. The results indicate that to cope with the new challenges, changes and global competition in the information market worldwide, Taiwan needs to take some measures; it needs to find a way in which it can sustain its highly acclaimed R&D performance and play a more important role both regionally and globally.  Taiwan has captured the imagination of the world with the speed and extent of its information industry development during last decade. Information technology products are now Taiwan's biggest export category and a major driving force behind the island's economic growth. The production value of information hardware ranked the fourth in the world which fell behind the United States, Japan and China (III, 2004). The information industry development has changed from original equipment manufacturing (OEM) in the early years to original design manufacturing (ODM) and branded products in recent years. In the last few years, Taiwan's computer industry has been trying hard to change its image of being only manufacturing oriented. Through intensive upgrading in the industry, it is now promoting technology at a research and development level.

 

How to Operate Public WLAN Business: The Case of Taiwan

Dr. Shih-Chi Chang, National Changhua University of Education, Changhua City, Taiwan

Dr. Hsiao-Cheng Yu and Julio Tsai, Doctoral Student, National Chiao-Tung University, Taiwan

 

ABSTRACT

 In most companies, an employee needs to be connected by wire to the company’s Local Area Network (LAN) in order to access information. However, the employee may not have the proper access when positioned in a remote location or with a client outside the office. Therefore, Wireless Local Area Network (WLAN) has become a necessity to enhance the productivity of employees. Meanwhile, WLAN is expected to be a major growth factor for communication networks in the upcoming years. It is also expected to provide a more convenient and transparent connection for mobile hosts to communicate with other mobile hosts, and wired hosts on the wired LAN and broadband networks. Because of advantages of WLAN, the demand for public WLAN is becoming a trend in society to build a comprehensive wireless Internet access environment. However, there are still some barriers in front of the way ahead need to be overcome. Besides, different business models of public WLAN have advantages and disadvantages respectively.  Business competition is more and more fierce today, and companies are continually looking for ways to satisfy client’s expectations as well as attract new business. In order to meet these goals, employees are forced to remain flexible and to keep abreast of the times in their field of expertise. To raise employee productivity, technology often becomes a critical success factor and provides necessary means.

 

 

A Three-Phased-Switching Relationship between Tobin’s Q and the Shares Owned by the Directors: An Empirical Study on the Taiwanese Electronic Industry

Ju-yao Hung, National Taipei University, Taiwan

Dr. Yeong-jia Goo, National Taipei University, Taiwan

 

ABSTRACT

 Morck et al. (1988) found that when the share of a firm is under 5% and above 25%, the relationship of Tobin’s Q and the shares held by insiders is positive, while it becomes negative if the share is between the two numbers. This paper examines the relationship in the Taiwanese electronic industry using the regression models. Evidence is found that our findings support that of Morck et al. And the two turning points in the three-phased-switched relationship are 39% and 51%.  It has been generally recognized that the maximization of firm value is the primary goal of a corporation. However, as the size of the firms increases, the ownership and management usually separate naturally. Owing to the decrease of control of the owners (principals) over the managers (agents), or managers may have their personal goals that compete with owners’ wealth maximization, the agency problems, therefore, arise when the goals of the principals and their agents differ. In order to reduce agency conflicts, the owners must incur agency costs. The agency costs will have an inverse impact on the maximization of firm value (or stock price maximization).  The agency theory was first proposed by Jensen and Meckling (1976) in order to solve the agency problems. They argue that the managers will pursue their own welfare under the separation of ownership and management (control), with welfare measured in the form of increased personal wealth or well-being. And this action of maximization of self-interest by the managers takes the form of consuming more perquisites (e.g. executive fringe benefits) or adopting second best corporate investment decisions, thus lowering firm value.

 

Strategic Decision Processes and Firm Performance Among Truckload Motor Carriers

Dr. Johannes H. Snyman, Oklahoma Christian University, Oklahoma City, OK

 

ABSTRACT

 The trucking industry has experienced significant changes since deregulation in 1980.  Effective strategic management is necessary for competitive success in today’s environment.  Trucking companies should focus on the content and process by which strategy is crafted. This paper investigated the relationship of strategic decision processes of motor carriers in the truckload segment of the motor carrier industry and their organizational performance, while controlling for organizational size. Results suggest strategic decision processes, low in complexity, can make a difference. The processes that motor carriers use to develop their strategies can be a significant source of competitive advantage in a deregulated industry.  Trucking is an important segment of the United States transportation industry. Every year trucks haul general freight, such as furniture, food and drinks, packages and specialized freight, such as commodities, bulk solids and liquids to multiple destinations. In 2003, trucks transported 9.06 billion tons of freight or 68.9% of all freight, making them the largest mover of goods in the United States, followed by trains, pipelines, ships and airplanes (“ATA Says,” 2004). Trucking is therefore an important link in the supply chain of American companies.

 

A Case of Control Practice in Restaurants and Cafes in Hamilton, New Zealand

Dr. Asad Mohsin, The University of Waikato, Hamilton, New Zealand

 

ABSTRACT

 Employee theft and lack of internal control has a significant impact on the profits and sustainability of business. Estimates of employee theft in USA alone range from $40 to $ 400 billion a year (Oliphant and Oliphant 2001). Temptation to pilfer in a catering establishment is not limited to hard cash only, it provides opportunity to employees to unduly consume luxurious food and beverage items themselves or serve free of charge and generous portions to family and friends eating in the establishment. One way of restricting, if not eliminating, such practices is by having an effective internal control in place which should be strictly implemented and regularly evaluated. So how many small to medium size restaurants, cafes, bars, pubs and other catering establishments actually have an arrangement to implement and practice internal control? This paper reports the findings of a structured in-depth interview with 34 owners/operators of down town catering establishments in Hamilton, the fourth largest city of New Zealand. The results show that despite understanding the importance of internal control, little efforts are made by owners/operators to practice it.  It is suggested that this might contribute to the short life-span of such businesses.

 

The Effect of Customers’ Purchase Willingness by Applying Adaptive Sales Interactive Model

Chaang-Yung Kung, Chaoyang University of Technology, Taiwan

Chin-Ming Wang, National Changhua University of Education, Taiwan

Huey-Ju Lin, National Changhua University of Education, Taiwan

  

ABSTRCT

 The popularity of the Internet, in addition to the way how enterprises can search in a rapid and accurate way for the goods that their customers need, has become a key problem that every Internet operator has to consider and cope with. In the past, scholars have been paying much attention on doing researches on how ELM model is applied to testify the behavior of the customers, but these researches conducted on the Internet mostly target at its advertisement model. Fewer researches have been done on its interaction Model. Therefore, this research, through the investigation of the one-to-one Adaptive Sales Interactive Model conducted by customers of different characteristics, aims at examining whether under the Internet-purchase environment, different customers requiring different kinds of selling strategies will ascend their fondness for the Internet and hence enhance their purchasing inclination. For the above sake, the structure of the Adaptive Sales Interactive Model is raised so that based on the basic information about the customers and the transactions, through the use of the Neural Network and the Rough set Theory, an adaptive information system can be constructed. In addition, through using the Rough set Theory, we can accurately predict the favorite goods of different customers, and based on the product purchasing probability, a purchase list can be recommended to the customers.

 

Real Options as a Tool for Making Strategic Investment Decisions

Mustafa Mesut Kayali, Ph.D., Dumlupinar University, Kutahya, Turkey

 

ABSTRACT

 This paper analyzes the role of real options in making strategic investment decisions. The traditional investment project evaluation metrics, such as payback period, accounting rate of return and net present value (NPV), assume that the management is passive and makes the accept or reject decision at the beginning based on the expected cash flows throughout the useful life of the investment project. They ignore the management’s flexibility to revise the project as more information becomes available and the uncertainty about the project is resolved. This nature of the traditional approach to investment project evaluation may cause the management to underestimate the true NPV of the project and to pass up the valuable investment opportunities. However, investment projects under consideration may open up new opportunities, or in other words, may result in possible future investments and thus may provide the management with strategic options, such as the option to expand, the option to abandon or the option to wait. Therefore, the management’s flexibility and real options are valuable and should be considered when evaluating investment projects and making strategic investment decisions.

 

Sales Representative Selection of Pharmaceutical Firms by Analytic Hierarchy Process

Dr. Mehpare Timor and Dr. V. Lale Tüzüner, Istanbul University, Istanbul, Turkey

 

ABSTRACT

 In this article, “sales representative selection factors” of pharmaceutical firms are examined. In the first step of this study, variables are defined according to literature research. Related variables are combined and discussed with the experts of the field. “Sales representative selection” factors important to pharmaceutical firms are, “personal qualifications”, “interpersonal skills”, “qualifications required to do the job”. In order to determine the weights of sales representative selection factors, data was collected from HR managers of pharmaceutical firms. Analytical Hierarchy Process (AHP) is a technique, which provides decision makers to deal with complex decision problems especially if there are subjective judgments. In order to cope with subjectivity in the selection process, AHP is used to determine the weights (priorities) of the factors.  The purpose of this research is to present an alternative solution method that pharmaceutical firms may use in selecting their sales representatives.  Analytic Hierarchy Process (AHP) is a method, which gives an opportunity to decision makers to deal with complex decision making problems, especially when there is subjectivity. For this reason, AHP was used to determine the priorities of the factors in hiring sales representatives. Data gathered from HR departments of pharmaceutical firms and findings would reflect the weights of the factors, which are considered important for sales representative selection.

 

Dimensions of Quality in Higher Education:  How Academic Performance Affects University Students' Teacher Evaluations

Dr. Sameer T. Mustafa, Concordia University, Montreal, Canada

Dr. Dalen Chiang, California State University, Chico, CA

  

ABSTRACT

 Institutions of higher learning are facing new challenges in their efforts to improve the quality of education. Administrators and teachers in higher education are striving to achieve greater quality with fewer resources. To be successful, they must focus on customer (i.e., student) needs. The purpose of this study was to identify the dimensions of quality in higher education and to investigate their relationships with the following variables: teacher performance (i.e. abilities and attitudes), course content (i.e. materials and load), and quality of education (i.e. the amount of knowledge gained).  Four hundred and eighty-five teaching evaluation questionnaires were collected from accounting classes of an AACSB accredited accounting program.  The results of the factor analysis indicate that there are four key factors: teacher abilities, teacher attitudes, course materials, and course content.  Students with low GPAs perceive course content to be improved by teacher’s superior performance while students with high GPAs perceive the quality of education to be enhanced by better course content.  In addition, teacher performance plays a more significant (direct) role in enhancing the course content and the quality of education for students with low GPAs while those with high GPAs perceive the course content to be more significant in enhancing the quality of education.

 

Application of Queuing Model in Healthcare Administration with Incorporation of Human Factors

Cheng-Hua Wang, Chung Jung Christian University, Tainan, Taiwan

Yuan-Duen Lee, Chung Jung Christian University, Tainan, Taiwan

Wei-I Lin, Chung Jung Christian University, Tainan, Taiwan

Pang-Mau Lin, Chung Jung Christian University, Tainan, Taiwan

 

ABSTRACT

 In recent years, quality of life has improved in many societies due to advancements in technology and proliferation of economy.  The resultant change of social structure mandates a need to improve health services within a society.  More and more resources are being diverted into healthcare industry with the risen demand of quality health care and related services.  However, social resources are limited, and many countries are starting to realize that the cost of healthcare is becoming increasingly difficult to afford.  As a result, globally there are increasing numbers of operation researches, using theories such as simulation, scheduling, and queuing modeling, that are designed to solve the problem mentioned above.  In comparison to foreign countries, there are fewer researchers using similar methods on healthcare issues in Taiwan.  Therefore, this study would like to utilize queuing theory and simulation to construct a useful model for today’s healthcare organizations in Taiwan.  This study will design and apply a simulation model to the escort center of a case hospital. 

 

How Attribution Explains Consumers’ Views of Penalties

Young “Sally” Kim, Ph.D., Shenandoah University, Winchester, VA

 

ABSTRACT

 Penalties are used as an integral part of pricing strategies for many service organizations today.  While consumers have displayed dissatisfaction with penalties over the years, very few organizations have paid attention to the impact of penalties and made efforts to understand the implications of penalty management.  This study investigates how consumers view penalties using attribution theory and examines how attribution is related with consumers’ penalty evaluations and behavioral intentions (e.g., intentions to repatronize, intentions to spread negative word-of-mouth).  The hypotheses are tested using data collected online from customers in various industries.  The results show that locus of attribution is significantly related with customer dissatisfaction, intentions to repatonize, and intentions to spread negative word-of-mouth.  Qualitative data are used to support the results of quantitative data analyses, and implications of the results are discussed.  American consumers today are bombarded with many different types of penalties ranging from fees involving cancellation, late return, overdraft of a bank account, and late payment to fees associated with restocking of returned merchandise.  Penalties are fees assessed by service organizations to consumers who fail to complete the original purchase agreement (McCarthy and Fram 2000).  While some penalties are considered defensive in nature and viewed as necessary because they are intended to protect organizations from harm caused by the customers (e.g., a customer who cancels a flight schedule a day before the departure will actually harm the airline company because the company could not sell the seat), others may be regarded as unreasonable and excessive. 

 

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