The American Academy of Business Journal

Vol.  8 * Num. 2 * March 2006

The Library of Congress, Washington, DC  *  ISSN: 1540–7780 (1540-1200)

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The Myth of Inter-Period Allocation of Deferred Taxes: Industry–Based Analyses

Dr. Ron Colley, University of West Georgia, Carrollton, GA

Dr. Joseph Rue, Florida Gulf Coast University, Fort Myers, FL

Dr. Ara Volkan, Florida Gulf Coast University, Fort Myers, FL



The behavior of deferred tax balances in mining and real estate industries is analyzed and the accounting theory and procedures required by the FASB are examined in the context of the unit problem. The unit problem involves the selection of the appropriate perspective (either individual or aggregate) for applying measurement and recognition conventions to phenomena of interest. From an individual event perspective, the FASB's conclusions in Standard No. 109 – Accounting for Deferred Taxes (S109) regarding liability recognition are inconsistent with the definition of liabilities found in the Statement of Financial Accounting Concepts No. 6. In addition, the use of inconsistent perspectives by S109 creates disagreements with the FASB’s position, where both the individual and aggregate perspectives are used simultaneously as the basis of the FASB's decisions. The study argues that the income tax accounting issue should be viewed from an aggregate perspective and concludes that the flow-through method of accounting for income taxes should be adopted. The impact of eliminating deferred taxes and adjusting the liability and stockholders equity balances on the debt-to-equity (DTE) ratio is computed for the mining and real estate industries in the COMPUSTAT database (1995 – 2004). In addition, the ratio of the net deferred tax balance to total assets is computed. In the mining industry, for those companies persisting over the 10-year period, the ratio increases. Statistical results show that the decreases in the DTE ratio are significant in each industry and each year. The Financial Accounting Standards Board (FASB) issued Statement 109 (S109) to bring closure to accounting and reporting controversies concerning deferred taxes (FASB, 1992). S109 required companies to use the comprehensive inter-period tax allocation method for measuring and reporting timing differences on the financial statements and on the tax returns.


Is South Carolina’s Integrated System of Personal Property Tax and Motor Vehicle Registration and Licensing a Burden on Interstate Commerce Such that it Violates the Dormant Commerce Clause of the U.S. Constitution?

Dr. Brad R. Johnson, J.D, Francis Marion University, Florence, S.C.



By means of a case study approach, this article argues that, as to South Carolina (S.C.) nonresidents, state and local  administration and enforcement of S.C.’s decentralized and integrated system of (A) personal property taxation under Chapter 37 of Title 12 of the S.C. Code of Laws and (B) automobile registration and licensing under Chapter 3 of Title 56 of the S.C. Code of Laws burdens interstate commerce in terms of (1) the incoming business-related services of S.C. nonresidents and (2) the non-business personal travel of S.C. nonresidents. Specifically, this article argues that in the administration and enforcement of S.C. Code Ann. §§ 56-3-150(B) & -160 and S.C. Code Ann. §§ 12-37-2610 & -2630 against S.C. nonresidents, the policies, practices and procedures of S.C. counties violate the Dormant Commerce Clause of the U.S. Constitution, which may thereby subject the county and its employees to actual and/or punitive damages under the United States Constitution, particularly pursuant to the provisions of Title 42 of the United States Code, Section 1983. Within the context of this article’s case study, such liability is found in the deprivation of a S.C. nonresident’s fundamental (constitutional) personal right (a) to travel out-of-state (i.e., in S.C.) and (b) to earn a living by exporting his services to S.C. Specifically, under the facts of the case study, this article clearly shows that the interaction among certain provisions dealing with (A) the personal property taxation of automobiles (S.C. Code Ann. §§ 12-37-2610 and 12-37-2630) and (B) automobile registration and licensing (S.C. Code Ann. §§ 56-3-150(B) and 56-3-160) effectuates a substantial burdening of interstate commerce, where such provisions are determined to be unconstitutional, in that the benefits of these state provisions cannot be viewed as outweighing the burden on interstate commerce.


A Descriptive Overview of Islamic Taxation

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



Currently, there are fifty-seven Muslim countries in the world covering one-fifth of the world’s landmass, including some vital strategic areas, and few other emerging Muslim countries are on the horizon.  Additionally, Islam is prominent in several other countries and Muslims constitute a sizeable minority in yet other societies.  With population of about 1.3 billion, Muslims account for one-fifth of the world’s inhabitants.  Given the prevalent high birthrate in Islamic societies, in twenty years, one-third of the world’s population is expected to be Muslim.  Muslim countries today control more than seventy percent of the world’s energy and account for 40% of the global exports of raw materials.  Their economic and geopolitical relevance, both as suppliers of energy and raw materials as well as vast rich markets for various goods and services is increasing rapidly.  The Western interest in the Muslim world, thus, is not a coincidence.  Since the  Middle-Ages Muslims and Islamic countries have occupied an important position for the Western governments and societies.  The course of history and economic development in the twentieth century has substantially intensified this prominence.  The history, politics, economics, sociology, behavioral patterns, and other social aspects of Islam and Muslim communities have been subject of continuous interest and investigation in the West.  Parallel to this interest, during the twentieth century, there have been indigenous attempts to revisit and reinterpret Islamic Thoughts and revive Islamic practices in the Muslim societies. 


Exploring a Taxonomy of Global Leadership Competencies and Meta-competencies

Dr. Stewart L. Tubbs, Eastern Michigan University, MI

Dr. Eric Schulz, Ph.D., Eastern Michigan University, MI



There is a substantial body of research evidence regarding the importance of leadership development to organizational success, Charan, Drotter and Noel (2001), Fullmer and Goldsmith (2001), McCall and Hollenbeck (2002), McCauley, Moxley and Van Velsor (1998), Viceri and Fulmer (1997, Whetton and Cameron (2005). There is no more important task with regard to leadership development than identifying the competencies and meta-competencies that comprise leadership. However, to date, there has not been agreement regarding just what are the Global Leadership Competencies that should be taught and learned. In this paper leadership is defined as, “Influencing others to accomplish organizational goals,” (Tubbs, 2005). Based on the model presented in this paper, the rationale is advanced that some aspects of leadership are more or less fixed at a young age while others are able to be developed even well into adult life (i.e., the Global Leadership Competencies). This paper describes the model and identifies fifty Global Leadership Competencies in the form of a taxonomy of Global Leadership Competencies and Meta-competencies Most importantly, leadership development efforts must be targeted on the outermost circle in the model.. Approximately $50 billion a year is spent on Leadership Development (Raelin (2004). Yet, two of the most frequently asked questions of leadership scholars is (1) what competencies and meta-competencies comprise leadership and (2) can leadership, in fact, be taught and learned.


The Web of Deception Money Laundering and Transnational Crime: “A Double Edge Sword of Power & Illusion”

Dr. Kathie Cooper, University of Wollongong, Australia

Dr. Hemant Deo, University of Wollongong, Australia



Money laundering has been the focus of perpetrators for both the regulators and accountants in the 20th century.  The methods adopted by the perpetuators of money laundering have become more sophisticated so as to provide a web of deception or illusion so that the regulatory authorities are confused and therefore, the paper trail goes undetected.  The Foucauldian framework (Foucault, 1977; Foucault, 1984) employed in this paper addresses that deficiency by making explicit the power and knowledge disciplinary relationships inherent in the dynamics of any financial institution and the need to under-pin the concept of money laundering through such a complex relationship. Money laundering has been around for as long as law breakers have needed to convert their ill-gotten gains to legitimate currency although the term did not gain official recognition until the Watergate scandal in 1972.  Perhaps it is folk lore, but popular opinion (see for example, Wells, 2003; Richards, 1999) is that the term originated with the efforts of organised crime to “wash” dirty money through the acquisition of a cash-intensive business, specifically, a laundromat, so that the dirty money could be assimilated with the legitimate proceeds of business.  Arguably, the need to legitimise illicit funds gained momentum after Al Capone was convicted for tax evasion in 1931.  The days when money laundering was the province of organised crime, if it ever was, is well and truly over.  Scandals such as BCCI and Enron demonstrate all too clearly that money laundering has become a pass time of the rich, famous and outwardly upright pillars of the community including executives of prominent companies and banks, accountants and lawyers. 


Teaching the Job Stress Audit to Business School Students: Causes, Measurement, Reduction

Dr. Gene Milbourn, Jr. University of Baltimore, Maryland



This paper will provide an outline on structuring a consulting project for business school students on the topic of employee stress measurement and reduction.  It will suggest a step-by-step program to lower high stress levels in an organization.  Specifically, the paper will assist students in (1) selecting an appropriate stress measurement instrument; (2) identifying the organizational causes of the two major types of job stress—job ambiguity and job conflict; and (3) using the Rizzo, House, and Lirtzman stress model, the paper will formulate a practical approach to reducing high levels of job stress.  The work of Harvard’s Herbert Benson is introduced as a remedy to the Type A Personality.  While no intended to a literature review, some research is reviewed as appropriate for pedagogical purposes.  We all know people employed by small and large organizations who have the habit of pitting themselves against the clock.  These people are usually ambitious, competitive, aggressive, and highly success-oriented. They will likely be individ­uals who try to control as many situations as possible and may succeed in all endeavors--even in a casual game of cards. Such people believe they can control almost everything and make anything happen that they wish. When problems or threats to their control emerge, they respond with an even greater intensity and often be­come more aggressive, frustrated, and stressed when their efforts to prevail fail. Even when they succeed, wish they would have accomplished something faster or more effectively.  While some personality factors--like those above--are linked with stress, some characteristics of organizations and jobs are as much to blame or more so.  Work overload and work underload to many people are sources of endless frustration. 


A Legal Perspective on Outsourcing and Offshoring

Dr. Sam Ramanujan, Central Missouri State University, MO

Sandhya Jane, Central Missouri State University, MO



This article identifies the legal issues and controls used for contracting a project and its impact on conducting global business. It describes the wide variety of legal risks and its implications on different types of contract. Managers may use this paper as a framework for evaluating an IT outsourcing/ offshoring decision. Outsourcing and offshoring are complex business strategies that are meant for enhancing company’s profitability by improving operating efficiency and allowing management to focus on core business activities (Slaughter and Soon 1996). Successful outsourcing results when the objectives and driving force are clearly spelled out (Goo, Kishore and Rao, 2000). Companies need to comprehend some of the major issues such as compliance risks, potential legal and financial problems that can arise due to lack of data security, privacy, intellectual property rights and executive accountability.  In this paper we will study and analyze the legal issues in Outsourcing such as Information Security, Privacy, Intellectual Property, Copyrights, Patent, Trade Secret and other regulatory compliance and their implication to business. To study these legal issues, we have categorized outsourcing and offshoring into four types based on nature of contract: 1. Outsourcing: It is defined as a company contracting in part or a whole project to a vendor based in same country. Example, Company A (a manufacturing company) is contracting its information systems project to Company B (a software development company), in USA. 2. Offshoring: It is defined as setting up company’s existing business function or division in a foreign country. Example, Company B decides setting up its own software development division in foreign country to take an advantage of a competitive market. 3. Outsource-offshoring: This happens when the outsourcing vendor go offshore for contracting part or whole project to third party vendor situated in another country. 4. Offshore-outsourcing: It can be defined as company contract its part or whole project to a vendor based in another country.  Outsourcing is not a new phenomenon.


Strategic Offshoring from a Decomposed COO’s Perspective: A Cross-Regional Study of Four Product Categories

Kien-Quoc Van Pham, Pacific Lutheran University, Tacoma, WA



Decomposing country-of-origin (COO) effects for four dissimilar product exemplars originating from 18 countries (6 from each Triad area) elicited statistically significant different consumer preferences for specific country (ies) of origin for hybrid products. These COO dimensional preference findings from a survey of 170 non-traditional students and management seminar attendees representing 30 countries reaffirm that management needs to also consider and monitor COO consumer preferences and country stereotyping effects (CSE) beyond the cost benefits normally associated with strategic offshoring and global outsourcing/supply chain management practices. Country of assembly (COA)/country of manufacture (COM) emerged as the most important COO dimension overall. Global benchmark countries are identified for each product class operational dimension, and optimal pairings of regional trade areas in terms of COO dimensional preferences are suggested for global consumer market segmentation. While country of origin (COO), “Product Country Image” potential effects (as a single cue or as multiple cues) on consumer product selection, imputed quality perception and purchase intention have been extensively documented, the proliferation of hybrid products with multiple country affiliations (country of assembly-COA or country of manufacture-COM, country of design-COD, country of brand-COB, and country of parts/components-COP/COC) and corporate global offshoring, outsourcing upward trends warrant sustained investigation of consumer COO country-specific product dimensional preferences. Recent publications have focused on these multi-dimensional aspects of COO (Chao, 1993, 2001; Tse & Lee, 1993; Li et al, 2000; Insch & McBride, 1998, 2004; Chao et al, 2005), especially on branding (COB) with national, bi-national studies for single product or a limited array of products.


Alternative Options for Business Decisions Using Nearly Optimal Programming

Dr. Alan Olinsky, Bryant University, Smithfield, RI

Dr. John Quinn, Bryant University, Smithfield, RI



Linear Programming is a quantitative method for finding the optimal solution when there are limitations on resources. This technique is used extensively in a variety of areas, including the field of business decision making. One shortcoming of mathematical modeling in general and linear programming in particular, is that these models can only represent approximations of the actual constraints in the system.  Therefore, the optimal solution might not be the best course of action for a company, since there might be unquantifiable restrictions that could not be represented in the model.  This paper illustrates a technique called Nearly Optimal Programming that generates multiple solutions, very close to the optimal objective value. This allows the decision maker to choose from a variety of solutions, or even to combine different solutions to produce another solution with desired characteristics. The example is for a multinational company taken from the literature. Linear Programming (LP) is one of the most popular methods for quantitative analysis and is used extensively in business studies. For example, “LP has been used to solve optimization problems in industries as diverse as banking, education, forestry, petroleum, and trucking. In a survey of Fortune 500 firms, 85% of the respondents said they had used linear programming.” (Winston 2004, pg. 49). The principal goal of a LP model is to find the best decision for a given problem based on the availability of limited resources, as modeled with a linear objective function and a set of linear constraint inequalities.  In this standard model, the objective function is to be maximized and there are n decision variables (xj) and objective coefficients (cj), and m functional constraints and resource availability levels (bi) with m×n technology coefficients (aij). Finally, there are nonnegativity constraints for the decision variables. However, the optimal solution (values for the decision variables at the best objective value z*) might not always be the most attractive one since the LP model is, at best, only an approximation of the actual business conditions. Some of the restrictions could be difficult, if not impossible, to model.


E-Mails in the Workplace: The Electronic Equivalent of ‘DNA’ Evidence

Dr. Nadeem M. Firoz, Montclair State University, Upper Montclair, NJ

Dr. Ramin Taghi, William Paterson University, NJ

Jitka Souckova, Montclair State University, Upper Montclair, NJ



Recent technological advances have dramatically transformed the working environment. Written, unlike the telephone communication in the past, is now documentary evidence of communications. With growing use of email the battle of security and privacy has been heating up. Companies are under increasing pressure to monitor employees’ electronic activities and workers should assume that their every key stroke is being watched. The extensive use of the Internet has changed the way business is done in the typical workplace. Written message to almost anyone in the world is being delivered nearly instantly through the e-mail (Postini 2004).  Information for a daily job tasks can be retrieved in seconds from the Internet. While these advances have aided productivity and business growth, they have also created new concerns over corporate security efforts and the privacy rights of employees. Workplace privacy is no longer just about the results of drug tests or question about sexual orientation, though they are still areas of concern.  habits and Internet surfing now dominate the privacy issue.  Information Technology in today’s business is an integral part of the infrastructure. Employees in every department require a computer terminal and Internet connection in order to do their job effectively. Even the employees who perform their jobs in the ‘field’ are required to carry a laptop, PDA, or other device that can electronically transmit information. This access to the world has introduced a number of new security related issues to the work force. One of the issues involves “the company’s right to maintain control over IT assets which provide employees with an easy way to silently perform personal activities.


Does Price Limit Spill the Stock Price Volatility of the Companies with Different Fundamental Value?

Chih-Hsiang Chang, National University of Kaohsiung, Kaohsiung, Taiwan



Some stock markets have employed a number of circuit breakers to avoid non-rational overreaction and price limit is one of them. While price limit is widely accepted benchmarks for the prevention of market crash, the question of whether price limit reduces stock price volatility has long attracted research interest. The purpose of this study is to test volatility spillover hypothesis by examining Taiwan Stock Exchange price limit system. The main difference of this paper with the previous literatures is that we explore the impacts of fundamental value on the price limit performance. The companies with distinct fundamental value react differently to the shock of good news and bad news because the fundamental value is a determinant of stock price determination. Therefore, this paper will analyze the effectiveness of price limit on the prevention of volatility spillover for the companies with different fundamental value. Empirical results indicate that volatility spillover is more obviously after limits were hit for the companies with better fundamental value than those with worse fundamental value. In order to prevent irrational overreaction on the part of investors, many stock markets have adopted price limit as an instrument to stabilize trading activities.  However, views on price limit are quite diverse, whether in academia or in industry.  Studies that support price limit point out that price limit can decrease stock price volatility and prevent overreactions and would not impede trading activity (Brennan, 1986; Lee and Kim, 1995; Westerhoff, 2003). 


Testing Wagner’s Law Using Bounds Test and a New Granger Non-Causality Test: Evidence for Taiwan

Dr. Chiung-Ju Huang, Feng Chia University, Taichung, Taiwan



This paper examines government expenditures in Taiwan over the fiscal years 1966 through 2002, in order to test whether follow Wagner’s Law.  Due to having a small sample size, the use of more traditional cointegration techniques may be unreliable.  Therefore, the Pesaran et al.’s (2001) bounds test for cointegrating relationships is adopted.  The results of the Pesaran bounds test indicate that there a cointegrating relationship between government expenditures and output does not exist.  Furthermore, results from the new Granger non-causality testing procedure developed by Toda and Yamamoto (1995) show that there is no causal relationship between government expenditures and output.  Therefore, our empirical results do not support Wagner’s Law for Taiwan. The source of public expenditure growth has been an important issue in economic literature.  A number of attempts have been made to identify the principle causes of growth in the public sector.  Wagner’s Law is one of these theories that emphasize economic growth as the fundamental determinant of public sector growth. Therefore, several studies have been devoted to test the validity of Wagner’s Law, which postulates the tendency that government activities increase with economic expansion.  Empirical tests of this law on various countries have yielded significantly different results.  Although several multi-country studies conducted by Wagner and Weber (1977), Abisadeh and Gray (1985), and Chang (2002) conclude that most countries show trends supporting Wagner’s Law; studies conducted by Ram (1986), Afxentiou and Serletis (1996), and Ansari et al. (1997) find no strong evidence supporting Wagner’s Law. 


A Comprehensive Study on Information Asymmetry Phenomenon of Agency Relationship in the Banking Industry

Gow-Liang Huang, National Kaohsiung First University of Science and Technology, Taiwan

Hsiu-Chen Chang, National Kaohsiung First University of Science and Technology & Yu Da College of Business, Taiwan

Chang-Hsi Yu, Yu Da College of Business, Taiwan



The objective of this study is to investigate the information asymmetry phenomenon of agency relationship in the banking industry. Information asymmetry phenomenon is one of the most important factors of agency cost, and it should make an effort to eliminate. Although information asymmetry phenomenon has been popular in banking industry, however, most studies only focus on deposits market or loans market separately. The present authors argue that the banking industry should be looked as a whole market that having a linkage relationship. It should be apply systematic standpoint integrative to explore the problems of information asymmetry gap. The present study therefore proposes a conceptual framework of bilateral agency relationship model for the banking industry. It includes five information asymmetry gaps among the bilateral agency relationship. The implications of these findings are discussed in the paper. A healthy banking system has no necessity to worry a run, but if a banking system, its bad loan is in clusters, the capital lapping is multifarious, according to international standard may have already bankrupted many times, have to face this risk. Resolving the bad loan problem is the premise that the bank health maintenance and, only transfer the bad loan to the assets management company is not enough, because the bad loan still yield continuously. The financial institution bankrupt and financial crisis both are also similar, the bank of the ill-health will close down finally. Recent banking literature has focused increased attention on the costs and benefits of banking relationships. If the market management of the bank should be efficient, it should consider the interests of the banks’ stakeholders and effective application of the fund.


Using Importance-Performance Analysis in Evaluating Taiwan Medium and Long Distance

National Highway Passenger Transportation Service Quality

Yuan-Chih Huang and Dr. Chih-Hung Wu, Takming College, Taiwan

Dr. Jovan Chia-Jung Hsu, Kun Shan University of Technology, Taiwan



This research discusses relationship among customers’ characteristics, customers’ travelling characteristics and service quality; Service quality includes two levels, first, importance degree of service quality, namely customers’ expected service quality; second, satisfaction degree of service quality, namely customers’ perceived service quality;  This research used purposive sampling, sent out 1980 questionnaires, collected 1950 questionnaires, return ratio of 98.4%,research results showed cross table analysis of customers’ characteristics(sex, age, profession, education attainment, income) and customers’ travelling characteristics (start to end point, choice of passenger transportation company, travel purpose, monthly ride frequency, trip timetable selection),  test, majority (22 groups) showed observable relationship. Lastly, calculating the 24 questions mean value of expected service quality and perceived service quality, based on Importance-Performance Analysis, emergency exit facilities, seat comfortableness, vehicle interior cleanliness, traveling route, traveling safety, traveling steadiness, embarkation and disembarkation convenience, etc. Seven items, belonging to quadrant 1, (maintenance reinforcement area), vehicle interior noise pollution, vehicle washroom cleanliness, station waiting lounge cleanliness, ticket price structure, driver’s traveling habits, etc. five items, belonging to quadrant 2(improvement reinforcement area), air-conditioning effect, vehicle interior illumination, ticket purchase convenience, etc. three items, belonging to quadrant 4 (over-emphasized area), other remaining questions total 9 items, belonging to quadrant 3 (secondary improvement area); based on analysis result, suggesting companies involved to separately select suitable service strategy, and consider company’s resources used on quadrant 4 to be moved to quadrant 2.  


Evaluating Ethical Decision–Making of Individual Employees in Organizations—

An Integration Framework

Miao-Ling Fang, Southern Taiwan of Technology University, Taiwan



Employees face an array of moral issues in their everyday decision-making. This paper is an attempt to better understand the ethical considerations of employees when they face with ethical dilemmas. A comprehensive review of the literature on ethical decision-making models in the workplace is presented. This article proposes an integration model containing a new set of variables and offers 17 research propositions. This study examines the influence of independent variables on the components of ethical decision making: cognitions (perceived ethical problem), moral evaluations, determination(intentions), and actions(ethical or unethical behavior). The independent variables include individual factors, situational factors, and characteristics of the moral issue itself.  The relationship between independent variables and dependent variables is mediated by emotion. The moderating variable includes three types of relationship (instrumental ties, mixed ties, and rival ties). The process of an individual decision-making apparently is a management issue worth further examination. Every profession processes its own codes of ethics.  Ethical conflicts are inescapable today as human interactions become increasingly frequent and complex.  How to deal with the conflict and how to decide on a solution which doesn’t discriminate against any party involved are just two examples of ethical issues that occur frequently in the workplace.  Ethical decision-making refers to a process in which individuals can freely make a decision based on the evaluation of the interests of all parties when facing ethical dilemmas.  Many empirical studies have been done to support the correlation between business and business performance.


Predicting Turnover Intentions: The Case of Malaysian Government Doctors

Dr. Sarminah Samad, Universiti Teknologi Mara, Malaysia



The purpose of this study was to determine the relationship of organizational commitment and job satisfaction with turnover intentions. Consequently the study examined the influence of organizational commitment and job satisfaction on turnover intentions. Based on organizational commitment postulated by Meyer and Allen (1991), theory of job satisfaction by Hezberg (1973) and turnover intentions by Bluedorn (1982) a study was conducted among 300 government doctors working in government hospitals in Malaysia. The results hypothesized that organizational commitment and job satisfaction were negatively related to turnover intentions. The study also revealed that organizational commitment and job satisfaction made a negative influence on doctors’ turnover intentions. Among all the facets of independent variables, affective commitment appeared to be the most significant predictor to turnover intentions. Based on the implication of the research findings, several suggestions are put forward. Turnover intentions, organizational commitment and job satisfaction have been the focus of interest of many industrial and organizational psychologists, management scientists and sociologists. This is because empirical studies have reported that turnover intentions can reduce the overall effectiveness of an organization (Smith and Brough, 2003). Meanwhile literature have documented that in 1970s about three thousand studies have been done on job satisfaction (Locke, 1976) and voluminous of research are conducted on organizational commitment (Meyer and Allen, 1997).


International Strategies and Knowledge Transfer Experiences of MNCs’ Taiwanese Subsidiaries

Yi Ming Tseng, Tamkang University, Taipei, Taiwan



This research views the activities of international expansion on the part of MNCs as a process of knowledge transfer, and investigates the marketing knowledge transfer modes of MNC subsidiaries in Taiwan. Three modes of transfer are widely recognized in the literature: the global knowledge mode, host country knowledge development mode, and the standardized knowledge transfer mode. Results show that the types of global strategy adopted by MNCs clearly explain their selection of the knowledge transfer mode. Further, market similarity and strategic importance are also closely related to the selected transfer mode. Rapid changes in the nature of global competition have driven international managers and management researchers to search innovative ways to approach new challenges, tackle problems and answer questions as to how to manage complex multinational corporations most effectively. This has meant having to develop new theoretical perspectives with which to examine issues, such as those concerning the management of a set of foreign subsidiaries with diverse external environments and a wide range of internal skills and competencies. Researchers in organization theory (Levitt and March, 1988) as well as strategic management (Prahalad and Hamel, 1994) have identified organizational learning as one of the most important subjects for scholarly inquiry. A common thread among network theory (e.g., Ghoshal and Bartlett, 1990), organizational learning(e.g., Hedlund, 1986; 1994), and evolutionary theory (e.g.Kogut and Zander, 1993) is their focus on the multi-relationships within MNCs, and the view that the multinational organization as a whole can greatly benefit from the transfer of resources and competencies within the firm. 


The Study of the Motivation and Performance of the Incubators’ Strategic Alliances:

Strategic Groups Perspective

Dr. Wen-Long Chang, Shih Chien University, Taipei, Taiwan, R.O.C.

Jasmine Yi-Hsuan Hsin, University of British Columbia, Vancouver, Canada



This paper applies the concept of strategic groups to the motivation and performance of the incubators’ strategic alliance. Surveys are conducted with 76 incubators in Taiwan. The result shows that all incubators can be divided into three strategic groups according to the similarity of their resource ownership and strategic thinking: strategic group with dominance over information resource, strategic group with dominance over business administration resource and strategic group with dominance over technical and human resources. In addition, due to the diversity of each strategic group’s resource dominance, incubator’s motivation for taking on a strategic alliance varies. The performance of each strategic alliance varies as well. Since 1996, Small and Medium Enterprise Administration (SMEA), Ministry of Economic Affairs, Taiwan, has taken on an active role to reinforce incubation policies in order to promote the start-up and innovation of small and medium enterprises in the hope to integrate the knowledge of different sectors: government, business, academia, and research institutions, so that SMEA can assist schools and both public and private sectors to set up their own incubation centers. SMEA aims to eliminate the difficulties faced by small and medium start-ups and to strengthen technology innovation skills of those start-ups. The goal is to upgrade those enterprises into knowledge industry with high added values, and to enhance Taiwan’s industrial competitive edge.


The Application of a Quantile Regression to the Relationship Between Debt

Financing and Equity Financing by Dual-Issue Cases

Min-Tsung Cheng, Ching Yun University, Taiwan



The allocation of financing sources contributes to the “success” of corporate financing strategy. Theoretically, what is the relationship between debt financing and equity financing? The literature regarding capital structure considers either substitutive or complementary financing sources. Hovakimian et al. (2004) assume that debt can be applied as a substitute of equity; on the other hand, a theory developed by Mehar (2005) argues that debt and equity are complementary sources of finance.  This paper adopts a methodology of quantile regression approach, similar to the work of Fettouh et al. (2005), to examine the relationship between debt and equity. Evidence shows debt and equity are complementary sources of financing amid high-equity financing firms, partially consistent with the finding of Mehar (2005).  What is the relationship between debt financing and equity financing? The literature regarding capital structure considers either substitutive or complementary financing sources. Hovakimian et al. (2004) identified a novel concept of “dual issues” in corporate financing behavior; that is, the practice of a firm issuing both debt and equity in the same year, in contrast to the previous research of choosing only one sort of financing instrument. Having a rare opportunity to reset their capital structure at relatively low cost, firms that follow a dynamic trade-off strategy will choose a combination of new debt and equity, as alternative sources of finance, with the assumption that debt can be applied as a substitute for equity. By offsetting the deviation from target leverage caused by the accumulation of earnings and losses, debt ratio is close to the target; therefore, debt can be applied as a substitute of equity.  


A Study on the Factors of Manufacturer Profitability: The Moderating Effect of Different Industries

Shu-Ching Chan, Jin Wen Institute of Technology, Taiwan

Wenching Fang, National Taipei University, Taiwan



Directed by governmental policies and global prosperity, the information and electronic industry is a mainstream industry to which investors pay close attention and job seekers are attracted in Taiwan. This study discusses non-information and electronic manufacturers that have been ranked as top businesses in Taiwan, together with mainstream industry manufacturers with good business performance. The study examines strategies for steadily gaining profits in the international market. Studies suggest that that key factors leading to profitability for information and electronic manufacturers and non-information and electronic manufacturers have modified in recent years. The effects of R&D, marketing expenditures, and the employment of professional workers on such profitability are significant for Taiwan’s information and electronic manufacturers, but not for Taiwan’s non-information and electronic manufacturers. In recent years, non-information and electronic manufacturers have steadily gained profits in the international market, primarily because this group can effectively manage the costs of its value chains and develop both global logistics and resource integration.  Progressing from its world-recognized role as “Made in Taiwan” to its role as “ Made by Taiwan”, Taiwan has long been a global player in terms of manufacturing capability. In 1998, the nation became the world’s third largest producer of information products. Having experienced the situations of the industry in that period, Shih (1996) proposed the notion of the “smiling curve” and believes that the added values for manufacturing are minimum at the bottom of that curve.


A Study on Efficiency and Productivity of Turkish Banks

In Istanbul Stock Exchange using Malmquist DEA

Dr. Birgul Þakar, Kadir Has University, Istanbul, Turkey



This paper considers the study of the Turkish commercial banking performance listed in Istanbul Stock Exchange in terms of their ability to provide maximum outputs with the given set of input consumption, i.e. Malmquist DEA analysis with output orientation have been adopted. Malmquist DEA analysis methods have been employed to determine the affects of variable returns on banks efficiencies and resulting Malmquist indices have been used to evaluate changes. The model  uses five input variables as i) branch numbers, ii) personnel number per branch, iii) share in total assets, iv) share in total loans, v) share in total deposits. The Share figures used are for whole Turkish banking sector and not the sector shares of Istanbul Stock Exchange. The five output variables selected as i) net profit-losses/total assets (ROA), ii) net profit-losses/total shareholders’ equity (ROE), iii) net interest income/total assets, iv) net interest income/ total operating income, and v) non-interest income/total assets. Results of the Malmquist DEA analysis is discussed from different perspectives. An examination of bank efficiency listed in stock exchange is important for several reasons. Financial markets in Turkey have undergone significant change over the last decade, as a result of deregulation and globalization. These drivers of change were particularly strong over the second half of the 1990s, which may be characterized as a period of a series of financial reforms were introduced, whose main objectives were to boost the efficiency and productivity of banks by limiting state interventions and enhancing the role of market forces. Banks moved away from simply being intermediaries toward providing a range of financial services, from insurance to funds management. All of these factors have had a significant influence on the operations of Turkish banks. This paper is a study to examine the effect of scale efficiency on the productivity of eleven Turkish banks listed in Istanbul Stock Exchange looking for their performance indicators after a recent crisis in Turkish banking sector.


Application of the VAIC Method to Measures of Corporate Performance:

A Quantile Regression Approach

Huei-Jen Shiu, National Chengchi University



This research applies a new accounting tool for measuring the value creation efficiency in the company, namely the Value Added Intellectual Coefficient (VAICTM) of Pulic (1998). Based on the year of 2003 annual reports of 80 Taiwan listed technology firms, it also examines the correlation to the resources of corporate allocation, and focuses on differences between firms in different quantiles of corporate performance. Conditional quantile regressions show that while variables are significant throughout the distribution, there are considerable differences, including differences in sign, and in their impact on firms with different degrees of performance. The empirical applications indicate that the nature of the technology industry in Taiwan is that of transforming intangible assets such as intellectual capital into high-value-added products or services in a way identical to the claims of Pulic (2004). Conventional accounting systems were developed for manufacturing economies and for measuring the value of tangible assets, but with intangibles such as the rate of change they find it difficult to account for. In addition to accounting systems, there are several internal and external measures of intellectual capital. The Skandia Navigator was one of the first internal measures to calculate and visualize the value of intangible capital by stating that intellectual capital (IC) represents the difference between market and book value (Leif 1997). Others are human resource accounting, the intangible assets monitor, and the balanced scorecard. External measures include market-to-book value, and Tobin’s Q and Real Option theory (Shaikh 2004).  The central question of the measuring systems: “Do traditional measures of corporate effectively capture the new emerging intellectual-based measures with the same constructs?”has acquired new significance in the context of developing accounting.


A Study of the Factors Impacting ERP System Performance—from the Users’ Perspectives

Ching-Chien Yang, National Central University, Jhongli, Taiwan, ROC

Ping-Ho Ting, Tunghai University, Taiwan, ROC

Chun-Chung Wei, Chungchou Institute of Technology, Taiwan, ROC



Many companies excessively emphasize the information technology, they ignore the most important factor for implementation IS success should be people-centered. This research examined the factors that impact ERP system performance from the system users’ perspectives. We empirically investigate the using experiences of ERP system users of those have implemented ERP systems middle-size companies in Taiwan on 2004. Our research found that the different implementation planning (implementing consultant services, education and trainning, and specific staffs for implementation ERP), characteristics of implementing organizations (customized processes, use partial or all system functions, and personnel), and users’ characteristics (the working age, department/segment, and position) will significantly influence the ERP system performance.  An ERP system is an integrated enterprise computing system to automate the flow of material, information, and financial resources among all functions within an enterprise on a common database. Davenport (2000) proposed that implementing the ERP systems bring many benefits for the organization including reduction of cycle time, promotion the flowing efficiency of information, generating the financial information fast, proceeding the E-business, and assistance in development new organizational strategies. Many companies are implementing ERP packages as a means to reducing operating costs, enhancing competitiveness, increasing productivity and improving customer services (Martin, 1998; Mirani and Lederer, 1998; Pliskin and Zarotski, 2000). Mabert et al. (2000) surveyed the US manufacturing firms found that ERP systems implementation benefits are concentrated more on quickly providing high-quality information within the firm.  


Factors Constraining the Growth and Survival of Small Scale Businesses. A Developing Countries Analysis

Stephenson. K. Arinaitwe, Breyer State University, London Centre



Small-scale businesses play a crucial role in contributing to overall industrial production, export and employment generation in developing countries, as noted by Kazmil & Farooquie, 2000. They form an integral part of a well growing and expanding national economy. Small-scale businesses have been a means through which accelerated economic progress and rapid industrialization can been achieved. That’s the reason why the dynamic role played by these enterprises in developing countries has been highly recognized and applauded.  Despite the recognition given to small-scale businesses as potential sources of economic growth and development in developing countries, their contributions have always fallen short of expectations. Therefore this analysis will try to find out and discuss the major challenges that have limited such businesses from delivering their expected benefits of poverty eradication, economic recovery and other developmental goals to the economies of developing countries.  In order to arrive at meaningful conclusions, the analysis will exploit all the available literature on small-scale businesses in developing countries. It will investigate the challenges of applying assumptions of positive relationships experienced within developed countries to developing nations.  Technological capabilities and how the lack thereof is a considerable constraint for small-scale businesses, in developing countries will be discussed, along with the need for technological support. Finance and small-scale businesses, as well as the three components for a grassroots campaign will be overviewed. And finally, balancing promotional strategies with environmental sustainability will be reviewed in order to better understand the challenges that small-scale businesses in developing countries must overcome in order to survive. By the late 1990s, over one billion people lived in abject poverty globally. 


On Using Benefit Segmentation for a Service Industry: A Study on College Career Counseling Services

Professor Chaim Ehrman, Loyola University Chicago, Chicago, IL



The need for a marketer of consumer goods to segment his market has been well documented in the literature. Segmentation strategies can be based on demographics such as age, income, religion, location, ethnic background, education, etc. Alternatively, segmentation can be based on psychographics, in which the segmentation strategy will focus on consumer life style characteristics. A third approach is to segment your market based on key benefits sought by consumers. However, the literature documents application of segmentation strategies for products, which are tangible items. In this paper, the focus is on a service, and benefit segmentation will be demonstrated how it can be used for the service industry. Universities in the 21st Century are facing a Buyers’ Market. Assume that students are “buying” higher education, and Universities are “selling” higher education through their curriculum, faculty, libraries, resources, etc. In the 60’s and 70’s there were many veterans from the armed forces who became college students, thanks to the help of the GI Bill. There was a shortage of colleges, and students were grateful to be accepted by any college. Hence, it was a Sellers’ Market, because the Universities could be picky and choosey whom they would accept as students. However, in the next 30 years, many new colleges and Universities opened up, faster than the rate of new students. Now we have a Buyers’ Market, because the students can pick and choose the university of their choice. The Universities are competing fiercely to get more students. Many students select the University of their choice based on the success of the placement service or career center of the University. This is logical, since many students go to College to select a career path for their future.


Business International: An Analysis of the International Market

Dr. Mehenna Yakhou, Georgia College and State University, Milledgeville, GA

Dr. Vernon P. Dorweiler, Michigan Technological University, Houghton, MI



Business has taken steps toward internationalizing their markets, and production.  This research focus is on two avenues of global extension: entry into national markets encounters national policies on imports; requiring local production for local marketing, or restrictions on imports.  Current terms of international participation are included.  This paper concludes with decision by firms, on how far to go toward globalization.  The modern business era has introduced two international terms (Quintella, 1997): globalization, and internationalization.  This approach to business is based on the initiatives by two parties: the business corporation, and the entry national.  The first is incentive-based, to provide a willingness to undertake venturing the technology.  The second focuses on risks of international marketing (Sullivan, 1991). The corporation will likely need to restructure, to meet conditions in the international environment.  The rationale shows the impact involved with an international strategy.  The risk-reward requires a basic understanding of the international environment; this pertains to the national policies of countries of entry.  A useful concept is offered by Jones (2002).  The corporation will need to apply its own means to the entry task:  information processing, communication, transportation, and organization.  Kedia (2002) provides a brief statement on each approach, with a view toward a rationale to undertake each.


A Voice Crying in the Wilderness for Auditor Independence: Abe Briloff and

Section 201 of the Sarbanes-Oxley Act of 2002

Dr. Deborah Prentice, University of Massachusetts, Dartmouth, North Dartmouth, MA



Abraham Briloff, an accounting academician and practitioner for over 60 years, is a major historical voice for the tenets of Section 201, of Title II, entitled Auditor Independence, of the Sarbanes-Oxley Act of 2002 (SOX). Section 201is entitled Services outside the scope of practice of auditors and makes it certain practices unlawful for a public accounting firm when conducting an audit. SOX came into effect subsequent to the wave of accounting scandals in 2002. In his 1965 doctoral dissertation, The Effectiveness of Accounting Communication, and in numerous published writings, Mr. Briloff had indicated his opposition to these practices. Finally, in 2002, these practices were outlawed. This article examines Mr. Briloff’s longstanding claims and suggestions and points out how they were finally resolved by Section 201. From these it is apparent that Mr. Briloff foresaw the need for the content of Section 201 of SOX. In the spring and summer of 2002, a wave of accounting scandals erupted in the United States. These were linked to the business failures of Enron, Worldcom, Global Crossing, and other large firms. High-ranking officials of these firms and a number of other leading companies admitted to intentionally misstating their accounts. Their offenses were often aided rather than hindered by the public accounting firms that audited their financial statements. The scandals brought billion-dollar financial restatements for many of the firms involved, and unleashed a series of accounting humiliations, sharp stock price corrections, and stories of corporate malfeasance in firms with previously stellar reputations.


The Effects of Nonmonetary Sales Promotions on Consumer Preferences:

The Contingent Role of Product Category

Dr. Shu-ling Liao, Yuan Ze University, Taiwan



Sales promotion as a major marketing communication tool has attracted extensive research attention which mostly addressed price promotion and its utilitarian driving force. Nonprice promotion with the provision of mixed benefits that might avoid losses in brand image and profit, however, was insufficiently investigated. The present study explores the preferential effects of nonmonetary consumer promotions moderated by product category. Results show that both product-related and reward-timing nonprice promotions take a major part in influencing consumer preferences for the sales promotion. The preference for same-product sales promotion is stronger than for other-product sales promotion. Also, instant-reward sales promotion is better preferred over delayed-reward sales promotion. The contingent role of product category is discovered in product-related consumer promotions. Same product as promotional benefit generates best preference when the promoted product is in the convenience goods category. If other product than the one on promotion is provided as buying incentive, it was found to top the preference for shopping goods. Rewarding consumers with same product instead of something different from the promoted one is a more effective match to convenience products and specialty goods, whereas providing other product as a reward object is more suitable for shopping goods.  Sales promotion as a pivotal component of marketing mix has been heavily used as a major incentive tool to pull consumers to stores and increase short-run sales volumes. Since 1980s, researchers have constantly proposed a variety of concepts to illustrate how sales promotion might affect consumer purchase behavior via overcoming "consumer entropy" (Beem & Shaffer 1981), inviting consumers to engage in transactions (Kotler 1988), heightening the psychological value associated with the transactions (Thaler 1983), or by providing consumers with a script of purchase behavior (Gardner & Strang 1984).


An Analysis of Factors Which Influence Small Businesses’ Decision to Have a

Website and to Conduct Online Selling

Dr. Sumaria Mohan-Neill, Roosevelt University, Chicago, IL



Using data from a national sample of 752 U.S. small business firms, this paper addresses four general research objectives concerning the decision to have a website and to conduct online selling activity by firms. The first objective is to present an overview of the frequency distribution of websites in small firms, and the frequency of online selling by these firms. The second objective is to explore why some firms with a website do not use it to sell goods and services over the Internet.  The third objective is to explore the reasons why firms without a website do not currently have one. Finally, the fourth objective is to address the expectation of firms, without a website. What are their expectations concerning having of a website for the business in the near future? The Internet bubble has burst, and much of the hype is over, but we are nonetheless faced with radical technological changes, which have revolutionized the competitive marketplace, and even small businesses cannot ignore the opportunities and threats, which comes with the Internet. This paper presents a significant part of the picture on the current use of technology and websites by small businesses. It utilizes data from a national sample of 752 U.S. small business firms. Previous research studies on this dataset have described the overall usage of the Internet by small firms (Mohan-Neill 2004a), the computer and Internet usage by small business and their correlation with owner’s gender and education (Mohan-Neill 2004b). Differences in Internet usage by industry sector have been analyzed and reported (Mohan-Neill 2004c), and an initial analysis of the interaction between owner’s gender, industry sector and Internet usage has also been reported (2004d).


Maximize Audit Fees and Minimize Audit Risk:  A Recipe for Auditing Success or Failure?

Dr. Kathie Cooper, University of Wollongong, Australia

Dr. Hemant Deo, University of Wollongong, Australia



The audit profession is always mindful of the costs of the auditing process that it undertakes.  When the audit firms tenders for an audit it is done on a very competitive basis.  If the audit firm wins the tender then the resulting consulting services is where the audit firm makes its revenue.  The way to achieve this is to do a risk based audit, which is timed based.  The audit firm therefore, in most cases trying to take as much consulting works as it possibly cans the aim being to maximize audit fees and minimize audit cost “the road to audit success”.  The aim of this paper is to highlights some of the pitfalls once an approach such as this is undertaken using the recent collapse of Heath International Holdings (HIH) case study in Australia. The Royal Commission Report into the collapse of Australian insurer, HIH, demonstrates how a previously respected accounting firm, Arthur Anderson, breached its own audit manual requirements in order to keep a client.  Evidence to the Royal Commission further demonstrates the folly of the decisions made by Arthur Anderson executives to maintain not only a difficult client, but also a maximum risk client at the expense of the firm’s reputation and, ultimately, its very existence.  Meanwhile, the demise of Arthur Anderson as one of the world’s Big Five accounting firms in the wake of the unexpected collapses of not only HIH in Australia but also Enron and WorldCom in the USA is little compensation to those left financially benefited as a result of reliance on the viability of these companies as reflected in audited financial reports. 


A Study on Relations between Industrial Transformation and Performance of Taiwan’s Small and Medium Enterprises

David W-S. Tai and C-E. Huang, National Changhua University of Education, Taiwan



With the liberalization and internationalization of the global economy, Taiwan’s labor-concentrated traditional industries are progressively loosing their competing advantages. Therefore this research studied Taiwan’s SMEs, through transformation process to establish competitive advantages and better performance, among the changes in environment. This research focused on Taiwan’s SMEs, and discuss through actual demonstration to define the relationship between “industrial competing environment, industrial transformation strategy and organizational performance”. With the data from 184 SMEs, through the analysis of LISREL,this study found that: 1. Industrial competing environment is clearly affecting the industrial transformation strategy, when facing greater changes in industrial environment, transformation process goes higher. 2. Industrial competition environment must go through industrial transformation strategy to affect the performance. SMEs plays an important role in the process of Taiwan’s economic development, especially for Taiwan’s exporting business and the growth in national income. Until 1980s, managing environment and industrial structure went through a great revolution, SMEs are facing impacts such as insufficient labor, prime cost rising, fast changes in technology, advances in environmental awareness, competitions from foreign developing countries, etc. Along with the situations of Taiwan’s politic and economic status, are all affecting the management of the SMEs.  Also, Taiwan has officially entered the World Trade Organization, businesses are facing impacts from internationalization.


The Impact of Message Framing and Involvement on Advertising Effectiveness -

The Topic of Oral Hygiene as an Example

Chia-Ching Tsai, I-Shou University ,Taiwan

Ming-Hung Tsai, E. C. K. Hospital, Taiwan



In this study, we used oral hygiene advertisement to investigate the impact of message framing and involvement on advertising effectiveness.  We found that negatively framed messages were more effective than positively framed messages under high involvement conditions, but reverse outcomes had been obtained under low involvement conditions. In a society with advanced communications technology, advertising has become one of the main tools for industries to communicate with consumers.  How to frame the messages as to raise the effectiveness of communication is an important subject to explore.  Message framing can be categorized as: (1) positive messages emphasizing the advantages or benefits the product can bring to the consumers; and (2) negative messages emphasizing the losses or disadvantages consumers may suffer for not using the product (Meyerowitz & Chaiken, 1987; Maheswaran & Meyers-Levy, 1990).  However, some scholars think that messages of identical content, if framed differently, will have different impacts on consumers (Rothman, 1993).  Meyerowitz and Chaiken (1990) discovered in their research that negatively framed messages can produce the best advertising effect on high involvement consumers.  Conversely, positively framed messages will have better advertising effect on consumers of low involvement. Furthermore, Smith (1996) pointed out that most of the topics in studies on advertising message framing are health related, such as breast cancer, testicular cancer, and skin cancer.  When decision makers face this type of topics, they all want to avoid patient losses.  This means that this type of messages is quick to let decision makers think of the unpleasant aspects. 


ISO 9000 and Financial Performance in the Electronics Industry

Dr. Philip W. Morris, CPA, CFE, Sam Houston State University, Huntsville, TX



Over the last two decades, businesses have increasingly shown an interest in quality and quality-related issues.  The conventional wisdom states that quality is an important component of survival for today’s companies.  The quality movement has seen the development of an international quality standard known as ISO 9000. Although developed in the late 1980s, ISO 9000 became increasingly popular, in the U. S. and internationally, during the 1990s. From an academic standpoint, the link between quality and financial performance is still a poorly researched area (Wruck and Jensen, 1994; Easton and Jarrell, 1999). Likewise, the link between ISO 9000 and financial performance is still undetermined. This study was designed to help better explain the link between quality, as indicated by ISO 9000 certification, and financial performance. Specifically, this study examined financial performance of U. S. firms in the electronics industry.  ISO 9000 certification served as an indication of quality management practice. Financial data from Compustat was used to determine financial performance. Firms that become ISO 9000 certified (quality firms) were anticipated to have superior financial performance to firms that were not certified to ISO 9000 standards. The results failed to support the hypotheses.  Quality-related issues continue to be of concern to both management and managerial accountants.    However, the literature has suffered from some major problems.  In much of the literature, the anecdotal benefits of quality are listed as unquestionable fact (Garvin, 1988). Consequently, most of what is written about quality is grounded on coherent argument rather than in empiricism. Much of the literature about quality is by people who are either quality consultants or who have some type of connection to quality-related businesses (Cole, 1998). Research in the area of quality management practices suffers from the multiple definitions (Wruck and Jensen, 1994; Matta et al., 1998; Easton and Jarrell, 1999), varying degrees of implementation (Reed et al., 1996), and lack of specific implementation dates (Easton and Jarrell, 1998).


A Framework for Interpreting the Antecedents of CEO Compensation:

An Organizational Adaptation Perspective

Chen-Ming Chu, Chung Yuan Christian University, R.O.C.

Hsiu-Hua Hu, Ming Chuan University, R.O.C.

Nai-Tai Chu, Chung Yuan Christian University, R.O.C.



This study provided a framework for interpreting the antecedents of CEO incentive compensation from an organizational adaptation perspective, which encompassed strategic choice and environmental determinism. The purpose was to develop a better understanding of the key determinants that influence the incentive structures for CEOs and other top decision-makers in organizations. The result revealed that external environmental factors were found to have the strongest influence on CEO incentive compensation, in particular, technology intensity and industrial life cycles. Consequently, companies operating in the hi-tech and new emerging industries were found to provide a higher ratio of incentive-based compensation. Executive compensation is perhaps the most crucial strategic factor at the organization's disposal, given that it can be used to direct managerial decisions and is likely to have a significant effect on the company’s future.  Debates continue on how to optimize the incentive structures of Chief Executive Officers (CEOs) and other top decision-makers in organizations.  Also, criticism in the popular business press abounds about CEOs being overpaid and when benchmarked, with peers and their firm’s performance, many executives appear to be rewarded at a level that is excessive. Companies have tried all sorts of methods for providing incentives to executives, such as bonuses, stock, stock options, phantom stock plans, employee stock ownership plans, deferred compensation and so on.  The growing interest in such pay-for-performance schemes has come from the realisation that often the interests of top executives and shareholders are not aligned, and that sometimes contracts need to be designed to induce executives and managers to work more closely in the company’s interest.  


An Overview of Knowledge Management Assessment Approaches

Dr. Martin Grossman, Bridgewater State College, Bridgewater, MA



While knowledge management (KM) continues to gain popularity as a corporate strategy, the acceptance of standardized KM assessment approaches has lagged.  The development of metrics to assess a firm’s knowledge-based assets is inherently problematic due to the intangible nature of such resources.  Nonetheless, assessment is of vital importance for valuation purposes as wells as to let managers determine whether particular KM initiatives are working. There has been a recent surge of interest in the area of knowledge management assessment and a host of new methods and frameworks emanating from both the academic and practitioner communities.  And yet with all of the different alternatives available, there is a dearth of empirical evidence to suggest one approach is more appropriate than another and little consensus. This paper provides an overview of the knowledge management assessment landscape and suggests some areas for future development. Although the study of knowledge has its roots in antiquity, the field of ‘knowledge management’ as a self conscious discipline is a recent phenomenon.  Peter Drucker was one of the first management gurus to laud the centrality of knowledge in the organizational context (Drucker, 1994), stressing that the collective knowledge residing in the minds of its employees,  customers, suppliers, etc. , is the most vital resource of an organization’s  economic growth,  even more than the traditional factors of production (land, labor and capital).   The criticality of knowledge-based assets to the firm is often reflected in the disparity that may exist between a company’s market capitalization and its book value. 


Research Trends on Patent Analysis: An Analysis of the Research Published in Library’s Electronic Databases

Dr. Kuei-Kuei Lai, National Yunlin University of Science and Technology, Taiwan

Mei-Lan Lin, National Yunlin University of Science and Technology & Far-East College, Taiwan

Shu-Min Chang, National Yunlin University of Science and Technology & Nan Kai Institute of Technology, Taiwan



Researches on patent analysis are often applied in the management of technology, and the topics of this arena are becoming increasingly diversified. Various themes studied in patent analysis are easily obtained through library’s electronic databases. Not only do we use a library’s electronic database, we also apply a citation technique to figure out the relationship between target literatures. Two hundred and fifty three target literatures regarding the subject of patent analysis were retrieved from the electronic system of a library. According to our investigation, research on patent analysis has been continuous and has been extensively discussed for the past ten years. Patent citation and patent statistics are two major keywords for retrieving related papers. The journals of Research Policy and Scientometrics contain most of the papers which are relevant and specific to patent analysis. Narin, F. and Meyer, M. both have a relatively higher productivity of being published. In terms of citation frequency, our results show that Griliches, Z. 1991 has the highest citation rate. In addition, the rate of cooperative publishing goes as high as 61%. Some literatures specific to patent analysis are based on previous researches. From an evolutionary perspective, this study brings new insights of intellectual development on patent analysis and also makes it easier to understand specific topics of researches. Patent analysis is an important topic in the management of technology. Academics and corporations acquire information of technological development and competitive intelligence from patent databases. The number of patents issued is often in terms of technological R&D output.


Effects of Job Satisfaction and Perceived Alternative Employment Opportunities on

Turnover Intention: An Examination of Public Sector Organizations

Dr. Ing-San Hwang, National Taipei University, Taiwan

Jyh-Huei Kuo, National Taipei University, Taiwan



This study analyzes the effects of job satisfaction and perceived alternative employment opportunities on turnover intention. Thanks to the support of the Taiwan government, the data collection has been conducted using personnel from various government departments. The present research surveyed 259 executives and staff employed in the government. The results show that solely job satisfaction does not have a significant relationship with turnover intention. However, the interaction between job satisfaction and perceived alternative employment opportunities does have a negative effect on turnover intention. In fact, perceived alternative employment opportunities have a positive effect on turnover intention. The conclusion suggests that more reliable measures should be developed when discussing the turnover intention in public sector organizations. The study of personnel turnover has attracted academic attention in the field of human resources management for several decades. It is widely believed that a significant amount of turnover adversely influences organizational effectiveness (Hom and Griffeth, 1995; Hom and Kinichi, 2001). By identifying the determinants of turnover, researchers could predict turnover behaviors more precisely and managers could take measures in advance to prevent turnover.  Among the determinants of turnover, job satisfaction plays a major role in most theories of turnover (Lee et al., 1999) and operates as the key psychological predictor in most turnover studies (Dickter, Roznowski, and Harrison, 1996). According to Hom and Kinichi (2001), testing theories of how loss of job satisfaction progresses into job-termination has dominated turnover research over the past 25 years.


Return on R&D Investment Across High-Tech Products’ Life Cycle

C. Catherine Chiang, North Carolina Central University, Durham, NC



In this paper, I model the return on research and development (R&D) spending across different stages of a product’s life cycle and show that, for a high-tech product, return on R&D is heterogeneous across different product life cycle stages.  Specifically, return is highest in the mature stage before the innovator firm offers any price concession on the product and lowest at the decline stage when successive price concession is provided.  The model developed in this paper also provides specific guidelines for product pricing and development strategies, so that high return on R&D can be achieved.  In this paper, I build a simple but stylized model to find a theoretical relationship between a firm’s return on R&D investment and its product life cycle stages.  Specifically, I model the return on R&D spending across the stages of a product’s life cycle and show that under the assumptions that resemble the market environment of high technological industries, return on R&D is highest during the mature/saturation stage and lowest at the decline stage.  I further identify specific conditions under which highest return on R&D can be achieved at mature stage or at the saturation stage.  For a high-tech firm, the life cycle stage of its product(s) is an important indicator in setting its product development and marketing strategies.   Because a high-tech company differs from other companies in the amount (and intensity) of its R&D spending, to the managers and shareholders of a high-tech firm, return on R&D is a more important factor in valuing the firm than return on other assets.  The objective of this paper is to build a model of return on R&D across different stage of a product’s life cycle and find the conditions under which return on R&D would be highest.  


A Research Study on Students’ Level of Acceptance in Applying E-Learning for Business

Courses -A Case Study on a Technical College in Taiwan

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



The twenty-first century is a period of knowledge economy, so both academic units and enterprises now exert great influence on the development and promotion of e-learning.  By reviewing the available archived literature, we discovered several research studies on e-learning with regard to courses in languages, biology, and geography.  However, there were few studies regarding business courses.  As a teacher conducting business courses, it is vital to utilize e-learning to expedite business courses more easily.  This research thus used a technical college in Taiwan to survey students’ level of acceptance in applying e-learning for business courses. The purpose of the study was to provide a clear reference for developing and promoting e-learning in all business courses. Peter F. Drucker remarked that we are in a time of great change and great changes will continue to the year 2020; the evolution of these times will also be unpredictable (Hamel, 2000).  The rise of a knowledge economy will serve as a key point contributing to this great change (Wu, 2002).  In the epoch of the knowledge economy, society is transforming into a new structure where the “binary digit” has become the foundation and basis for thinking (Chou & Yang, 1998).  Academic units and enterprises have veered from traditional in-class learning to limitless e-learning to meet the demand for more learner-centered environments (Chen, 2002). 


Study of the Financial Planning Behaviors of Chinese Senior Citizens

Dr. Yao-Tsung Tsai, Nan Kai Institute of Technology, Taiwan



The goal of this study is to identify the relationship among senior citizen’s financial planning behaviors, financial planning tools selection, and financial planning service selection. First, based on the relevant literatures of researches on financial planning services, we have formulated and distributed surveys which will be used in our study. Subsequently, we have utilized participant observation method to interview senior citizens on their financial planning behaviors and to survey their planning tools selection in order to determine the senior citizens’ thinking process and logic and to further understand the suitability and problems of existing financial planning service models. Finally, we have applied statistical analyses such as factor analysis and multiple-regression analysis to develop a new financial planning service model for financial institutions to design the guidelines and bylaws of financial planning services offered in the future. Furthermore, we believe that this model can be used as references for the financial institutions or government when making important strategic decisions. There is an old Chinese adage that states “A person’s real life begins at age 70”. However, the actual meaning of this adage is more symbolic than realistic. In another word, if no adequate financial planning has been provided at young age, when the person becomes senior citizen, it will mark as the beginning of his or her misery. The Chinese tradition place key emphasis on piety to parents and supporting parents is the social norm that each person should comply with.


Integrating the Role of Sales Agent into the Branding Model in the Insurance Industry

Hui-Chen Chang, National Taipei University, Taipei, Taiwan



The use of salespersons to build effective and enduring customer relationships is a strategic choice in many industries. This study explores the coincident influence of brand equity and sales agents in the service industry and develops a positive customer relationship maintenance model in order to identify and investigate how the antecedent variables influence relationship marketing outcomes. The potential effects of customers’ relationship maintenance motivations on subsequent relationship attitudes and behaviors are examined through the sample drawn from the customers’ database of three major insurance companies in Taiwan. The results provide support for the model and indicate the important role of the sales agent in customer relationships in the insurance industry; that is, the salesperson’s attributes, product and non-product attributes, customer benefits, customer affect and trust of salesperson and firm are observed as significantly contributing to relationship marketing outcomes in services. The managerial implications are also provided. Building and maintaining enduring relationships with customers of service industries is increasingly important in the field of relationship marketing. A critical challenge is to identify and investigate how antecedent variables influence relationship marketing outcomes. This study develops an integrated customer relationship model based on Aaker’s (1996) definition of brand equity, Keller’s (1998) definition of brand associations, and other literature related to relationship retention determinants. Currently, firms enhance the customers-sales link to increase brand loyalty.


Integrating Management Concepts and Telecom Facilities Using Ideas from Public Law

Dr. Yi-Chun Lin, Central Police University, Taiwan, R.O.C

Dr. In-Chung Chang, National Chiao Tung University, Taiwan, R.O.C



The Telecom business in Taiwan was originally exclusively controlled by the Directorate General of Telecommunications (DGT) under the Ministry of Transportation and Communications (MOTC). In 1996, Taiwan completed revisions to the Telecommunications Act and a reorganization of the DGT. Since then, the DGT has aggressively opened Taiwan’s telecom market and established an environment of fair competition. In 2001, the domestic telecom market was fully liberalized. However, the market still existed some disputes on infrastructure of telecom. This study analyzes management techniques such as: (1) the concept of property; (2) scarcity of resources; (3) public benefit; (4) management efficiency; and (5) fair competition.  Moreover, four Taiwanese telecom companies involved in the fixed network industry are taken as examples to explain the gain or loss of the sharable facilities on the telecom market. After the Telecommunications Act was published and implemented in Jan. 1996, the restructuring and the establishment of the Directorate General of Telecommunications (DGT) with the segregation of telecom supervision and operation; at the same time, market was opened up and private sector investment was encouraged. The telecommunications enterprises were classified into Type I and Type II Telecommunications enterprises. Type II Telecommunications enterprises has been fully opened up after the Telecommunications Act was passed, since Type I Telecommunications enterprises were involved scarce resource such as frequency or land utilization , special permit method was adopted.


The Application of Quality Function Deployment (QFD) in Product Development -

The Case Study of Taiwan Hypermarket Building

Shih-shue Sher, Feng Chia University, Taiwan



In order to get competitive advantage, a business must depend on a continuous innovation and creativity of products.  Hence, the research and development of new products become a focus topic.  Quality Function Deployment is a useful tool for the research and development of new products.  QFD is a systematic method to transfer customers’ thinking into the designing, manufacturing, and costing processes of products, services, and parts. It uses a technique transformation of a two dimensional matrix to expand its meanings for the purpose of guaranteeing the quality of the product and service, in turn, it will meet the customer’s requirement and provide customer’s satisfaction. This research uses the large scale supermarkets as our observation subjects to investigate the application QFD on supermarket’s architecture.  Data are collected through mail questionnaires and face-to-face interviews. Seventy eight valid questionnaires are returned.  A quality house was built after analyzing the data through the technique of QFD.  The result revealed (1) that the model developed through QFD can handle the customer’s demand and develop the quality required by the customers, and (2) that QFD is a mature logical thinking and is applicative to service industry. In order to acquire the consumers’ identification and the competitive advantage, firms must continue change in management and accelerate product innovation. Therefore, for all companies, the development of new products becomes one of the most important issues. Since 1990, after the hypermarket was introduced from Europe, it changed the environment of retail business in this decade.


Assessment of Internet Marketing and Competitive Strategies for Leisure Farming Industry in Taiwan

Dr. Chen-Ling Fang, National Taipei University, Taiwan

Dr. Ting Lie, Yuan Ze University, Taiwan



Internet marketing has brought Taiwan leisure farming industry into modernization and globalization. In Taiwan, most of the leisure farms have used Internet marketing to different extent in promoting business. Although using their homepages to access information on the location, facilities, products and services are popular, few studies have examined the effectiveness of Internet marketing and the level of usage by tourists. This study aims at evaluating the Internet usage behavior of leisure farm tourists and identifying the marketing strategies for different consumer groups. Two hundred and thirty-two valid questionnaires collected from 20 leisure farms were analyzed. The results showed that tourists perceived an inadequate amount of information provided by leisure farm websites, the most important function demanded by tourists. Six factors affecting the choice of leisure farms by tourists were also identified. Cluster analysis yielded three different consumers groups that varied with respect to their choice emphases. Internet marketing is to employ the web to market products and services to customers. Promotion, advertising, transaction and payment can be done through web pages. The users of Internet marketing can conveniently access information anywhere with computers hooked up to the Internet. In Taiwan, an increasing number of leisure farms have used Internet marketing to different extent in promoting their business. Information on the location, facilities, products and services are provided through leisure farms’ homepages.


A Kano Two-dimensional Quality Model in Taiwan’s Hot Spring Hotels Service Quality Evaluations

Yao-Hsien Lee, Chung Hua University, Taiwan

Tung-Liang Chen, Chung Hua University, Taiwan



Recently, the hot spring recreation activity has become an important leisure activity of the tourism industry in Taiwan.  Therefore, activity-related issues such as service quality, pricing, marketing, and safe/security have been extensively investigated. The empirical result of the study shows that there are 15 items belong to indifferent quality element defined by the Kano two-dimensional model in the 23 examined items of hot spring hotels service quality.  We also adopt a quality improvement methodology which is proposed by Matzler and Hinterhuber (1998) to find that improving the surroundings of hot spring hotel and its decorative expressions can increase the consumer’s satisfaction.  There are statistically significant satisfaction differences in customers with different demographics and different traveling modes. According to our findings, we suggest that the hot spring hotel industry in Taiwan should segment the targeted consumers and provide them with the different services by considering relevant demographics obtained in the paper. According to the quarterly national economic trends in Taiwan area, Taiwan’s economic growth rates increased in steadily from 2001 to 2004 are -2.18%, 3.59%, 3.31%, and 5.87%, respectively.  The average national income in 2001 is 11,639 USD and 12,528 USD in 2004. 


Compelling Claims on Multinational Corporate Conduct

Ahmed S. Maghrabi, King Abdelaziz University, Jeddah, Saudi Arabia



This empirical study identifies that multinational corporations by definition are said to have production facilities in more than one country. Beyond economics the social and public objectives of multinational corporations have intriguing phenomena. In the twenty first century many corporations in the western world have been expressing such social objectives as those that are inherent in the conceptual philosophies of “Social Marketing”, “Social Responsibility Marketing” and “Societal Marketing” in their mission statements, policy statements and in their advertising themes after a high visibility of social objectives in the non profile sector of the western world economy. These aims are emerging as a moving force in other parts of the world through out the transnational corporate structure. The twenty first century has witnessed globalization of business with astonishing speed.  This speed has played an important role in the life of Multinational Corporation around the global world which has forced them to enter markets all over the world.  In order to keep up competitions for these corporations as well as leadership of the markets they have to do every possible way in their long range planning to have production facilities in more than one country.  This new century has brought to multinational corporations a new trends which have posed great challenges for companies as they have to interact with different cultures. However, they have been said that there is compelling evidence to suggest that U.S. multinational corporations (MNCs) operating in areas such as transportation, mass media, tourism, publishing, sports, consumer durables and non-durables, and information technology among others have been contributing immensely to make the world a “ Global Village “ (Mcluhan and Powers,1989).

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