The Journal of American Business Review, Cambridge
Vol. 1* Number 2 * Summer 2013
The Library of Congress, Washington, DC * ISSN 2167-0803
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A Pathway to Sustainable Business Success in SMEs Through Innovative Leadership Processes and Synergizing Principles
Brad Nikolic, CQUniversity, Australia
Dr. David Robinson, Professor, CQUniversity, Australia
The purpose of this paper is to present a conceptual model to enhance leadership effectiveness and to introduce the concept of synergy into mainstream leadership theory. In essence, there are four key elements to effective and sustainable leadership, namely ethical foundation, authentic action, charisma and transformational intent. These are combined sequentially indicating a step-wise progression. There are also seven synergizing principles, namely utility, attraction, visualization, recognition, evolution, reciprocity and serendipity, each of which exerts influence on the flow of energy within firms, and which in combination produce synergistic forces that inter-relate with Vortex Leadership, potentially accelerating the firm toward its goals. Small and Medium sized Businesses (SMEs) in the modern-day have great opportunities to compete among global players, through the rise of the information society, globalization and shifts in social structure. Yet financial impacts such as the Global Financial Crises (GFC) and increasing social responsibilities are elements with which all business leaders are confronted. Hence, innovative leadership is more important than ever to ensure a competitive edge for the SME. Leadership has become an interdisciplinary field, through increased research from other disciplines such as the social sciences (Avolio, Walumbwa, & Weber, 2009; Rosenbach & Taylor, 2006). Business leaders need to ensure short-term success as well as keeping an eye on long-term business sustainability. Thus, task orientation continues to be important as ever and stakeholder engagement has become even more essential in contemporary leadership approaches. In this paper we explore the necessity for an innovative leadership framework, proposing that SME leadership must have an ethical foundation model based on energy flow. The modern-day business environment adds new and complex challenges to business leaders, which reflect a paradigm shift of peoples’ values through new technologies, environmental concerns or cultural transformation (Euwema, Wendt, & van Emmerik, 2007; Martin & Ernst, 2005; Schierenbeck & Wöhle, 2012). To be able to maintain competitive advantage and sustain a company over the long run, it is important for a business leader to consider the interrelationship between economic, environmental, and social performance (Epstein, 2009, p. 25). Hence, business leaders face a complex mix of performance factors. A way to better approach the management of these can benefit the company over the long run. Dyllick and Hockerts (2002) note that business sustainability is often linked to eco-efficiency, for example, reducing costs by using efficient energy sources or improving environmental performance by the re-use of waste materials. Such a reduction, however, neglects several criteria that companies have to satisfy if they want to become truly sustainable. According to Haugh and Talwar (2012) business sustainability is an optimized synergy of three dimensions, namely environmental, economic and social dimension and thus much broader than being solely focused on environmental factors. SME focus should be on creating long-term shareholder value by embracing opportunities and managing risks that result from an organization’s economic, environmental, and social responsibility (Pojasek, 2007). Similar to individual development (Graves, 1974), a company progresses through different stages of maturation aiming towards optimal performance (Robinson, 2008). This process develops as one step at a time to bring into line various key success factors, such as company culture, person–company fit, reward systems, communication channels, and all of these require coordinated leadership. To ensure that the company culture keeps pace with the developmental stages, effective leadership practices are needed (Robinson & Boulle, 2012). In other words, business leaders need an effective way to balance strategic decisions and direct their company members responsibly towards company goals for long-term sustainability. As the field of leadership is rather complex, and research has approached this phenomenon from various angles, there is no single clear definition of leadership (Muchiri, 2011; Rost, 1991). Definitions that do exist vary considerably (Bass, 2008; Hernandez, Eberly, Avolio, & Johnson, 2011), though it is generally accepted that leadership is an influencing process between a leader and a follower aiming to achieve a set goal. Such a behavioral process is highly complex and dynamic and must necessarily be developed over time (Graves, 1970, 1974). Common elements can be identified across many of the accepted definitions (see e.g. Antonakis, Cianciolo, & Sternberg, 2004; Avolio et al., 2009; Bass, 2008; Hersey & Blanchard, 1969; Shamir, House, & Arthur, 1993; Stogdill, 1974), for example good communication skills, good interpersonal skills, analytical skill for the contextual setting, or displaying authority. Theories on leadership have evolved over time and can be conceptualized as four theoretical pillars, namely traits, behaviors, contingencies, and processes (Grint, 2011). For the modern-day business environment, leadership research now needs to look at common components of established leadership theories and combine those into a holistic approach.
Historical Perspectives of Corporate Governance: Have the Increased Regulations Changed Corporate America?
DeLeah Vogt, Sam Houston State University, TX
Dr. Balasundram Maniam, Sam Houston State University, TX
Dr. Hadley Leavell, Sam Houston State University, TX
Corporate governance in America can be traced back to the first corporations chartered in the U.S. during the nineteen century; however, the corporate governance requirements from the nineteenth century are minimal when compared to the regulations posed on corporations today. The past decade brought about significant changes to corporate governance regulations, which are now imposed on publicly-held corporations. Corporate accounting scandals involving major corporations like Enron, WorldCom and Adelphia led to major legislative reform with the passing of the Sarbanes-Oxley Act (SOX) in 2002, which changed the landscape of corporate governance entirely. Another round of corporate failures plagued the American economy as a result of the financial crisis of 2008; more governmental oversight was added to corporations. As early as the 1800’s, corporations in the USA were established with legislation that required corporate responsibility to shareholders. The American corporate structure originated in England; it provided a corporate framework including the Joint Stock Companies Act of 1844, which allowed corporations to define their business purpose and the Limited Liability Act of 1955 gave shareholders limited liability (Grant, 2003). Further legislation addressed issues for corporations that were chartered in America. In 1881, the Supreme Court of Massachusetts rendered a ruling in Davis v. Old Colony Railroad Company stating that corporations were restricted to their business purpose as stated in their corporate charter and corporate directors were not allowed to spend shareholder funds on any activity that was not part of the business purpose for which the corporation was created (Grant, 2003). This early form of corporate governance was established to protect the interests of the shareholder. This paper will review the history of corporate governance and will identify and discuss the changes that corporate governance has made in corporate America. Effective corporate governance is designed to protect investors and to address the agency problem; therefore, the impact of increased governmental oversight on corporate management and the effects of corporate governance on the corporation as a whole will be discussed. The paper concludes with a discussion of overall effectiveness of corporate governance and the possible directions corporate governance may take in the future. Grant (2003) explains the origins of corporate governance and how history continues to repeat itself with corporate failures even following the implementation of stringent regulations. Grant argues that government regulations have proven to be ineffective with resolving corporate governance issues and corporations will need to step up with self-imposed corporate governance policies to restore public confidence in American corporations. Rockness and Rockness (2005) conducted a study of the financial reporting failures over the past decade and the regulations that have been passed in an attempt to control ethical behavior. The research revealed that the fraud and financial failures of the past decade are nothing new; corporate failures have been around since the turn of the century. They further claim that the added costly sanctions do not guarantee corporate ethical behavior. Hamilton (2000) explains the shift of management’s roles in the corporation from the 1950’s. He further explains the impact this shift has had on the need for increased corporate governance regulations. Hamilton discusses three developments that impacted overall management performance, a new classification of board directors and shareholder involvement. These developments include the growth of institutional investors, the development and decline of takeover bids, and the fallout from the Nixon scandals. These factors led to an increased interest for improved corporate governance during the 1970’s. Bolt-Lee, Farber and Moehrle (2011) discuss the results of a study conducted on corporate governance changes post-Sarbanes-Oxley. The study examines the impact of SOX on internal control measures, board monitoring, CEO compensation and corporate fraud whistle blowing. The impact that internal auditors have on the quality of financial reporting was also examined to determine whether or not material weaknesses were more likely to be detected and reported with strong internal audit activities. Tipgos and Keefe (2004) define the principal weakness of corporate governance as the power given to top management of corporations. They further analyze the current corporate structure and its inadequacies and provide insight as to the changes that are deemed necessary to instill public confidence back into the American corporation. Mukweyi (2010) conducted a qualitative research study addressing managerial fraud and corporate governance. The study identified characteristics that most managers possess which contribute to decisions to commit fraud. The study further addresses the impact that corporate governance has on deterring management fraud. Ronen and Berman (2004) examine the impact that SOX reform has had on auditor and board member independence. The study examines the myth of independence and disputes the ability to eliminate these conflicts of interest through government regulation. They further examine the need for market mechanisms, such as financial statement insurance (FSI), as a more viable option to eliminate auditors’ conflicts of interest.
The Staying Power of Unpopular Projects: Clues from the Movie Industry
Dr. Wayne J. McMullen, Pennsylvania State University, PA
Dr. Raj Varma, University of Delaware, DE
We examine the enduring power of unpopular projects with very limited appeal within the context of hypotheses suggested by extant theoretical research. Based on value or profit maximization being the ultimate motive for a manager, the Shareholder-Interest Hypothesis asserts that the survival of unpopular projects emanates from some competitive advantage inherent to firms investing these projects. The Management-Interest Hypothesis, on the other hand, suggests that managers continue making unpopular projects because such projects maximize managerial private benefits like prestige or job security from risk minimization. Although our findings document substantial private benefits to managers choosing to undertake real investments in unpopular projects, these benefits seemingly do not lead to suboptimal investment decisions. Why do firms invest in unpopular projects? Extant theories in finance prescribe that in the absence of capital constraints, managers acting in the interest of a firm’s shareholders should accept unpopular capital projects as long as they are associated with positive net present values, irrespective of the unpopularity of these projects. Similarly, theories in accounting recommend that managers should proceed with unpopular projects providing their accounting returns (revenues divided by costs) are greater than zero. In contrast, agency theories assert that managers may choose unpopular projects for a variety of private benefits arising from career and other concerns. What remains puzzling is how such projects could have any enduring power if these projects only provided private benefits to managers. We examine the above mangerial motivations for investing in unpopular projects by conducting an empirical analysis of documentary movie projects. Our choice of using documentary movie projects for our investigation of unpopular projects is motivated from the reality that despite their well-known abysmal box-office performance, documentary movie projects have continued to be made by filmmakers since the 1920s. Our main reason for examining unpopular projects in the movie industry is that we are able to obtain rich project-by-project data for a sufficiently large number of projects in this industry. Also, the resilience of unpopular projects becomes particularly interesting in an industry as lucrative as the movie industry. Furthermore, our interest in the use of the movie industry as a useful laboratory for testing theories of project choice follows the growing consideration of the movie industry by scholars in multiple disciplines, possibly because of the entry of hedge funds as co-financing allies in the movie picture industry. Our research adds to our understanding of real investment decisions by separately examining the enduring power of unpopular documentary movie projects. Our analysis of documentary movie projects indicates that these projects provide managers with substantial private benefits from prestige but none from risk minimization. To compare our results to previous studies, we use revenues as our measure for project performance in our first set of regressions. Our results from these regressions confirm previous results that documentary movie projects are associated with smaller revenues than other movie projects. In our second set of regressions, we measure performance using the project’s return, because several recent survey papers assert that performance from a movie project should ideally reflect a comprehensive stream of revenues and costs in domestic and foreign markets. We find that the ex-post returns from documentary movie projects are not significantly different from those of other movie projects. Taken together, our findings show that despite the private benefits from investing in unpopular projects, the staying power of unpopular projects seemingly arises from these projects not being detrimental to a firm’s investment efficiency because of the small capital outlays associated with these projects. The rest of the paper is structured as follows: In the next section we review the literature and suggest several testable hypotheses. In the following section we describe the methods used for our analysis. Our data and the results of our investigation are reported and discussed subsequently; the final section concludes. A comprehensive review of approximately 135 studies that have empirically examined movie projects over a three-decade period is provided by Hadida (2009). Our research specifically examines documentary movie projects which are understandably removed from many movie samples examined in other studies because such movie projects tend to be classified as art-house movies that are best studied separately. We extend extant empirical research on movie projects in several ways. First, we examine both the risk attributes and private benefits like prestige from each of the documentary projects in our sample. Second, we measure performance from a documentary movie project using a comprehensive stream of revenues and costs in domestic and foreign markets. Notwithstanding the significance of including every stream of revenues and costs, the majority of academic studies have only used revenue from domestic theatrical exhibition as a gauge for movie performance. Hadida (2009) finds that over a three-decade period only eight studies use both revenues and costs and do so usually by only using domestic revenues. Most studies recognize the significance of using more inclusive streams of revenues and costs but do not do so probably because of the prohibitive cost of doing so. Still another reason suggested by Eliashberg, Elberse, and Leenders (2006) is that the prevalence of using revenues from domestic theatrical exhibition as a metric for movie performance possibly reflects the movie industry’s fixation with revenues rather than returns.
Toward a Unified View of Customer Relationship Management
Dr. Joseph O. Chan, Roosevelt University, Schaumburg, IL
Competitions in the new economy have caused major changes in business strategies from internal product focus to value creation along the demand and supply chains. Companies are extending their operational and decision structures to include those of their customers, suppliers, distributors, and alliance partners. Product-centric strategies are replaced by customer-centric strategies that facilitate value creation. Focuses on transactional efficiency are replaced by new requirements to integrate and optimize the value chains between the customer, the firm and its extended enterprise. Disparate business processes and systems, compounded by the proliferation of customer contact points and channels, have created incompatible and disconnected views of customers. The inability to synchronize information and processes across various customer touch points may result in negative customer experience and lost opportunities for the firm. Disconnections between CRM operations and CRM analytics can negatively impact marketing effectiveness, customer retention and loyalty. Lessons learned from past CRM implementations have provided guidance pointing to integrated strategies that not only include technologies, but also include business processes, information and organizations. Forward looking CRM strategies can leverage customer intelligence created by CRM analytics that enhances CRM operations, and conversely, CRM operations collect critical customer data for CRM analytics. To attain optimization of CRM performance, metrics need to be defined across the enterprise driven by customer-centric goals. For customer relationship management to take to the new level of value creation, businesses require a strategy that creates a unified view of customers from the perspectives of operations, analytics and collaboration along the entire customer relationship management value chain. This paper proposes an integrated framework for CRM through the construct of the enterprise model. As we move from the industrial economy to the knowledge-based economy, the focus of production efficiency is shifted to value creation throughout the entire value chain. Customer relationship management is a key ingredient in the value creation strategy. While CRM technologies have matured in the last decade, their implementation failure rates are high, ranging from 55 to 75 percent according to the Meta Group (Johnson 2004). Key reasons for failure include the failure to create an enterprise-wide CRM strategy, the inability to integrate with legacy systems, and not having an approach to analytics (McKenzie 2001, Greenberg 2002, and Bannan 2004). It seems that history does repeat itself with enterprise applications. Lewis (2001) points out that ERP implementations also suffer the 70-perscent failure rate. One of the key lessons learned from ERP implementations is that they are not just software implementations. They come with built-in business processes (Lewis 2001). Business process and integration issues that haunted many ERP implementations are also leading causes of failure for CRM implementations. The issues with CRM can be compounded by disparate views of customers through different channels, processes and systems. Information about customers can be captured through various transactional systems and got buried in their respective silos. CRM technologies can also come in multiple flavors. As pointed out by Bannan (2003) that many CRM deployments are specific applications providing point solutions such as automated alerts and email, or handling segment predictive modeling. Furthermore, there exist many types of CRM. The Meta Group described three CRM ecosystems: operational CRM, analytical CRM and collaborative CRM (Kelly 1999). Web-based applications and wireless applications further yield classifications in eCRM and wireless CRM. Johnson (2004) points out that CRM is more than just technology. While technology is a key enabler, it is only a means to the end. McKenzie (2001) articulates that CRM is a combination of strategy and information system aimed at focusing attention on customers in order to serve them better. An integrated business model that ties together business organizations, processes, information and technologies along the entire value chain is critical to the success of CRM strategies. The holistic view of customers must include information from various customer interactions with the firm through sales and marketing, call centers, customer service, the Web, distribution channels and alliance partners. McKenzie (2001) points out the importance of integration along the value chain to provide better customer service, by organizing, aligning and integrating the organization processes all the way from the point of customer contact, through the organization and back through the supply chain. The CRM enterprise model proposed in this paper provides the integrated framework for the creation of a unified customer view amongst disparate systems, processes and channels across the enterprise. Customers can interact with a firm in many ways and through many channels. Customer interactions may include the transactions at retail outlets or on the Web, the participation in direct mail campaigns, the mailing in of rebate cards, and the complaints and inquiries via phone, mail, or the Web. Disconnected views of customers can be caused by disparities in an organization created by system and organizational boundaries, which can result in negative customer experience and the loss of opportunities for the firm. Technology investments in the past decades have created the legacies confined by the boundaries of systems and organizations. Many system implementations have become information and decision silos within an enterprise. Customer information collected in these systems got buried in their respective silos and are not shared and leveraged across the enterprise to improve customer relationship. Each functional area in sales and marketing, distribution, production, and supplier management acts as separate silos and makes decision based on its own objectives. As pointed out by Fraser et al. (2003), decision making fragments across a business as different functions become entities in themselves.
Integrating Knowledge Based XML Transport into Database Statistical Applications
Dr. Karen Coale Tracey, Central Connecticut State University, New Britain, Connecticut
Usage of Extensible MarkUp Language (XML) extends beyond the Web, facilitating companies’ access to their own legacy data. Companies are now able to integrate legacy data quickly and cheaply into newer programs merely by assigning each piece of data an XML name. XML has strategic impacts as well for the companies. Companies can now give their suppliers and customers access to their own data without high application development costs, thus better integrating their operations. Every type of business transactions uses XML in one way or another. XML is the foundation for web services, e-business and e-content - industry forecasts indicate that by 2003, XML will account for 40% to 60% of all Internet traffic. Yet today's network infrastructure is not capable of recognizing, accelerating, securing or prioritizing XML traffic (DataPower, 2001). Because of the extensive growth in usage of XML it is foreseen that there would be high network traffic. The network traffic in-turn would slow down the transaction process in a distributed environment. Increasing network bandwidth through hardware means, which is an expensive solution, can minimize the problem. Without question, the Internet is a revolutionary phenomenon. In just a few years, it has completely transformed the landscapes of both personal and enterprise computing (Lee & Runge, 2001). The word processor use to be the most important application on the personal computer, now it is rivaled by the web browser. The database used to be the most important piece of software in an enterprise computing architecture, now it is rivaled by the Web application server and the ability to transfer data using standardized protocols (i.e. TCP/IP, FTP, HTTP, and SMTP). For almost 26 years Electronic Data Interchange (EDI) has given companies the prospect of eliminating paper documents, reducing costs, and improving efficiency by exchanging business information in electronic form (Grangard, 2001). EDI-enabled eBusiness is centered around dominant enterprises that impose proprietary integration approaches on its trading partners. Extensible Markup Language (XML) has rapidly become the first choice for data interchange formats in new eBusiness applications on the Internet (Grangard, 2001). Extensible Markup Language gained its popularity because of its ease of implementation for small and medium companies, which EDI did not provide. This does not mean that XML is going to replace EDI. EDI and XML have their own advantages. EDI possess substantial experience in Business Process. XML enables open, flexible business transactions than EDI. In order to take advantage of EDI and XML a new specification called Electronic Business XML (ebXML) has been developed. The evolution of ebXML gives business users the assurance that many companies will be using XML for business transactions in the future. This in turn will create demand for additional network bandwidth as more information is passed through the network using the XML technology. Due to the high volume of data that is going to be transferred through the network it is anticipated that the company has to increase the network bandwidth for the communication between the industries. Increasing bandwidth will increase the cost of implementation of the business transactions. The bandwidth problem can be avoided by using the technique discussed in this paper. This paper identifies the problems, issues and proposes a solution to minimize or avoid those problems. EbXML specifications are available for download at http://www.ebXML.org. The summary of this research is aimed at reducing the number of bits transported between two business applications but still maintaining the meaning of the XML data. Development of the Extensible Markup Language (XML) started in 1996 and has been a World Wide Consortium (W3C) recommendation since February 1998 as explained on the W3C web page by Bert Bos (http://www.w3c.ort/xml/1999/XMLin-in-10-points). Although seemingly a recently created technology, the roots of XML reach back to the development of the Standard Generalized Markup Language (SGML) in the early 1980s. SGML is the international standard for defining descriptions of the structure of different types of electronic documents, and is very large, powerful, and complex. SGML has been in heavy industrial and commercial use for more than a decade, providing a vendor independent way to maintain repositories of structured documentation, but its inherent complexity limits SGML’s effectiveness in a Web environment. This lead to the development of a small SGML application called the Hyper Text Markup Language (HTML). HTML defines a very simple class of report-style documents, with sections headings, paragraphs, lists, tables, and illustrations, with a few informational and presentational items, and some hypertext and multimedia. HTML is one of the engines that has driven the electronics commerce revolution. Despite this, even its inventors recognized its limitations. HTML is effectively a presentation tool that tells a browser how to arrange text, graphics, and links on a screen. One of the most important functions missing is a mechanism for describing the data being presented. As a result, there was no way too effectively gather data from a web page (McFadden, 2000). Instead of making HTML more complex by adding additional descriptive tags, the W3C designers took the power and flexibility of SGML, incorporated the lightweight features of HTML, and produced a new markup language – XML. As stated earlier, the goal of W3C was to enable generic SGML to be served, received, and processed on the Web in the way that is possible with HTML. For this reason, XML was designed for ease of implementation, and for inoperability with both SGML and HTML (Flynn, 2002). Unlike HTML, XML is not just for building Web pages, it can be used to store any kind of structured information. XML is used to enclose or encapsulate information in order to pass it between different computing systems, which would otherwise be unable to communicate (Deutschman, 1999). XML provides a standard, vendor and application-neutral way for data to move over a network. This makes it possible for two companies to exchange information without having to understand anything about the underlying databases or information sources. To communicate, a source system simply reformats its propriety information as an XML-compliant document and sends that document to any other system or application that understands XML. In effect, XML is the innovation that has revolutionized business-to-business e-commerce, giving even the tiniest companies a cost-effective way to ply their trades on line. Where HTML creates one-way communications for presentation on the Web, XML allows for two-way communications through Web sites. It’s the tool that permits trading partners to pass information back and forth, forming the foundations of e-business (Porter, 2000).
Chinese Consumer Protection in the Era of Electronic Commerce
Dr. Mary Ip, The University of Sydney, Australia
This paper is to examine the future development of
consumer legal protection in China in view of the growing on-line shopping.
Three main approaches for defending consumers’ rights within the forum of
international e-commerce are considered. And comments are made on the
applicability of these approaches to the diverse consumer’s situation in China.
The rapid development in information technology has bridged the gap and improved
links between people of the world. A consequence of such wide-reaching contact
amongst people is the boost in international trade. Although the proliferation
of international business is also due to liberalisation of the economy and the
removal of trade barriers between countries, it is indisputable that the
availability of the Internet has been the catalyst. Nowadays, people are
physically located in different geographical areas, but in fact are living in
one “global village”. Transactions within the “global village” are mainly
carried out by means of electronic commerce (e-commerce), conducted over
computer networks. Such an e-commerce phenomenon has triggered debate on various
issues, such as tax matters, copyright infringement, data protection,
jurisdiction, and the paradigm of consumer protection. It has been argued that
the borderlessness of the electronic marketplace has destroyed existing
protective shields for consumers. Thus a new legal framework must be devised or
the current consumer protective mechanisms must be modified in order to
accommodate this new commercial environment. Since 1978, China has established
a system of law for the country, and provided statutory safeguards for consumers
in 1994. With its
forthcoming entry into the WTO and the
continuing growth of “global shopping malls”, China needs to revise its strategy
for protecting consumers and review its current consumer law system in order to
gauge if it is compatible with today’s cybermarket. In the light of this, this
pilot paper aims to study the paradigm of Chinese consumer protection with the
advent of e-commerce. With this goal in mind, the paper commences with a brief
review of the literature relating to new hypotheses for international consumer
protection in the era of e-commerce, and highlights the arguments supporting the
different regulatory approaches. The paper then traces closely the development
of a legal infrastructure and the enactment of various legislations as a
response to e-commerce in China. Comments are provided on the efficiency of
these legislations in protecting Chinese consumers’ online transactions.
Finally, the paper proposes a model that operates justly in the future
development of consumer protection in e-China and discusses its merits.
Traditionally, legislation provides consumers with an
“invisible hand” through which they can seek protection to countervail market
powers. The imbalance of bargaining strength between consumers and business
operators justifies government intervention in the market place. However, legal
protection for consumers is restricted to the national level. With the exception
of a permissive rule of international law, all consumer legislations operate
only within the geographical boundaries of the enacting state and are mainly a
matter of national law. Therefore, the laws of a country basically cannot bind a
manufacturer or supplier who is beyond its jurisdiction. In international
e-commerce, manufacturers or suppliers are not confined to a single physical
location and markets have no frontiers. This unique feature of online trading
has rendered the usage of traditional “countervailing force” inadequate in
safeguarding consumers’ interests. Consequently, the issue arises of how best
to protect consumers in this new market situation. Different proposals are
available for defending consumers’ rights within the forum of international
e-commerce. This paper considers three of these approaches, namely the advocacy
for protection through market force/direct government regulation, industry
self-regulation, and co-regulation. Free marketers consider that commercial
transactions in a market economy should be regulated by
own force. They believe that resources
can be more efficiently allocated through market power than by government
intervention. Although consumerists recognise the importance of market force to
drive consumer protection, they are also aware of the fact that a free market
situation cannot adequately safeguard the well-being of consumers because of an
inequality of access to information and an imbalance in economic strength. Thus,
rectifying market failures through government intervention becomes necessary.
Government intervention usually takes the form of legislation that provides the
state with a countervailing force in addressing a perceived imbalance and in
protecting consumers’ rights. However, consumer regulations are not always
positive for consumers and in some cases act against their interests. Pertschuk
(1982) alleges that some consumer laws have an adverse effect on competition
through unintentionally favouring or penalising some businesses at the expense
of others. Consequently, the anti-competitive impact from those consumer
regulations would produce more harm than benefit to consumers. McChesney (1984)
supports this by stating that regulation raises prices, thus reducing the
quantity of goods sold. He points out that legislation imposes higher product
quality standards, which may deprive buyers of the freedom to choose a product
of clearly lower quality, but one which they can afford
Professionalism as Reputation Capital: Building Strategic Advantage
Dr. Neil E. Bechervaise, Australian Graduate School of Entrepreneurship, Australia
Dr. Kevin M. McKenzie, Australian Graduate School of Entrepreneurship, Australia
Richard Beal, Australian Graduate School of Entrepreneurship, Australia
Organisations typically leverage professionalism to promote reputational capital. Reporting on the origins, role and implications of professionalism as a strategic driver, this paper describes a recent Australian study into aspects of a trait driven ideology supported through individual relationships. Rather than being tangible and teachable, the paper argues that professionalism may be passed between generations of workers from childhood and independently of organisational demand or culture. The paper emphasizes the impact that an individual’s pursuit of professionalism has upon the reputation capital, and ultimately on the strategic advantage, of an organisation. Professionalism is under fire. We have become involved in a continuing global war against terror. National league football begins again in Australia this week. The axis of evil has become a pronominal epithet for describing everyone who disagrees with us. A leading Australian daily newspaper features the dismissal of the musical director of the National opera company! A woman of international repute, the artistic leader was lured to Australia from Europe under contract to lead the opera company toward a new vision. She established a challenging new direction, initiated tough new rehearsal schedules, and demanded increased production values and performance standards. Dismissed midway through her contract, the official press release recorded that her “visions for the artistic growth of the company are not sustainable by [the firm] in its current financial position”. When demands for heightened performance impact organisational culture, they often create conflict. When corporate vision is not shared on the shop floor, or when mission statements are unilaterally rewritten, low level resistance may escalate to board level rejection. The fall of the share price of Southcorp, a major beer and wine producer in Australia has led to the dismissal of the CEO though his strategic direction has been retained. In the opera community, as well, governing boards have begun to factor financial viability into the professionalism of the company. When perceptions of professionalism in one context do not translate to another, tensions are created when individuals strive for professionalism in multiple communities, each of which may use different criteria to pass judgment. Professionalism as a concept creates multiple images judged from multiple perspectives. Unravelling this construct involves striking at the heart of reputation capital because it is assumed that individual professionalism within a company directly impacts its reputation among organisational stakeholders. The professionalism demanded within an organisation, though supplied both at individual and group levels, is assessed as impacting the organisation at corporate governance level. Professionalism exercised becomes reputational capital delivered. Tensions resulting from this assumption provide a focus for exploring the essence of professionalism, its acquisition and development, and its value in leveraging reputational capital to create strategic advantage. This paper presents preliminary findings from an Australian study exploring the genesis, current understanding and perceived advantage of professionalism within a corporate culture. With responses from IT, business, military and other professions mirroring previously published responses from horticulturalists, lawyers, nurses and educators, it reports little evidence to support a common assumption that professionalism is restricted to recognised professions or displayed and shared only among professionals. Instead, the paper records increasing support for a trait driven acquisition model from which personally defined ethics, autonomy, responsibility, mutual respect, experiential knowledge, altruism and developing professional identity have emerged as commonly agreed elements. Seeking foundations for developing professionalism, the paper reports evidence of professionalism being clearly identified among school students, essentially gender independent and supported in some companies yet ignored or even actively suppressed in others. Acknowledging ongoing concern that the professions are in decline, this paper concludes that the recognised professionalism of individuals and dedicated groups within the firm is a significant element in client evaluation of reputational capital at corporate levels. It supports the view that professionalism is a tacitly understood ideology to which a subset of professionals, non-professionals and everyday people aspire, and that it is instantly recognisable, expected and judged from a variety of perspectives. It accepts that elements of professionalism can be foregrounded for registration and nomination purposes yet cautions that these provide poor measures of reputational capital. Instead, the paper argues that the firm is invariably measured by reference to relationship qualities established at individual and project team levels through contextualisation of the firm as a series of expert communities of practice. Although referring to the data at such an early stage of this paper may seem unusual, it is necessary to clarify the literary meaning of the term “professionalism”. Invariably in the focus groups carried out, the conversation turned to differentiating between the profession, the professional and, finally, professionalism. One focus group member described this process as “unpeeling the layers of cable, until you are left with the core that carries the payload signal – the professionalism of an organisation” (see figure 1). The following sections explore these three distinct layers before proposing an operational definition for professionalism evolved from the research process itself. The problem with thinking about professions is that they can be conceptualised in a wide variety of ways (Barker, 1992). Many profess to have gained expertise in their declared field. They may range from elite dancers to skilled teachers and expert funds managers. Others profess to have gained eminence among their peers. Again, they may range - from skilled surgeons and elite military units to renowned entrepreneurs. The acquisition and mastery of expertise in a specific body of knowledge and skill is commonly recognised (eg Kritzer, 1999) as a pre-determinant for recognition, and often for registration, as a professional. Completion of an undergraduate university or trade qualification, minimum periods in practice, on-going involvement in professional development activities may all be requisite for registration to practise within a given profession. Erault (1997) argues that
Developing New Markets for Turfgrass-sod in the United States
Dr. John J. Haydu, University of Florida, Apopka, FL
Dr. Alan W. Hodges, University of Florida, Gainesville, FL
Three years of research examining market opportunities for turfgrass-sod was conducted in the eastern (1999), central (2000), and western (2001) regions of the United States. A total of 1,248 firms, representing eight distinct Standard Industrial Classifications (SIC), were surveyed. Data were analyzed by geographic region and type of business. Results indicate that considerable differences exist across these categories with respect to market outlets, grass varieties used, and purchasing criteria of customers. Market outlets have shifted dramatically in recent years from a direct selling approach (from the farm direct to the customer) to more indirect selling through large retail chains. Major grass varieties used by consumers was largely a function of geographic location where climate restricts optimal growth, rather than problems associated with market outlets. Primary purchasing criteria were product quality, followed by price, product availability, and delivery, although results varied somewhat by type of business. Cultivated turfgrass is a pervasive feature of the urban landscape in the United States and many other regions of the developed world. It is preferred as a vegetative groundcover to reduce soil erosion, absorb pollutants, dampen noise, and to provide a comfortable, durable, and aesthetically pleasing surface for outdoor activities. Turfgrass is a major characteristic of home lawns, commercial landscapes, golf courses, hotels and resorts, and public institutions, including schools, cemeteries and airports. The turfgrass industry is an incredibly diverse and economically important component of the horticultural industry. The USDA estimated in 1997 there were over 300 thousand acres of turfgrass-sod produced in the United States, representing a farm gate value of $800 million (USDA, FLO-2002). While large, this value represents a small portion of total economic activity generated by turfgrass production. For instance, while Florida produced nearly 80,000 acres of sod in 2000, it was estimated that roughly 5 million acres of turfgrass was being maintained by families, commercial businesses and institutions (Haydu et al, 2002). Considering that the average Florida homeowner spent over $1,300 on their lawn in 1992, the dollars generated statewide on turfgrass maintenance are potentially enormous (Hodges et al, 1994). In spite of this large and robust industry, many sod producers have experienced weak demand in terms of declining prices and square feet of turfgrass sold. As a consequence, the International Turfgrass Producers Foundation (ITPF) funded a three-year study to identify strategies to expand the market for sod. Traditionally, once sod leaves the farm, it usually passes through one or more marketing channels — for new residential or commercial developments, for re-landscaping existing developments, for sports turf facilities such as athletic fields and golf courses, for commercial applications that include businesses and public and private schools, and for roadside uses (Haydu et al, 1998). A conceptual illustration of product flows within the sod production-marketing system and its major players is shown in Figure 1. For simplicity, the sod market is divided into two primary sectors — new developments, comprising roughly 75 percent and existing homes and commercial businesses covering the remaining 25%. For new developments, it is estimated that roughly a third of total volume is sold through landscape contractors, and the other two-thirds by sod installers. In essence, these segments represent the array of possibilities that producers must consider in their marketing strategy. The final customer can be the homeowner, a golf course facility, a cemetery, or a public institution. Each of these potential customers has different needs and expectations. Although the customer may decide the type of sod to purchase, in many cases this decision is left to the landscape contractor or installer. Hence, both sets of customers should be considered carefully in any type of marketing program. The purpose of this study is to address these marketing issues and to identify practical strategies for expanding sod markets. The report consists of three parts. Part one presents a brief overview of the survey methods employed. Part two introduces important findings of the research in the western region and, where applicable, compares results with the other regions. Part three offers specific marketing recommendations, based on conclusions of the study. Given that the study area was to cover the entire United States, the country was subdivided into three regions — the eastern, central, and western — with each region requiring one year to complete. The first year began with the eastern region, which was further subdivided into three subregions: 1) Northeast (Connecticut, Maine, Massachusetts, New Hampshire, Vermont, Rhode Island, New York); 2) East Central (Delaware, Maryland, New Jersey, Pennsylvania, Virginia, Ohio, Michigan, Indiana, Kentucky, West Virginia); and 3) Southeast (Alabama, Mississippi, Georgia, Florida, South Carolina, Louisiana, Arkansas, Tennessee, North Carolina). The central region was surveyed in year two, being further subdivided into: 1) North-Central (Illinois, Iowa, Minnesota, Nebraska, North Dakota, South Dakota, Wisconsin) and 2) Arkansas, Kansas, Louisiana, Missouri, Oklahoma, Texas). The western region was surveyed in year three, being further subdivided into: 1) West-interior (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming) and 2) West-coastal (Alaska, California, Hawaii, Oregon, Washington). Over forty personal interviews were conducted in the three regions to identify important factors influencing market demand for sod. Businesses interviewed included sod producers, irrigation contractors, landscape nurseries, landscape design and architectural firms, contractors and developers, and hydro-seeding companies. Preliminary questionnaires were developed for the interviews, which were conducted at the business site and required between 1 and 1½ hours to complete. The information was compiled and organized for the second phase of the research process, the telephone surveys. Telephone surveys were used because a large sample of the targeted population could be reached quickly. Although mail surveys provide more detail, acquiring an adequate sample may take months as opposed to weeks for phone surveys. However, because of time constraints inherent with phone interviews, questions must be concise and target a specific issue. Establishing which questions should or should not be included in the interview was an essential component of the personal interviews. Respondents fell into the following four main categories based on Standard Industrial Classification (SIC) codes developed by the U.S. Department of Commerce. General Contractors – General contractors and developers of single family housing construction (SIC 1521), commercial residential construction (SIC 1522) and non-residential construction (SIC1542). Landscape Services – Landscape architects comprising landscape counseling and planning (SIC 0781), lawn and garden services (SIC0782), hydro-seeding contractors (SIC078213), sodding services (SIC078203), landscape contractors (SIC078204), and lawn maintenance firms (SIC078206). Retailers – Nurseries and garden centers (SIC 5261). Sports Turf – Sports turf and golf courses comprising public golf courses (SIC 7992) and membership sports and recreation clubs, including private golf clubs (SIC 799700). Athletic field maintenance (SIC078216), and stadiums, arenas, and athletic fields (SIC794104). A random sample of firms were selected within these sectors. Lists of firms were purchased from Marketing Systems Group, an authorized vendor for data products from American Business Information, the original source for the lists. A total of 1,248 firms were interviewed from the regions. Data were analyzed based on geographic region and business category (Table 1). As noted, each group actually represents a substantially broader range of business types, accounting for a total of eight SIC codes. These businesses were selected because they represent both major and minor turfgrass markets and were the most likely to possess knowledge concerning market opportunities.
Structural Equation Modelling Analysis of Fairness Heuristic Theory
Dr. Douglas Flint, University of New Brunswick, Fredericton, NB
Pablo Hernandez, University of Toronto, Canda
Prior research on fairness heuristic theory of organizational justice has shown that procedural information is used when distributive information is lacking. This study extends consideration of fairness heuristic in two ways: By testing fairness heuristic effects across four different combinations of procedural and distributive justice; and by testing an ambiguous distributive outcome. Structural equation modeling is used to measure the directionality of procedural and distributive justice effects. Procedural justice is of interest to organizations because of its impact on important organizational outcomes. These include: performance (Ball, Trevino & Sims, 1995; Gilliland, 1994; Konovsky & Cropanzano, 1991; Welbourne Balkin & Gomez-Mejia, 1995), organizational commitment (Brockner, 1992; Konovsky & Cropanzano, 1991; Schaubroeck May & Brown 1994), job satisfaction (Schaubroeck et al, 1994), organizational citizenship behavior (Ball et al, 1995), commitment to organizational decisions (Greenberg, 1994; Korsgaard, Schweiger & Sapienza, 1995; Lind, Kulik, Ambrose & de Vera Park, 1993), turnover intentions (Schaubroeck et al, 1994, Olson-Buchanan, 1996), theft (Greenberg, 1990, 1993), and retaliation against organizations (Skarlicki & Folger, 1997). Organizational systems that have been linked to procedural justice include: Employee discipline (Cole & Latham, 1997), inter-group conflict (Huo, Smith, Tyler & Lind, 1996), institutional racism (Jeanquart-Barone, 1996), performance appraisal (Barclay & Harland, 1995), pay for performance (St. Onge, 2000), and employee benefits (Tremblay, Sire & Balkin, 2000). There are some conditions when procedural justice is more salient than others. Fairness heuristic theory provides an explanation for these conditions. Fairness heuristic theory deals with the impact of perceptions of procedural and distributive justice on formation of organizational justice judgments. The theory argues that “in incomplete or insufficient information conditions, people process information heuristically; for example, they use other information—such as procedural or outcome fairness—to substitute for information that would be most directly relevant but that is actually missing” (Van den Bos, 2001). This study seeks to expand consideration of fairness heuristic theory in two ways. First, the effects of fairness heuristic are considered across different combinations of procedural and distributive justice. Second, considerations of the effect of fairness heuristic theory are extended to ambiguous distributive outcomes. This theory has traditionally been tested only in the absence of distributive outcomes. Brockner and Wiesenfeld (1996) examined the effects of distributive and procedural justice across 45 studies that measured their interactive effects. They found when distributive justice is low, procedural justice has a significant effect on the favorability of participants' reactions to decisions. When distributive justice is high, procedural justice has no significant effect. Brockner and Wiesenfeld (1996) stated, "The combination of low procedural justice and low outcome favorability engenders particularly negative reactions.” This study seeks to test the robustness of fairness heuristic theory across these different combinations of procedural and distributive justice. The four conditions evaluated in this study are: positive procedures, positive outcome; positive procedures, negative outcome; negative procedures, positive outcome and negative procedures, negative outcome. The outcomes in each case were ambiguous. In an experimental manipulation of organizational justice scenarios participants were asked to judge the acceptability of an outcome and to rate procedural and distributive justice of each scenario. Given the ambiguity of the outcome, fairness heuristic theory predicts that procedural justice should be relied upon to make judgments of the acceptability of the outcome. This is broken into four research hypotheses. Hypothesis 1: When procedures are positive and the outcome is positive, perceptions of procedural justice determine outcome acceptability better than combinations of procedural and distributive justice. Hypothesis 2: When procedures are positive and the outcome is negative, perceptions of procedural justice determine outcome acceptability better than combinations of procedural and distributive justice. Hypothesis 3: When procedures are negative and the outcome is positive, perceptions of procedural justice determine outcome acceptability better than combinations of procedural and distributive justice. Hypothesis 4: When procedures are negative and the outcome is negative, perceptions of procedural justice determine outcome acceptability better than combinations of procedural and distributive justice. Previous work in this area has explored effects of procedural justice when distributive outcomes are lacking. An experimental study by Van den Bos, Lind, Vermunt and Wilke (1997) found when participants did not know the outcome of others’ they judged their own outcomes fairer if they had an opportunity to voice their opinions. Voice had no influence when individuals knew other participants’ outcomes. Van den Bos, Wilke, Lind, and Vermunt (1998) showed similar findings. Participants showed less reliance on procedural information when they had information that their own outcomes were less than, equal to, or better than comparison others. Heuristic effects are not limited to lack of information concerning distributive outcomes. Similar effects were found concerning trust in authority (Van den Bos Wilke and Lind, 1998). An experimental manipulation found procedural fairness served as a substitute for evaluating outcomes when situations lacked trust information about an authority. In two experimental manipulations, Van den Bos, Vermunt and Wilke (1997), showed perceptions of procedural justice had greater effects on participants' reactions to outcomes when procedural information was available before outcome information. Conversely, when outcome information was available before procedural information, distributive justice had a greater effect on participants' reactions. The effect on reactions to outcomes was greatest when procedural information preceded outcome information. The main point of these studies is that in the absence of comparative information about outcomes individuals rely on procedural justice to make fairness judgments. This study seeks to expand consideration of fairness heuristic theory to impacts of ambiguous, rather than absent, distributive outcomes on the formation of justice based judgments. A structural equation modeling analysis is employed to test the significance of the relationships between procedural and distributive justice and the directionality of those relationships. To achieve this participants were exposed to scenarios that involved discipline of a student by a university administration. Procedures were manipulated to reflect either positive or negative procedural justice. These were crossed with distributive outcomes that were either positive, in the sense that the student was exonerated, or negative in which case the student was found guilty and a year’s suspension was imposed.
Ethical Attitudes Among Accounting Majors: An Empirical Study
Dr. Siva Sankaran, California State University, Northridge, CA
Dr. Tung Bui, University of Hawaii, Manoa, HI
Due to innumerable instances of ethical lapses reported in the media recently, the accounting profession has come under close scrutiny. This study investigates if there are linkages between background characteristics and ethics among individuals who are on the verge of joining the accounting profession. An instrument is developed to measure ethical attitudes and administered to a sample population of college students majoring in accounting. Results show that i) ethics is inversely related to individual competitiveness, ii) personality types have no bearing on ethics, iii) ethics diminishes with age, and iv) women have higher ethics. The study also compares the ethics level of accounting majors with those in other business and non-business majors. Time has repeatedly proven that to err is human. Circumstances can sweep away even the best person’s ethical principles. With the ever widening globalization and cut-throat competition, the pressure in the workplace is higher than ever before. With the desire to produce results, the modern worker can easily be tempted to compromise on ethical principles. Unfortunately, some fall victim to temptation more easily than others. It is ironic that most ethical violations are committed by the advantaged and successful professionals. Among the business professionals, the accountants have come under greater scrutiny of their ethical values and practices due to recent disclosures in the media. In some instances, the ethical lapses on the part of even a handful of employees have brought their firms to extinction. This is why it has become important for companies to take a proactive stance in building an ethical corporate culture. This can be done only if the company has a team of employees committed to moral principles and the company provides an environment to nurture it. Often, companies place undue emphasis on employee/consultant skill sets and relegate other personal characteristics such as ethics to the background. Assuming a company truly wants to evaluate the ethical attitudes of a prospective or a current employee/consultant just as well as the skill set, what signals should they looking for? What specific individual background and contextual factors are related to the ethical compass of a person? In what manner and to what degree these factors impact on the level of ethics? Which employees are most likely to commit ethical lapses? These are the questions this research aims to answer. Research in the field of ethics as related to business professions needs to be expanded especially in the face of the recent accounting scandals (Lindsay, 2002; Wood, 2002). Currently no unified model/framework exists capturing all possible factors influencing ethics in business environments. In our investigation, the factors that showed promise are: individual competitiveness, personality type, age, gender and nature of profession. Individual competitiveness is the personal desire to outperform a rival employee or company (Maramark and Maline, 1993). Modern work environment places considerable demands on the employees. With the globalization of the marketplace and free flow of goods among the international communities, the competition among the corporations for market share has become fierce. While healthy competitiveness is an asset for an individual in the company, undue desire to outperform can lead to false claims or deliberate concealment of facts. This can result is ethical compromises. For instance, when making a sale an employee may extol the virtues of a product and intentionally hide its shortcomings. It has become commonplace to advertise products and services offering attractive prices with restrictive clauses in fine print hoping the customers will not notice them. However, ethical lapses can cause large financial losses due to resulting lawsuits and bankruptcies. A real example is the tobacco industry which, in spite of evidence to the contrary, maintained that nicotine is not addictive. The recent case at Enron is another example. In this case, losses were purposely hidden by high-level certified accountants and on revelation the documents were systematically shredded. It illustrates that in the conflict of interest between personal enrichment and duty to protect shareholders, greed wins handily. Ethical attributes in a person may be impacted by personality type (Barger, et al., 1998). There are several examples in various industries that support the possible linkage between personality types and ethical conduct (Tieger and Barron, 1993). Two types of personalities are discussed in literature: Type A and Type B (Rowe, 1992; van Aken et al., 1998). Type A behavior consists of several characteristics: always being in a hurry, easily moved to hostility and anger, and high levels of ambition (Friedman and Roseman, 1974). They are aggressive, task oriented and time driven. On the other hand, Type B personalities are more low key, cooperative and patient. Because of their predisposition to win at any cost, we expect that Type A individuals will tend to compromise on ethics more readily. A study by Coombe and Newman (1997) reported that younger individuals tend to be less concerned with ethical considerations. In determining response to social interactions, they tend to have their own code of ethics and formulate own moral and ethical stances. As individuals grow older, they become more philosophical and moralistic (Auerbach and Welsh, 1994; Barger et al., 1998). Thus, an older individual is more likely to have a higher level of ethics. Men appear to have lower ethics standards compared to women (Kelly, 1990). In a study conducted by Petty and Hill (1994), the researchers administered the Occupational Work Ethic Inventory to 2279 workers. Women scored significantly higher on ethics compared to men. Thus, past research seems to indicate that women will form a more ethical workforce. There are good reasons to postulate that ethical values will differ across professions due to their intrinsic nature and the type of activities they entail. This is because individuals can be generally expected to match their values to the profession they aspire to work in. Someone who wishes to major in nursing or social work will likely have a high level of altruism. This is because of personal attributes and education which encourage high ethical conduct. On other hand, someone majoring in a business field is trained to make decisions based on optimizations of economic rewards. Their emphasis is on the bottom line and they may be willing to manipulate the market for the sake of higher profits. Ethical considerations may take the back seat.
Speculation and Hedging in the Crude Oil Futures Markets
Dr. Yu-Lun Chen, Chung Yuan Christian University, Taiwan R.O.C.
Ya-Kai Chang, National Chengchi University, Taiwan R.O.C.
Dr. Tai-Hsin Huang, Professor, National Chengchi University, Taiwan R.O.C.
This paper investigates the impact of trading positions of hedgers and speculators on the price formation process in crude oil futures during 2003 to 2010. Relative hedgers’ position has a negative impact on price efficiency in crude oil futures markets. Hedgers are less likely to be information motivated, so their trading delays the price formation process. However, there is a positive impact of speculators’ position on price efficiency, because speculators correct pricing error, according to fundamental analysis. Our findings discover the role of hedgers and speculators on price formation process in crude oil futures are crucial and beneficial to academics, practitioners, and regulators. This paper investigates the impact of trading positions held by hedgers and speculators on market quality in crude oil futures. In the futures market, two major types of traders include speculators and hedgers have different trading purpose, behavior and performance. Hedgers use the futures market to transfer the spot price risk and their hedging pressure tends to drive down or up the futures price relative to the expected value of spot price to generate a bias in the futures prices. Speculators who enter on the opposite side of futures contract bear a risk, and are, therefore, compensated by a positive expected profit on their position. Due to the presence of speculators, the futures price will revise to close to the expected value of spot price. Hence, the trading activities from speculators and hedgers may have different influence on market quality in crude oil futures markets. To evaluate the relationship between the trading activities of hedgers and speculators and price efficiency is important to discussions on policy issue in the futures markets, especially regarding position limits. Position limits have been widely used to contain speculators participation for stabilizing on futures price movements. However, due to position limits, the speculators or hedgers may shift to spot or options markets. To apply position limits may affect the role of speculation in providing liquidity and price discovery to the futures markets. Nowadays, there is a debate regarding whether the limits should be set, and what sorts of information should be used in determining position limit sizes for the Commodity Futures Trading Commission (hereafter CFTC). This study can provide some empirical evidence that policymakers can use to complement their broader assessments of trading activities in futures markets. The significant body of research adopting Commitments of Traders (hereafter COT) report data in the oil futures explores a number of issues including the impact of different traders on market volatility (Du et al., 2011), the relation between futures movement and futures traders position (Sanders et al., 2004; Haigh et al., 2005; Cifarelli and Paladino, 2010; Fan, and Xu, 2011), the relation between spot movements and futures traders’ position (Buchanan et al., 2001; Chatrath et al., 2010), and determinants of traders’ positions (Wang, 2003; Haigh et al., 2007). (1) In contrast, this topic regarding the role of hedgers and speculators on price efficiency has not been fully explored and is important to academics, practitioners, and regulators. According to Keynes’s (1930) normal backwardation theory, hedgers have net short positions in the futures markets to transfer their exposure risk in the spot market and their hedging pressure tends to drive down futures prices relative to the expected value of spot price, resulting in a bias in futures prices. Several studies, including Houthakker (1957) and Cootner (1960) have reformulated the original backwardation theory to allow the hedgers’ position to be net long, so that futures prices may be above the expected future spot prices. On the other hand, speculators who enter on the opposite side of the futures contracts bear risks, and are therefore compensated with a positive expected profit on their positions. Due to the presence of speculators, futures prices will thus be revised closing to the expected value of spot prices. According to the above arguments, hedgers’ trading activity is likely to lead to mispricing and that of speculators provides liquidity and correction of mispricing in the futures markets. These imply that the speculators’ (hedgers’) trading activities have a positive (negative) impact on market efficiency. In this paper, we would like to investigate the impact of trading position held by different types of traders on price efficiency in crude oil futures markets from July 1, 2003 to December 31, 2010. By using the weekly COT report—we are able to classify trading positions of “commercials” (i.e. hedgers) and “non-commercials” (i.e. speculators) in the futures markets. (2) To examine the impact of different traders’ positions on price efficiency could be partitioned into two-stage procedures. In the first stage, we need to evaluate price efficiency in futures markets on the weekly basis. Regarding to evaluate price efficiency, we employ the pricing error approach of Hasbrouck (1993) in accordance to the work of Boehmer and Kelley (2009). Then, we construct the measures for relative traders’ positions from weekly COT reports. In the second stage, we regress price efficiency measure on different traders’ positions with control variables in futures markets.
Comparison Analysis of the Brand Effect between Brand Alliances and M&A Strategies
Dr. Hsiao-Chi Chen, Chung Yuan Christian University, Chung Li, Taiwan
The effect of branding strategy is always a critical topic in the brand issues. Brand creation is a tough and complex system for business operation in which many problems may appear including core competence, consumer demand, different market segment…etc. In branding strategy, strategic alliances and mergers and acquisitions (M&A) are applied to solve the growing problems and build more brand value and effect. However, would be any value added in brand by using the strategies? Consumer perspective is taken to evaluate brand effect with brand alliances and M&A strategies. Brand alliances and M&A strategy are compared in the consumer brand evaluation. This is the main concept discussed in the research. The strategies for branding under the customer brand evaluation by One-Way ANOVA have been analyzed. Paired-Sample T Test is taken to compare brand effect between brand alliance and M&A strategy. The results show that the brand effect for such brand alliances and M&A strategy is explored. Brand awareness is the major effect and value created from M&A strategy. In consumer evaluation process, the brand effect would be affected by both M&A strategy and brand alliance. However, to increase brand effect depends on strategy types. “Best of both” would get another brand’s image, awareness…and so on such as Sony Ericsson and Lenovo IBM, in which M&A strategy is applied successful to add brand effect and value. However, other M&A strategies could not create positive effect of brand value. Although, M&A strategy would create more brand effect comparing with brand alliance, different brand alliance also could create brand effect. “Homogeneous brand alliances” model get the effect of not only brand loyalty but also perceived quality. If brand image is seriously valued in business, “Heterogeneous brand alliances” would be considered in branding strategy planning. According to the research results, it is found that brand effect change in different scenarios. How to select the best solution is based on a firm’s leader’s branding objective. Finally, evaluation of brand effect in M&A strategy is higher than brand alliances. M&A would be a better branding strategy to get brand effect and to obtain target brand’s market position and perception shortly. Increasing brand effect and value is focused on the business executing branding strategy. Brand would be the major issue in future business (Tauber, 1988).Brand creation is a tough and complex system for business operation. Many problems including core competence, consumer demand, different market segment…etc have to be solved. Strategic alliances, mergers and acquisitions (M&A) strategy are the major solutions (Kotler, 1994; Onkvisit and Shaw, 1991). However, could the brand alliance or M&A strategy achieve the effect expected for a firm’s managers? Then, which strategy would bring more effect to brand? Investigation the influence of brand alliance and M&A strategy to brand would be necessary for business planning future branding strategy. Brand alliances or M&A strategy may have become essential to the introduction of core capability facing competition from well-entrenched brand name. Brand name has a signaling under the hidden information, which is the reason that M&A strategy or strategic alliance is considered to brand creation. With alliance to develop brand, like IBM and Intel, Acer and Scuderia Ferrari, Starbucks and Barnes & Nobile or Pepsi, Regent Hotels and Rezidor Hotels, there is market signal product quality (Rao and Ruekert, 1994). Additionally, M&A strategy is also used to brand creation, such as Sony and Ericsson, Lenovo and IBM, hTC and Beats, Masterkong and Pepsi China, Regent Hotels and Domino's Pizza Taiwan, Yahoo! And Kimo, Acer and Gateway…etc. By brand alliances or M&A strategy, introduction of radical technologies, time to market, economics of scale and brand value increasing are the advantages from partner or target company(Bucklin and Sengupta, 1993; Park and Zhang, 2000; Aaker, 1995；Barney, 1997). However, it is found that the business performance of alliance or M&A strategy is polarization. Some research addressed that the strategies would bring strongly effect for business value; then, also having the research discussed the negative cause (Chan et al.,1998；Das et al., 1998；Schmidt and Fowler, 1990；Vester, 2002). In the vein of the alliance or M&A strategy performance, the brand effect would be the critical point to discuss the alliance and M&A strategy. Actually, the strategic action in brand is reflected from consumer perception. Brand represents the corporate image for customers. Thus, brand and customer are related. (Escalas and Bettman, 2005; Reed, 2004; Aaker et al., 2004; Fournier, 1998; Sirgy, 1982). Therefore, consumer perspective is the respect to evaluate brand effect with alliances and M&A strategies. Comparison between strategic alliances and M&A strategy in the consumer brand evaluation is the main concept discussed in this article. For research objectivity, the research scale is selected consumer electronic products, for examine, the customer evaluation in brand strategy of alliance and M&A. Brand constitute the largest asset for many firms, relying on brand would create increasing value and performance for companies. In this article, the performance of brand valuation is called brand effect, which is influenced brand value add. Brand value and valuation remain important topics in the current competitive situation, is evaluated from financial market performance (Raggio and Leone, 2009; Mizik and Jacobson, 2008). Through the article, Raggio and Leone address a concept “Leaves of Brand Value”, insights the conceptual idea that found there clearly exists a higher “appropriable” value that it or another firm could capture if it could more effectively leverage the existing brand equity. In the vein of brand equity development, brand equity could arise the higher appropriable value. In proportion to brand effect, brings the value increasing. Brand equity would produce brand effect and then increase brand value. Therefore, this article will take brand equity attributes to investigate the major brand effect in alliance and M&A strategy.
The Online Corporate Branding of Banks – A Comparative Content Analysis of Indian and Japanese Banks
Dr. Soniya Billore, Linnaeus University, Vaxjo, Sweden
Gautam Billore, Punjab National Bank, India
Kyoko Yamaji, Keio University, Tokyo, Japan
Corporate branding of banks is an important tool to attract consumer’s attention and the internet is providing another platform to strengthen institutional brand identity. This study applied the tool of Content analysis to explore how banks create brand imagery online by highlighting some perspectives of brand identity that frequently appeared through the bank’s web pages. A comparative study was conducted between 25 Indian and 25 Japanese banks to explore how the brand imagery was established and differed from each other. The comparison between Indian and Japanese banks was conducted keeping in mind that with rapidly increasing business relations between the two countries there will be an increased influx of Japanese banks into the Indian market and vice versa in the near future (METI, GOJ, 2012). In such an opportunity, the analyses can indicate how present formats of both countries differ from each other and the scope of adapting the information on the web pages to national cultures and expectations. This can be extended further to see if policy and portfolio changes need to be made in order to adjust to the customer needs of the new market and establish enhanced appeal for prospective customers. Corporate branding of banks is witnessing an immense transformation with increased competition, multichannel delivery and a more robust technological support in the financial industry. Customersare increasingly aware of what they want from a bank and how the services should reach them. Innovation in the bank’s service and its delivery is being constantly researched. This environment has emphasized the need for strengthening corporate brand identity of banking institutions and reinforcing customer’s attention to the banks so that stronger relationships can be formed between them. The IT revolution helped to integrate new modes of service delivery in the banking sector. This sector evolved vastly towards a “click and bricks” strategy that emphasizes an online supplement to conventional banking services (Miranda et al, 2006) and that can also be used as a potent tool to communicate the overall brand identity of the bank.
The Synthesis of Selected Behavioral Biases With the Theory of Efficient Markets on Example of DJIA Index
David Havlicek, University of Economics in Prague, Czech Republic (1)
This paper describes an analytical approach to the partial synthesis of the theory of efficient markets with selected behavioral biases of conservatism, anchoring, gambler's fallacy and hot hand bias. We test the possibility of modeling these biases in comparison with the historical time series of U.S. stock index DJIA from year 1896 to 2012. We use for that correlation and regression analysis. The application of these behavioral biases could not, however, explain either one of the percentages of variance of logarithmic original time series. Further research should focus on individual equities, in which the behavioral biases could be rather expected. The aim of this article is to analyze the possibility of a partial synthesis of efficient market theory and selected behavioral biases. This is only a partial synthesis, since these two approaches are in contradiction with each other. According to the theory of efficient markets we cannot achieve abnormal returns based on historical information. According to behavioral finance it is not possible to assume that markets behave efficiently, because people make systematically repeated mistakes. So in both theories, it is necessary to make certain compromises. This synthesis is performed using correlation and regression analysis of historical time series of the U.S. stock index Dow Jones Industrial Average (DJIA) together with selected behavioral biases of conservatism, anchoring, gambler's fallacy and hot hand bias. The rest of the article is as follows. The second part describes the basic principles of the theory of efficient markets. The third part describes the basic assumptions of behavioral finance, focusing on selected behavioral biases. The fourth part describes the methodology. The fifth part summarizes the results. The sixth part offers a conclusion.
Case Study: Export Financing as a Key Driver in International Expansion for Engineering Firms
Jan Picha and Dr. Ales Tomek, Czech Technical University in Prague, Czech Republic
Construction and engineering industry in Europe has been heavily affected by recent economic conditions and debt crises on national levels. Taking advantage of national export credit and guarantee programs can result in significant competitive advantage in company’s expansion to developing markets worldwide. This paper presents unique strategic concept of the two market pioneers of engineering sector in the Czech Republic when penetrating developing market of Russian Federation. Despite the economic conditions these companies report increasing turnover and profitability, while their competitors suffer from lack of jobs. The markets of Eastern Europe and Asia are specific with neglected infrastructure and thus represent a huge potential for such experienced firms possessing necessary exporting know-how and technologies. In order to withstand the pressure resulting from increasing market competition, exporting firms are forced to come out with tailor made solutions and high level of value added. Delivering project construction together with secured project financing proved to be the key success factor in developing markets which enabled these firms to succeed in highly competitive international bids. This paper identifies and introduces the key success drivers necessary for successful execution of export financing concept. Author continues his research in the field of competitive strategy with focus on project alliances and project financing at international engineering sector. Our ambition is to work out best practice model of leading engineering firms with utilization of national export credit and guarantee program as a strategic alternative for foreign market entry and provide a route map for other market players. As a research methodology case study method was selected. The provision of subsidized credit to domestic firms is an important policy tool in many emerging markets and in particular widespread in export sectors. Export sectors are major sources of foreign currency reserves, contribute significantly to GDP growth and employ a large share of the domestic workforce . Several East Asian miracle economies – Japan, Korea and Taiwan in particular – relied heavily on export credit policies and enjoyed export growth rates in excess of 20% during the later half of the 20th century . The wheels of construction and engineering industry are driven by either domestic demand or export market. Prioritizing these drivers lays a solid foundation for sustainable industrial growth. The rationale behind the strategic planning is that export offsets the downsizing of domestic marketplace.
Features of IT Offshoring to Russia: German Perspective
Rasim Muftiev, Technische Universitat Dresden, Germany
The article reviews IT offshoring: a type of outsourcing concerning the close business relationships in the field of the Information Technology. The paper provides a basic overview of Russia as a player in the global IT outsourcing market. Russian IT offshore providers are discussed from the point of view of German potential customers with respect to advantages of Russian IT market — such as strong and experienced IT workers, financial benefits, smaller time zones, and their close fit with German culture — as well as their disadvantages — for instance, weak intellectual property protection, a lack of IT-security, and complicated political, legal, and tax policies. This overview discusses advantages, disadvantages, and an overall perspective of possible IT offshoring collaborations with Russian IT vendors. Information technology (IT) outsourcing has been a fitting approach for the business optimization for over two decades with a substantial growth over the last years. The usual function consists of delivering IT services, getting access to resources for the development of products, and providing reliable IT infrastructure and software solutions at competitive prices. India is currently the top IT offshore destination; however, many other countries possess unique characteristics and qualities which can make their possible offshore markets the most attractive for IT customers. One of such examples is Russia, which shows stable development of positive trends in its IT market. Since German companies are forward looking, always searching for innovative solutions, they are considered a possible valuable partner for the evolving Russian IT vendors in the near future. Although, there is always a number of obstacles or difficulties in every IT market. For German companies to offshore, there are still several remaining disadvantages of Russian IT market, which will be discussed in this paper as well its advantages.
The Effects of IFRS and the Institutional Environment on Accounting Quality in Chinese Listed Firms
Yuang-Lin Chang and Dr. Cheng-Hwai Liou,
National Taichung University of Science and Technology, Taichung, Taiwan
Yi-Hsin Chen, Deloitte Touche Tohmatsu Limited, Taichung, Taiwan
Dr. Ching-Chieh Tsai, National Taichung University of Science and Technology, Taichung, Taiwan
The objective of this study is to examine whether the mandatory adoption of IFRS in China and its institutional environment lead to difference in accounting quality. Like many other countries, China mandated IFRS adoption in 2007. According to the institutional perspective, China is characterized by a relatively weak institutional environment. Therefore, the institutional environment in China has posed challenges to the generalizability of existing institutional theories and has thus created opportunities to examine the effects of IFRS adoption on corporate accounting quality. Based on prior studies and in light of the geographical and economic diversity that exists across regions in China, this study further examines the effects of the regional institutional development on corporate accounting quality after the mandatory adoption of IFRS. By using a firm-level cross-sectional regression framework and utilizing an institutional perspective, this study aims to extend the research streams from the mandatory adoption of IFRS and to investigate the role of the institutional environment in the quality of accounting in Chinese listed A-share firms. Our empirical research achieves the following two conclusions: 1) IFRS adoption in China leads to a significant improvement in accounting quality, and 2) IFRS and the institutional environment synthetically influence the accounting quality as well. Our findings provide corroborating evidence for the importance of the development of the institutional environment in which those Chinese listed firms operate. The adoption of International Financial Reporting Standards (IFRS) is one of the most significant changes in accounting regimes in modern accounting history. Several researchers indicate that adopting IFRS leads to higher accounting quality, more market liquidity, and improved corporate transparency, and therefore ultimately benefits firms and investors (Tendeloo and Vanstraelen 2005; Soderstrom and Sun 2007; Tyrrall et al. 2007; Barth et al. 2008; Daske et al. 2008; Armstrong et al. 2010; Li 2010; Jones and Finley 2011; Zéghal at al. 2011). Like many other countries, China mandated IFRS adoption in 2007. Prior research on the costs and benefits of Chinese mandatory IFRS adoption is still at its infancy. From an institutional perspective, China is characterized by a relatively weak institutional environment.
The Global Competitive Ability of Taiwan’s IT Industry based on its Stock Fluctuations
Dr. Shu-hen Chiang, Chung-Yuan Christian University
In view of the progress in financial integration and the increasingly internationally competitive information technology (IT) industry in Taiwan, this paper seeks to understand the position of its global competitiveness from the IT stock price changes in Taiwan. We first use shift-share analysis adopted from regional science to decompose stock fluctuations into four effects that comprise three external factors with one internal element. Dynamic shift-share analysis is then used to trace the evolution of these four effects for changes in IT stock prices in the Taiwan stock market. It is found that the strong competitiveness of the IT industry in Taiwan is fully reflected in its internal element. Taiwan is not only a typical small open economy which derives its economic energy mainly from export-oriented manufacturing, but its small and medium-sized enterprises (SMEs) also play a much more important role in economic activities than in other Asian countries. In such an environment, Taiwanese firms continue to face increasingly severe international competitive pressure and it is this that led the authorities to decide to develop the information technology (IT) industry as the catalyst of industrial transformation and innovation through the use of massive public investment. A notable expression of this is the Hsinchu Science-based Industrial Park (HSIP), which is referred to as Taiwan’s “Silicon Valley”. Many studies, for example, Tsai (2004) and Yang et al. (2009) suggested that the IT industry in Taiwan has successfully created a globally competitive technological capability. Although numerous attempts have been made from economic analysis to demonstrate technological progress and competitive advantage in the IT industry, no studies have ever tried to investigate its global competitiveness from the finance field. The purpose of this paper is to quote shift-share (SS) analysis from regional economics to explore further into this issue by use of information from stock markets. Globalization refers to the connectivity and integration of countries, corporations and people in terms of labor, capital and technology.
Condition and Perspective of Internal Auditing and Influence of Internal Auditing on Annual Report Quality: The Case of Croatia
Marko Cular and Toni Susak, University of Split, Croatia
Research of internal auditing condition, perspective of the same and influence on reporting quality, through the annual report, is based for listed companies, in 2011. The primary aim is to draw conclusion about the existence of internal auditor and internal audit department for listed companies. The secondary aim is to find connection between existence of internal auditor and external auditor's opinion. The final effect is to show influence of internal auditing on annual report quality. The goal of research is to be informed with condition of internal auditing and reporting quality, through the annual report and to determine relationship between them, in order for financial reporting to be more transparent. Given that fundamental, the goal of modern internal auditor is to develop quality management process (in terms of commitment of achieving goals and requirements of the owner, more efficient use of resources, improving quality and environmental awareness, ethical behavior and pronounced responsibilities). Annual report is a document that includes all elements related to objectives of modern internal auditor, it is necessary to investigate connection between existence of internal auditor and annual reports quality. Descriptive statistics show existence of internal auditor, existence of internal audit department and auditor’s opinion for observed companies. The quality index of annual reports will be calculated, for selected listed companies. Also, connection between internal auditor existence and external auditor’s opinion, and difference on annual report quality for companies that have or do not have internal auditor will be determined. Results of researches indicate that position and stability of internal auditing in Croatia is very weak; position of internal auditing influence on audit opinion; there is no difference in annual report quality, looking for companies that have, or do not have internal auditor (because we have a poor annual report quality, considering on index quality of annual reports for observed listed companies). Today, quality of information is the key for success in the world of investment. Quality of presented information in annual reports affect investors and stakeholders, their roles, thinking, behavior and their apetite for risks.
Asymmetric Timeliness of Earnings across Corporate Life-Cycle Stages
Slavko Sodan and Dr. Zeljana Aljinovic Barac, University of Split, Croatia
This paper analyzes differences in earnings asymmetric timeliness across companies’ life-cycle stages. Asymmetric timeliness of earnings implies more timely recognition of economic losses than gains and it is the most commonly used measure of conditional conservatism in accounting. Namely, conservative bias in accounting causes negative stock returns, which reflect downward adjustment in economic income, to have a higher association with earnings than positive stock returns. Accordingly, economic losses are reflected in earnings faster than economic gains. This research assumes that level of earnings asymmetric timeliness, i.e. level of conditional conservatism, will differ across different corporate life-cycle stages. We argue that companies in early life-cycle stages which require a great use of financial leverage, so they will apply less conservative financial reporting than mature companies, in order to improve their perceptive borrowing capacity. Empirical evidence is provided through the sample of large, listed companies from 14 Western European countries in succession from 2002 to 2011. Estimated results indicate that companies in introduction and growth stage of corporate life-cycle have low level of asymmetric timeliness of earnings. This paper examines the level of accounting conservatism in different corporate life-cycle stages. Basu (1997) defines conservatism as accountants’ tendency to require a higher degree of verification for recognizing good news than bad news in financial statements. In accordance with principle of prudence, conservative accounting system recognizes potential decreases in income or assets well before they are realized, but postpones the recognition of income increase until it is realized or is sufficiently certain. Therefore, Basu expects that reported earnings will respond more completely or quickly to negative shocks on value of company (i.e. bad news) than to positive shocks (i.e. good news).
The Application of FAHP/DEA Methodology in a Transit-oriented Development Planning in Taipei Metro Transit System
Dr. Wann-Ming Wey, Professor, National Taipei University, New Taipei City, Taiwan, R.O.C.
The concept of transit-oriented development (TOD) planning mode in an urban area was proposed based on the principles of smart growth and sustainable development in recent years. Meanwhile, the development of appropriate design techniques for the surrounded built environment of TOD has become important increasingly as the TOD applied in an urban district. The available evidence lends itself to the argument that a combination of urban design strategies and TOD patterns that promotes the quality of urban built environment will help create active, healthier, and more livable communities and it is an essential element of this research. This study will include the following sections. First of all, we try to study and classify the category of smart growth principles based on literature review. Followed by applying fuzzy Delphi technique (FDT) to obtain individual expert’s opinions and to screen the most important criteria of proposed principles in our research. And then the empirical study of Taipei Metro Transit System will be demonstrated to show the application of our proposed methodology. Finally, the utilization of Fuzzy Analytic Hierarchy Process (FAHP) method and Data Envelopment Analysis (DEA) model combined with assurance region analysis will be applied to select the most suitable MRT stations as the suggested strategies for public sectors. This paper presents a study on a decision-making problem integrating smart growth principles into the urban transportation planning development strategies. A case of Taipei metro transit system will be taken as an empirical example to illustrate the appliacatin of our proposed methodology for assessing the comparative performance of TOD planning multicriteria analysis. This paper also proposes a model to evaluate the candidate TOD station performance of future MRT locations. The station performance of TODs is based on perspectives that balance and link the quantitative and qualitative, tangible and intangible, and internal and external factors. This study uses some different perspectives to construct the performance measurement system, namely, the smart growth principles supposed to be followed by locating the TOD stations in Taipe Metro Transit System. Thus, the proposed model provides an integrated method for evaluating multicriteria decision making within a transit-oriented development planning in Taipei city.
A Qualitative Study on the Antecedents of Turnover Intentions in A Turkish Company
Aylin Boztok Devrimci and Dr. Elif Cicekli, Istanbul Bilgi University, Istanbul, Turkey
This study explores the effects of work-life balance (WLB) and other factors on employee turnover intentions in a Turkish company. Turnover intentions, WLB practices, and other possible antecedents of turnover intentions are assessed through in-depth interviews with ten employees in a Turkish company. Results show that turnover intentions are negatively affected by WLB, particularly consistent work hours and flexible leave time, and by other factors, including a peaceful and friendly work environment, and the company’s being an institutionalized and prestigious company. In order to decrease employee turnover intentions, companies are advised to focus on these factors. Employee turnover has become a major issue for management in the twenty-first century (Batt & Valcour, 2003). Companies are giving attention to this issue (Lucas, Parasuraman, Davis, & Enis, 1987) because they know that a low level of employee turnover increases organizational performance and reduces the costs associated with recruiting and training new employees (Chen, Lin, & Lien, 2010). In this study, a Turkish company is examined to explore the possible antecedents of employee turnover rate, including WLB. Qualitative research on the effects of WLB and other work-related factors on employee turnover intentions in Turkey is lacking. Studies have examined antecedents of employee turnover intentions, such as perceived organizational support and perceived supervisory support (Tuzun & Kalemci, 2012), organizational justice (Ozer & Gunluk, 2010), job demands, job resources, and intrinsic motivation (Babakus, Yavas, & Karatepe, 2008). However, all of these studies are quantitative in nature and do not include WLB as a possible antecedent. Other studies have examined the WLB-related issue of work-to-family conflict in Turkey, including the effects of work-to-family conflict on job satisfaction (Anafarta, 2011; Karatepe & Tekinkus, 2006; Yildirim & Aycan, 2008), on emotional exhaustion (Karatepe & Tekinkus, 2006; Yavas, Babakus, & Karatepe, 2008), on job performance (Karatepe & Tekinkus, 2006; Yavas et al., 2008), and on organizational commitment (Karatepe & Tekinkus, 2006). However, these studies did not examine the effects of WLB on turnover intentions.
Intangible Assets and Business Performance
Dr. Biserka Komnenic, Dr. Dragica Tomic, and Dr. Radovan Tomic, Business School - Novi Sad, Serbia
Based on resource-based theory, firms gain competitive advantage and achieve superior performance by holding, acquiring, and effectively using strategic assets. These assets include tangible, physical assets as well as intangible assets. Intangible assets are valuable, rare, nonsubstitutable, hard to imitate and thus are defined as strategic assets capable of generating sustainable competitive advantage and superior financial performance. Often regarded as a fourth factor of production, in addition to land, labor, and financial capital, intellectual capital (IC) embodies intangible value drivers and for that reason, plays increasingly important role in achieving high business performance. This paper empirically investigates whether intellectual capital as a strategic asset impacts organizational performance and also identifies the IC components that may be the drivers of the traditional indicators of business success. The study sought its evidence from the banking sector in Serbia, using data from 24 Serbian banks from 2006 to 2008 and applying the VAIC methodology to generate independent variables that reflect IC. Regression models were constructed to examine the relationships between the efficient use of human and structural capital and corporate performance measures, including return on assets, return on equity, and productivity. The empirical findings of our study support the hypothesis for the positive relationship between firm IC and corporate performance measures: return on assets, return on equity and productivity. The growing importance of intangible resources for contemporary firms is the result of the increasing complexity in the business environment, as a consequence of structural changes to the economic system transformed to a now intensively based on knowledge. Firms need to develop the ability to respond faster to changes. They have to react smarter and be more sensitive and flexible to market signals, while at the same time gaining the capability to create their own future. In this competitive environment, firms cannot compete simply through using standardized solutions and processes that were designed for a stable and predictable environment.
Fuzzy Logic and Panel Logistic Models for EU Smart Specialisation Strategies
Dr. Yari Borbon-Galvez, ZLC-Zaragoza Logistic Centre, Zaragoza, Spain,
SPRU-Science and Technology Policy Research, University of Sussex. UK
Dr. Maria Del Sorbo, Institute for Prospective Technological Studies-JRC, European Commission. Spain. University of Salerno. IT
Based on a fuzzy logic and a panel logistic model, the models suggest 10 configurations (contexts) of sectoral specialisation of the EU regions, the most specialised regions being: Oost Nederland, Ouest FR, Saarland, Sachsen Anhalt, Schleswig Holstein, Thuringen, and Zuid Nederland; and various specialised sectors ranging from: Construction, Electricity gas and water supply, Manufacture of electrical and optical equipment, Real estate renting and business activities, and others. The Sectoral Specialisation of the EU regions was calculated with the Revealed Comparative Advantage method, capturing the degree to which a given region employs its economically active population (EAP). The results suggest that, for a region, to specialise in any given sector there are two ‘necessary conditions’. Firstly, the sector had to invest heavily in tangible goods (assets), and second, the region had to increase the shares of high and medium-high tech manufacturing employment. Moreover, the results show that the apparent labour productivity of the specialised regions did not have to be higher than the rest of the EU regions. It was also found that high specialisation emerged mostly among regions with high disposable income per capita, and this happens more often not among the largest EU regions. The panel logistic model shows that smart specialisation strategies targeting R&D intensity and R&D personnel at regional levels are potentially useful tools for regional de-specialisation and specialisation, correspondingly. The model is corroborated with the description of two contrasting cases (regions), one specialised and other de-specialised. Currently, the European policy on research and innovation is betting on Regional ‘Smart Specialisation’ as a way to ‘stay in the game’ (FORAY et al., 2009) at times of increasing global business competitive pressures. It is expected to revert what had been described as two decades of high concentration of wealth in high-income regions and low technological prominence in lagged ones (CUTRINI, 2010), implying that low technology will hardly pave the way to high-income regions. The ‘Innovation Union’ has a quest for correcting the EU-27 highly diversified technological systems, which correlates negatively with specialisation in high-technology sectors of the regions.
Building Team Trust: A Study in the Asian Context
Dr. Ngan Collins and Yu-Min Chou, Business College, RMIT University, Australia
Numerous scholars have concentrated on the influences of team trust in team cooperation and performance. However, there is a lack of studies which explore the relationship between team trust and team performance in the virtual setting. The issue of whether team trust influences team effectiveness differently between conventional and virtual teams has rarely been discussed. The purpose of this paper aims to address this gap in the literature by investigating team trust in both conventional and virtual teamwork, in order to seek an understanding of effective methods for building team trust in these working environments. Findings from this study show that building interpersonal trust between team members is important to improve the team effectiveness of conventional teams. But developing institutional trust within a team is essential for virtual teamwork. An understanding of how to build team trust in different working environments can help businesses to increase the operational efficiency. The rapidly changing business environment has led to competitive pressure to have a flexible organisational form for increasing working effectiveness so that teamwork has emerged as an important working style in the industry Teamwork is widely utilised in organisations to achieve high levels of performance in business operations because people cooperating can complete the job with better quality than individuals working alone. With advanced information technology, the use of virtual teams has been increasing. Virtual teams use computer-based communication systems to allow distant and time-dispersed employees to combine their knowledge and skill without the expenses of travel, thus, many multinational companies utilise virtual teams to achieve operational efficiency and to improve strategic performance. Research into teams in organisations has largely investigated the influences of work group characteristics and team structures on team performance.
Evaluation, Steering, and Support of Knowledge Production in Interdisciplinary Clusters of Excellence – One Step Beyond
Claudia Jooß, IMA/ZLW & IfU, RWTH Aachen University, Germany
Dr. Rene Vossen, IMA/ZLW & IfU, RWTH Aachen University, Germany
Prof. Dr. Sabina Jeschke, IMA/ZLW & IfU, RWTH Aachen University, Germany
Size, complexity, and dynamics of interdisciplinary research clusters result in an advantage with regard to resolving hybrid and specific problems. The variety of different scientific experiences, disciplines, and cultures in (mutual) scientific and operative research, however, can lead to tension and conflict in cooperation (Loibl 2005). This explains the high demand for structural and procedural framework conditions to support interdisciplinary knowledge production within interdisciplinary research clusters; thus, constant evaluation, steering, and support of knowledge production is required. This continuous steering and support of knowledge production is also necessary for the successful orientation of all cluster actors, teams, projects, and partial projects toward the superordinate objective of the German Research Foundation (DFG)―the knowledge objectives derived from these as well as the defined vision of the individual research clusters. This paper discusses the impact of already experienced knowledge engineering tools by taking the case study of scientific DFG clusters, the so-called clusters of excellence, of the RWTH Aachen University as an example. This impact is mirrored by consequent learning processes and successes in learning within the research subject clusters of excellence. A thesis concerning further needs for research of the nationwide Excellence Initiative, which covers further research constructs, is elaborated in an outlook that goes one step beyond and opens up the research horizon for years to come. In 2005/2006, the German Excellence Initiative was established by the federal government, the German Research Foundation (DFG), and the advisory council on scientific matters to sponsor and support science and research. With the help of so-called “future concepts,”(1) “clusters of excellence,” (2) and “graduate schools,” (3) the Excellence Initiative aims to equally and broadly support top-level research and increase Germany’s attractiveness as a center for university and scientific research so as to sustainably strengthen the location for science, improve Germany’s international competitiveness, and visualize peaks in the areas of university and science. (4)
The Role of Incentive Compensation on Tax Avoidance: Empirical Evidence from Thailand
Xiaoque Chen, Mahasarakham Business School, Mahasarakham University, Thailand
The growing divergence between book and tax income is being considered by those in authority. Economics theory makes the assumption that human beings are self-interested, which indicates managers are motivated to manipulate accounting numbers to achieve their goals. Also, asymmetric information does provide the opportunity, since managers hold more information than the shareholders. As a result, earnings management gets first blame which contributes to the increasing gap between book and tax income. However, accounting scholars are often quoted that taxation is an alternative factor that influences the reporting of accounting income. Thus, the rising divergence between book and tax income is also questioned to be the result of tax activity. Soon afterward, researchers began to consider the role of incentive compensation on tax avoidance. This study used unique panel data from the Stock Exchange of Thailand, obtained from 3 sources: DataStream, SETSMARTs, and the annual report of a 10-year period database from 2001 to 2010. Information of all listed companies is collected, but only complete individual firm data sets are analyzed. The result shows that the trend of the book-tax gap fluctuates. The gap first reaches a peak in 2004 and once again in 2009. The basic estimation shows that earning management plays a significant role on the divergence between book and tax income. The estimation of the tax avoidance model is Tax Avoidance = BT - 0.036007 * EM - 138,884. This paper does not only aim to investigate whether incentive compensation influences tax avoidance, but also aims to discover the uniformity of estimation techniques between repeated cross-section analysis and panel data analysis. OLS estimation reveals that salary and bonus does influence tax avoidance, but not every year. Pooled-OLS indicates that salary is the only factor while fixed and random effects do not show any link between incentive compensation and tax avoidance. Taxation plays an important role and exercises a big influence on the national economy due to its own characteristics. From a legal point of view, imposing tax is a must. The most important reason is that a government needs capital to establish governmental organizations and the public infrastructural facilities to run the country such as: the military forces, courts, schools, hospitals and so on, which are funded mostly from tax revenue. In addition, taxation can help the secondary distribution of social wealth to avoid polarization, since polarization leads to the instability of a society. Another function of taxation is to influence human behavior by changing or revising the policy. Tax authorities are aware that not everyone is willing to pay.
Determinants of Audit Committee Effectiveness in Saudi Listed Firms
Dr. Murya Habbash, King Khalid University, Abha, Saudi Arabia
Dr. Ehsan Al-Moataz, Professor, Umm Al-Qura University, Makkah, Saudi Arabia
This paper provides empirical evidence that audit committee effectiveness is associated with economic factors, and that it increases with board independence and board diligence and decreases with the firm's leverage and state ownership. Moreover, there are positive associations between audit committee effectiveness and audit quality and large firm size. At the same time, a substitution effect is observed between internal control mechanisms, ownership types and audit committee effectiveness. Audit committee effectiveness increases with the supply of active and independent directors and with the demand for monitoring, and decreases with the availability of substitute monitoring mechanisms. There is a vital need to understand the implementation of the emergence of corporate governance, and specific aspects such as audit committees in developing countries such as Saudi Arabia. In recent years the accounting profession, users of financial statements and governments have expressed concerns over the incidence of fraudulent financial reporting. One response on the part of companies to these concerns has been the establishment of audit committees (Al-Moataz, 2008). Turley and Zaman (2003) point out that corporate failures and malpractices have led to an increasing emphasis on the governance role of audit committees. Also, Jaggi and Leung (2007) claim that the weaknesses in corporate governance mechanisms in Asia, due to a lack of audit committee,s have partially contributed to the crisis. It is interesting to note, however, that in all of the countries where they have become established, audit committees have been motivated by unexpected company failures and/or corporate malpractices (Vanasco, 1994; Guthrie and Turnbull, 1995; Wolnizer, 1995; Teoh and Lim, 1996; Porter and Gendall, 1998). Recognising the importance of audit committees as a major tool to increase confidence in financial statements the Minister of Commerce issued a resolution in January 1994, mandating all public companies to establish audit committees. This comprised guidance to control the selection of their members, namely (Al-Moataz and Higson, 2007):
Cross-Country Differences in Euro Crisis
Dr. Timotej Jagric, Professor and Dr. Sebastjan Strasek, Professor, University of Maribor, Slovenia
Marjan Hafner, Institute of Macroeconomic Analysis and Development, Slovenia
This paper shows that countries with less developed and unstable financial system were more affected by last financial crisis. We find that non-financial companies’ financial structure in more affected countries were less favorable, since this structure is minor influenced by long run financing, which was also confirmed by ANOVA models. The differences between more and less affected countries are highly significant by indicators, which are connected with long-run financing. Many observers and policy makers support the view, that euro crisis can be attributed to reckless fiscal policy in the peripheral or noncore countries. The alternative view (Wyplosz, 2010) is that a reform of EU institutions is needed in order to impose fiscal discipline on the sovereign national institutions, since a revised euro-zone’s Stability and Growth Pact (SGP) would be doomed to fail. Soros (2011) defend a different view. He understands the euro crisis as banking rather than a fiscal crisis and argues that the euro crisis is a by-product of 2008 crash which forced the financial system to substitute the sovereign credit of governments for the commercial credit that had collapsed. Crotty (2009) finds the roots of the crisis in the New Financial Architecture (NFA), where deep cause on the financial side is to be found in the flawed institutions and practices of the current financial regime. The existing system of tight financial regulations was deconstructed through radical deregulation pushed by financial institutions and justified by efficient financial market theory. Since different effects of financial crisis are a function of different characteristics of financial systems we analyze EU countries with a goal to find significant differences. Our analysis builds on results from our previous research (see Strasek (2012), and Hafner and Jagric (2013)). The paper is structured as follows. First, we give some comments on the economic development before and after the start of the financial crisis in Europe. In chapter three we show results of the cluster and ANOVA analysis for 27 European countries. Based on the results, we try to give support to our hypothesis that the properties of financial system are connected with the level of impact of the financial crisis on the observed EU countries. In chapter four we give some concluding remarks.
Price Relationship between Commodity Exchange Market and Traditional Market in Iran: Study of Maize and Barley
Mina Mahmoudi, University of Nevada, Reno, NV
Dr. Amir H. Chizari, University of Tehran, Iran
Maize and barley are important products in feeding livestock in Iran and their price change is important for policy makers, producers and consumers. According to the huge transaction volume of these products in Iran Commodity Exchange and traditional market, this study will pursue the price relationship between these two markets for these products. For this purpose, we used monthly price data and the existence of monthly unit root was checked too. Johansen cointegration analysis and vector error correction model (VECM) showed that for both products, the prices of traditional market are related to the prices of exchange market and the price leadership is undertaken by the exchange market. So, buyers and sellers of these products in traditional market can use price information of commodity exchange market to determine the ideal price and volume of their transactions. Maize and barley are two of most important products in Iran which are used in feeding livestock and their price changes is important for policy makers, producers and consumers. United Nations Food and Agriculture Organization (FAO) estimated maize and barley production of Iran respectively 1.6 and 3.4 million tons in 2009 . The market for these products can be divided into two parts: Commodity Exchange market and traditional market. Agricultural commodity exchange market has established in Iran in response to the need of information transparency, managing risk of price fluctuations, organizing markets in order to enhance performance and reducing transaction costs. Among all agricultural commodities, maize and barley are listed on the center of exchange market transactions (during the years 2008, 2009 and 2010 the share of total maize from all agricultural products traded on the exchange market, was respectively 68.5, 57.9 and 10.9%, and the share of barley transactions was 7.2, 22.6 and 26.3%) which have been both cash and future transactions . Price changes of these two products in the exchange and traditional market is shown in diagrams (1) and (2). As it can be seen, price trends of these two products are relatively same in exchange and traditional market which indicates a possible relationship between the prices of these two markets.
The Impact Analysis of Globalization on Human Resource Management --- A Systems Thinking Model
Dr. Kuan-Chou Chen, Professor, Department Head, Purdue University Calumet, Hammond, IN
Dr. Keh-Wen “Carin” Chuang, Associate Professor, Purdue University North Central, Westville, IN
Globalization influences the number and kinds of jobs that are available and requires that organizations balance a complicated set of issues related to managing people in different geographies, cultures, legal environments, and business conditions. HR functions such as staffing, training, compensation, and the like have to be adjusted to take into account the differences in global management. This paper will focus on the Human Resource Management aspects of the Human Capital and the Information system. This paper will further delve into demographics, economy, change, new technology, total quality management and their inter-relations using system thinking. The effects of globalization are not just a recent phenomenon. The term is used since 1980s, reflecting technological advances that have made it easier and quicker to complete international transactions. The most appealing aspect of this has been the integration of financial markets made possible by modern electronic communication. Globalization is the process of denationalization of markets, politics and legal systems, i.e. the rise of the so-called global economy. Globalization refers to an extension beyond national borders of the same market forces that have operated for centuries. Globalization occurs when companies decide to take part in the emerging global economy and establish themselves in foreign markets. They will adapt their products or services to the customer’s linguistic and cultural requirements. They take advantage of the Internet and establish an effective presence on the international marketplace with multilingual corporate web site or even as an e-business. Overall, globalization requires a combination of linguistic, engineering and marketing knowledge that is not easily available. This paper will focus on the Human Resource Management aspects of the Human Capital and the Information system.
Leadership and Spirituality in Business: The Contributions of Eastern Philosophies
Dr. Stewart L. Tubbs and Pradeep Chowdhry, Eastern Michigan University, MI
There is a substantial body of research evidence regarding the importance of leadership and leadership development to organizational success, Avolio and Luthans (2006),Charan, Drotter and Noel (2001), Fullmer and Goldsmith (2001), Goffee and Jones (2006), Goldsmith (2007), McCall and Hollenbeck (2002), McCauley, Moxley and Van Velsor (1998), Reardon (2007), Viceri and Fulmer (1997), Wagner and Harter (2006), and White (2007). However, there remains an ongoing controversy about what types of leadership styles and competencies are the most effective in any given situation. In this paper leadership is defined as, “Influencing others to accomplish organizational goals,” (Tubbs, 2007). Based on the model presented in this paper, the rationale is advanced that the leadership competencies on the outer wedges of the model are where leadership development efforts should be focused (Tubbs and Schulz, 2006). This paper focuses on exploring the contributions of Eastern philosophies (specifically from India) on leadership effectiveness. Approximately $50 billion a year is spent on Leadership Development (Raelin (2004). Yet, one of the most frequently asked questions of leadership scholars is whether leadership can, in fact, be taught and learned. The answer seems to be a qualified yes. In other words, some aspects of leadership are more likely to be learnable and others are less so. For the purposes of this paper, leadership is defined as, “Influencing others to accomplish organizational goals,” Tubbs, (2007). Leadership is often discussed in terms of competencies, (Boyatsis (1982), Goleman, Boyatsis and McKee (2002), Whetton and Cameron, (2002). Competency is a term that describes the characteristics that lead to success on a job or at a task, Boyatsis (1982). Competencies can be described by the acronym KSA knowledge, skills and abilities. The model in Appendix A shows that leadership competencies can be represented by three concentric circles. These three circles describe three distinct aspects of leadership. The innermost circle includes an individual’s Core Personality. The second circle includes an individual’s values. The outermost circle represents an individual’s leadership behaviors and skills, (i.e., competencies).
Samson Ekanayake, Deakin University, Victoria, Australia
It has long been acknowledged that international joint ventures (IJVs) offer opportunities for firms to gain competitive advantage, diversify risks, and to gain access to new markets and technologies (Ghoshal, 1987). Hence, establishment of an IJV is considered a ‘compelling option’ for a firm that pursues global strategies (Hergert & Morris, 1988; Fryxell, Dooley & Vryza, 2002). Despite their importance and popularity, many IJVs seem to encounter relational and performance problems and fail (Groot & Merchant, 2000). While estimates of IJV failure vary, a failure rate of 61 per cent within the first five years of formation has been reported (Osborne, 2003). The failure rates of IJVs are considered to be significantly higher than that of a single firm (Bleeke & Ernst, 1991; Das & Teng, 2000). According to some estimates, up to 70% of all IJVs fail within two years of their formation (Geringer & Herbert, 1991; Parkhe, 1993). A number of non-academic studies also highlight the poor performance and high failure rates of IJVs (e.g., Cooper & Johnson, 2000; Andersen Consulting, 1995). IJVs generally face greater challenges, because partners, especially foreign partners, have to control IJVs in settings with which they have little familiarity (e.g., markets, distribution systems, legal systems, geographical separation, cultural differences) (Groot & Merchant, 2000; Fryxell et al., 2002). Controlling an IJV is particularly complex and difficult because of shared ownership and control (Madhok, 1995; Groot & Merchant, 2000; Fryxell, et al., 2002). As Groot & Merchant (2000, p. 581) point out, an IJV involves an obvious, extra dimension of complexity because of the behaviors of the partners “must be considered in choosing the set of controls to use.” Alliance partners are ‘neither friends nor strangers’ (Lorenz, 1988). Cooperative as well as competitive dynamics that occur between partners add to the complexity and difficulty of controlling IJVs (Hamel, Doz & Prahalad, 1989; Yan & Gray, 2001). Many researchers argue that IJV control is special, because IJVs are mixed motive games between partners and therefore both collaborative and competitive dynamics that occur within them need to be managed (Hamel et al., 1989; Chalos & O’Connor, 2004).
Social Media and Youtube As An Attractive Marketing Tool
Dr. Hyun Sook Lee, National Autonomous University of Mexico, Mexico City
Technological evolution and social media such as Facebook, Twitter, YouTube and others have been influential in becoming an integral part of people´s everyday lives. The key factor for the success of social media is conversation, being a cost-effective method for marketing activities and thus for business practice. YouTube has the advantage of free world-wide access, to all those connected with the internet, so it must be attractive as an advertising tool. For Entertainment marketers, YouTube became a must-buy as an option for anyone trying to reach a great number of viewers, especially the younger demographic (Learmonth, 2010). The ability to identify market opportunities and to mobilize or develop resources for effective exploitation of those opportunities is an essential prerequisite for gaining competitive advantage. This dynamic competitive firm behavior is observable and can be studied by examining the patterns of actions and reactions of firms over time (Miller & Chen 1996a, b; Grimm & Smith 1997; Ferrier 2001; Chi, Ravichandran & Andrevski, 2010). Staying ahead in today's challenging business environment requires an established infrastructure for maintaining internal processes as well as external relationships with stakeholders (Managed Network …, 2012). Increasingly, retailers and marketers have recognized that online consumers, especially those in younger demographics, are becoming unresponsive to advertising on social networking sites. That's partly because they feel overwhelmed by the sheer volume of advertising, but they also feel the ads aren't in sync with or relative to their wants and needs. Because of that, young consumers are starting to ignore traditional advertising and are expecting businesses to change their marketing tactics to meet their lifestyle desires.
Coca-Cola: International Business Strategy for Globalization
Dr. Michael Ba Banutu-Gomez, Professor, Management and Entrepreneurship,
William G. Rohrer College of Business Rowan University, Glassboro, NJ
The purpose of this research was to analyze the efficiency of global strategies. This paper identified six key strategies necessary for firms to be successful when expanding globally. These strategies include differentiation, marketing, distribution, collaborative strategies, labor and management strategies, and diversification. Within this analysis, we chose to focus on the Coca-Cola Company because they have proven successful in their international operations and are one of the most recognized brands in the world. We performed an in-depth review of how effectively or ineffectively Coca-Cola has used each of the six strategies. The paper focused on Coca-Cola's operations in the United States, China, Belarus, Peru, and Morocco. The author used electronic journals from the various countries to determine how effective Coca-Cola was in these countries. The paper revealed that Coca-Cola was very successful in implementing strategies regardless of the country. However, the author learned that Coca-Cola did not effectively utilize all of the strategies in each country. CEOs and top management teams of large corporations, particularly in North America, Europe, and Japan, acknowledge that globalization is the most critical challenge they face today. They are also aware that it has become tougher during the past decade to identify internationalization strategies as well as with whom to do business (Krishna, 2005). Entering into a foreign market is like discovering new territory for business owners. Foreign countries have different laws, economies, business strategies and currency. Cultural differences can also impede a country's success. Though every business should anticipate a huge learning curve, entering a foreign market can be easier with the adoption of a few strategies (Krishna, 2005) Entering into a foreign market could require changing your product to suit the new market's tastes and preferences. Though you may know how to issue surveys and offer samples in your base country, the foreign market might have a different protocol.
Disconfirmation and Customer Satisfaction of Impulse Buying Behavior
Dr. Chuanlin Kang, Chinese Culture University, Taiwan
Although consumer researchers have investigated impulse buying nearly 60 years, diversified finding on the relationship between impulse buying and consumer satisfaction still a question need to study furthermore. Based on the E-K-B model of consumer buying decision theory, this paper try to justify the definition of “impulse buying” and try to explore the mediating effects of “disconfirmation” on the relationship between “impulse buying” and “consumer satisfaction”. A random sample of 1,327 Taiwanese consumers is examined with questionnaires. The major finding demonstrated that “disconfirmation” acts as mediating variable with partial effects between “impulse buying” and “consumer satisfaction”. Theoretic and practical implications are discussed with respect to impulse buying behavior. According to Solomon (2001), approximately two-thirds of all purchase decisions are made in stores. In some product categories, including candies, chewing gums, oral hygiene products, and cosmetics, more than 70% of all purchases are unplanned. Statistical data shows that impulse buying has accounted for a dominant share of all purchase in certain product categories (Smith, 1996). Previous studies differentiated impulse buying from non-impulse buying by using various criteria, including intention, presence of advance planning, and the state of being rational. As a consequence, pluralities of definitions have been proposed. Among studies that used presence of advance planning as a criterion, most agreed with Stern's (1962) view that impulse buying is an unplanned behavior (e.g. Kacen and Lee, 2002). However, some studies argued that consumers’ in-store information search and product evaluation should be viewed a planned behavior (e.g. Wood, 1998). Among studies that used intention as a criterion, Engel and Blackwell (1982) defined impulse buying as a buying action undertaken without a problem previously having been consciously recognized. In other words, this buying action is undertaken without an intention formed prior to entering the store. However, Kollat and Willett (1967) mentioned in an earlier research that it is hard for consumers to clearly express their “intention” formed prior to entering the store, so “planned buying” is not easy to measure.
The 1959-73 Mandatory Oil Import Quota Program: U.S. Energy Policy or a Camouflaged Subsidy?
Dr. John C. Edmunds, Professor, Babson College, Wellesley, Massachusetts
Sitanshu Singh, Brandies University, Waltham, Massachusetts
INTRODUCTION AND OVERVIEW
It is illuminating to study the struggles over the Mandatory Oil Import Program. That program was of the sort that seems to crop up in countries everywhere; it was an intervention that diverted profits to a select group, at a cost to the larger polity. The media never publicized it prominently because it was cloaked in legitimacy and required too much explanation. The quota program is a suitable and worthy precedent for today's discussions about energy policy and market regulation because it had so many parallels with today's battles over energy policy. It has the advantage that the debate about it was always a mix of analytical arguments and partisan rhetoric, so it is a relevant model for framing today's issues. Hopefully the lessons of that mandatory quota program can be applied to today's emotion-charged debates. The alignments for and against the quota are easy to understand, the Congressional tactics employed were instructive, and the bureaucratic wrangling over technical details was the real meat of the program. The tactics that the adversaries employed, and the public appeals they issued, were similar to the ones employed in today's struggles. Studying the oil import quota can shed light on a larger topic, namely, how the U.S. will set its energy policy, as forecasts of self-sufficiency open up new possibilities. The oil import quota debate was most intense during a period when the United States was dependent on imported crude oil, to a degree that mimics the dependency just before the current production surge began. The quota debate also pitted the major international oil companies against the smaller domestic firms, commonly known as the independents. So the Mandatory Oil Import Quota Program has much to recommend it to today's experts and laymen as they align themselves on all sides of current U.S. energy policy issues. As a way of presenting the contestants in the struggle, we take the point of view of the international oil companies and we portray the "independents" as their adversaries. The winners in the regulatory trench warfare were the independents -- the smaller oil companies mostly based in Texas and Oklahoma. By starting with the position of the major international oil companies, we spotlight the international trade issues, and the tradeoff between low cost and national self-sufficiency.
Behavior of Consumers of Healthy and Healthier Food in Israel
Dr. IlanBijaoui, Ashkelon Academic College
Dana Dayanzada and HadarVdee, Bar Ilan University
The profiles of consumers of healthy and healthier food are different. Healthy food consumption is a cultural trend, an ideology. Healthier food is a wider behavior focused mainly around the phenomenon of obesity. To enter both markets, firms must understand both consumer behavior and related profiles. In the present research we analyze the profile of the Israeli consumer of healthy and healthier food and compare it with the "classic" profile defined in the literature worldwide. The main motivation of the healthy Israeli consumer is the health of their children. Consumers of both genders are prepared to spend money for healthy food. The positioning of healthy products must be focused on content value related to children's health and on preventive medicine for their relatives. The healthier food consumer has a different profile than the healthy food consumer. Anybody can be a healthier food consumers, and therefore these consumers are more difficult to characterize. Nutrition content related to obesity is the only common denominator of healthier food consumers. Seventy nine percent of top executives in the food and beverage business agree that healthy nutrition is the key issue driving the industry forward, ahead of convenience and price growth pressure (Deloitte, 2012). Healthy food is a global and growing trend (Nielsen, 2012; Feunekes et al., 2008; Nørgaard and Brunsø, 2009; Grunert, Willys, 2007). The desire to maintain good health is of prime concern for consumers, and they read labels in order to obtain information about ingredients, nutrition (Wills et al., 2009), and negative nutrients in food products (Cowburn and Stockley, 2005; Drichoutis et al., 2006). Consumers in North America show the highest confidence in understanding nutrition labels. Nearly six in ten (57%) regional respondents indicated that they mostly understand the details of such labels. This result is based largely on U.S. respondents, as consumers in the U.S. appear more comfortable with the labels than are Canadians consumers. Fully 58% of U.S. respondents report mostly understanding the information, compared with 49% of Canadian respondents (Nielsen, 2012).
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