The Business Review Journal

Vol. 2* Number 2 * Summer 2014

The Library of Congress, Washington, DC   *   ISSN 1553 - 5827

The Library of Congress, Washington, DC   *   ISSN 2167-0803

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The Significance of the Psychological Contract for Organizational Downsizing

Dr. Franco Gandolfi, Dean, School of Business and Professor of Business

California Baptist University, Riverside, CA



This conceptual paper examines the nature of the psychological contract in the context of organizational downsizing. It provides an examination into the shift from the ‘old’ to the ‘new’ psychological contract seeking answers on how such a tectonic shift may affect the perceptions of the downsizing survivors. The paper also investigates whether this paradigm shift may be at the core of the emergence of the survivor sicknesses.  Psychological contracts are individually held beliefs about the mutual obligations of employers and their employees (Kim & Choi, 2010). These implicit agreements play a significant role in shaping employee behavior in firms as they influence employee attitudes towards the firm and efforts towards the accomplishment of organizational goals. Empirical research has shown that perceived breaches of the psychological contract lead to negative organizational outcomes (Montes & Zweig, 2009). Furthermore, research has demonstrated that there are ‘triggers,’ including downsizing and layoff decisions, that can lead to such perceived breaches of the psychological contracts (Guzzo, Conway, Briner, & Dickman, 1994; Agarwal & Bhargava, 2013).  Downsizing and layoff announcements abound in today’s business press (Gandolfi & Littler, 2012; Gandolfi, 2013A). Given the abundant news coverage of such major events, it is unlikely that individuals can avoid being exposed to the news of such downsizing initiatives, layoffs, and corporate restructurings. How do downsizing victims and survivors react to the announcement of downsizing? To what extent are downsizing initiatives perceived as a breach of the psychological contract? What is in fact the relationship between downsizing and the psychological contract? Might there be a correlation between the paradigm shift of the psychological contract and the emergence of downsizing-related survivor sicknesses? This paper examines the nature of the psychological contract and studies the perceived paradigm shift from the old to the new psychological contract. It is of great interest to investigate how a perceived breach of the psychological contract may impact the perceptions of downsizing survivors. A review of the downsizing literature provides a more in-depth understanding of whether the violation of the psychological contract may be at the core of the exhibited survivor sicknesses.  The paper is organized as follows: It begins with a general discussion of the nature of the psychological contract followed by a presentation of the notion of a new psychological contract. The third section discusses downsizing and a perceived breach of the psychological contract. The strategic implications of the psychological contract are introduced in section four. The fifth section discusses the psychological contract and downsizing. The final section presents Noer’s (1993) basic bind model followed by concluding thoughts.  The relationship between employees and employers has been described as an exchange relationship (Chiang, Liao, Jiang, & Klein, 2012).


A Hybrid Intelligent System for Stock Analysis Through Integration of Fuzzy Logic and Analogical Reasoning

Dr. Harry Zhou, Professor, Towson University, MD



It is well known that security analysis is a time-consuming and error-prone  process.  However, it can be improved or enhanced considerably by automated reasoning. Efforts to reduce the inaccuracy and incorrectness of analyses and to enhance the confidence levels of stock selection have led to the development of an intelligent decision support system called TradeExpert, which assists, not replaces, portfolio managers. TradeExpert assumes the role of a hypothetical securities analyst capable of analyzing stocks, calling market turns, and making recommendations. It has a knowledge base of stock trading expertise, and a case base of past episodes and consequences of decisions. By combining knowledge-based problem solving with case-based reasoning and fuzzy inference, TradeExpert demonstrates forms of intelligent behavior not yet observed in traditional decision support systems and expert systems. The novelty of this research lies in its application to analogical reasoning, fuzzy reasoning, and knowledge-based decision making.  Over 60% of the families in the United States have billions of dollars invested in mutual funds. Consequently portfolio managers are under tremendous pressure to make critical investment decisions in dynamically changing financial markets. Experts have been forecasting and trading financial markets for decades, using their knowledge and expertise in recognizing patterns and interpreting current financial data. This paper describes a knowledge based decision support system with the analogical reasoning capability to be used in financial forecasting and trading. In an attempt to maximize a portfolio’s return and avoid costly losses, the portfolio manager must decide when to enter trades as well as when to exit and thus, must predict the duration as well as the direction of stock price movement. A portfolio manager is faced with a daunting information management task and voluminous amounts of rapidly changing data. It is simply an impossible task to manually and simultaneously follow many investment vehicles, stocks and market moves effectively.  To assist portfolio managers’ decision making processes, tens of millions of dollars are spent every year on Wall Street to automate the process of stock analysis and selection. Many attempts have been made at building decision support systems by employing mathematical models and databases [7]. These traditional decision support systems are composed of three components: a database, a user interface, and a model base. The user interface allows the end user (in most cases, a manager) to select appropriate data and models to perform an analysis for a given stock. The database contains data necessary to perform the analysis, such as market capitalization, shares outstanding, price ratio, return on equity, and price to book ratio. The model base consists of mathematical models to deal with the present value of expected future payoffs from owning the stock, such as the dividend discount model, price-to-earning ratio(P/E) models, and their variants. Standard decision support systems employ quantitative approaches to decision making [2,3]. Specific quantities in the form of payoffs and probabilities are used to arrive at a quantitative expected value.


ICT Expansion and GDP Stabilization: How Russia is Using ICT to Move into the Modern Economy

Dr. Shahram Amiri, Chair, Department of Decision and Information Sciences, Stetson University, FL



This paper examines the correlation between the diffusion of Information and Communication Technologies (ICT) in Russia and its overall GDP. Currently, Russia’s GDP relies heavily on commodities and is very susceptible to shifts in the international market. Since the early 2000s, the Russian government has become interested in increasing their ICT-based market, which has proven to be less variable in times of international economic trouble. The government is funding large programs to increase ICT diffusion, not only to gain increased economic stability, but also to aid both the educational and political sectors of the nation. This paper reviews the history of technology and ICT expansion in Russia, and how its continued expansion and use will affect GDP.  “Russia has a chance not only to preserve its culture but to use it as a powerful force for progress in international markets…This is not about empire, but rather cultural progress. Exporting education and culture will help promote Russian goods, services and ideas; guns and imposing political regimes will not.” – Vladimir Putin regarding ICT spread in Russia (Feb. 27, 2012)  In recent years, Russia’s government has begun to switch its focus from promoting a commodities-based economy to promoting and funding an ICT-based economy. Internet use and telecommunications technology have been growing quickly in Russia, and the government views this as an opportunity to stabilize the GDP, increase education, and modernize the economy so that it can better compete in the world market.   Russia is a massive exporter of fossil fuels and metals giving Russia the 6th largest GDP in the world. However, these commodities are very vulnerable to swings in the global market, and as such, Russia is harder hit by economic downturns in other nations. To illustrate, in 2008, Russia’s economy was hit particularly hard by the international financial crisis as their GDP dropped abruptly by 7.81%. This number was significantly higher than that of most of the global leaders (…Real GDP…2012).  In order to combat this vulnerability, Russia is now pushing for a more prominent position in the fields of high technology and software production ( 2012; Perminov & Egorova 2005). These technology and production jobs are largely influenced by and reliant on information and communication over the internet (Pries-Heje, Baskerville, & Hansen, 2005), and often deal with the diffusion and upkeep of ICT infrastructure, such as the creation of software for use in public computer systems (…working meeting… 2012).   The ICT-based industry has shown itself to be less vulnerable to shifts in the national and world economy. During the late 1990s, when the Russian GDP was just beginning to recover, ICT-manufacturing and service businesses were growing at a rate significantly higher than the rest of the economy (Perminov & Egorova 2005). A similar situation came during the financial crisis of 2008. In that year, despite a drop in GDP, mobile phone subscriptions increased by 21.75 per 100 people, a rate consistent with the previous year. ICT expansion in times of economic trouble indicates that it is a steadily growing market in Russia which is unlikely to be greatly hindered by future financial ups and downs. 


Development of Soft Skills for Information Systems Education Through Service Learning

Dr. Keh-Wen “Carin” Chuang, Purdue University North Central, Westville, IN

Dr. Kuan-Chou Chen, Professor, Purdue University Calumet, Hammond, IN



The purpose of the paper is to present the course design of a service learning project with a soft skills learning and training component for information systems course.  The design on students’ reflections and project assessment are discussed as well.  The project provides students the opportunities to learn and apply individual’s soft skills as well as hard skills at different situations and levels. The information systems graduates who can demonstrate strong soft skills in addition to the hard skills will be prominent in the workplace and succeed in their information systems career.  Most students enter college with the goal of graduating and securing their dream job.  The students major in the Information Systems (IS) programs take classes to learn the computer technical skills that they can apply to their future job after the graduation.  However, today's IS professionals need both technical expertise and soft skills.  Steve Coscia (Coscia, 2011) says in his book, The Trade Technicians Soft Skills Manual, “Technical skills usually get a person hired, but the lack of soft skills is what usually gets them fired.”  Yet, many IS graduates who are technically capable are often criticized for lacking the soft skills.  Soft skills are the skills, abilities, and personal traits that enhance an individual's interactions, job performance and career prospects (Paajanen, 1991). The soft skills, unlike hard skills, which are about a person's skill set and capability to perform a certain type of task or activity, soft skills relate to a person's capability to interact effectively with coworkers and customers and are broadly applicable both in and outside the workplace (Wikipedia, 2013).  For example, soft skills are often described as teamwork, collaboration, communication, organization, negotiation, critical observation, conflict resolution, adaptability, sociability, problem solving, work ethic, or leadership skills. This study is to present the development of a service learning project with a soft skills learning, training and application component for an information systems course.  The service learning project is to partner students with a local County Superior Court to build a customized Veterans Treatment Court Web site.  Students follow the systems development life cycle methodology to build the Web site. And, the soft skills training and learning are also included to the hard skills course.  The design on students’ reflections and project assessment are discussed as well.  The purpose of the service learning project is to not only enhance the IS students’ soft skills via the service learning project in addition to the hard skills applications, but also to heighten students’ awareness, affiliation and work ethic for community service and professional practice.  The soft skills concept is not new to higher education. 


Equity-Efficiency Trade-off in Regional Allocation of Production Factors in the Russian Federation

Dr. Andrey Belov, Professor, Fukui Prefectural University, Japan



This paper presents a non-econometric estimation of the production function for Federal Districts of Russia over the period from 1996 to 2004. The empirical results show that the regional allocation of employment does not correlate with the marginal productivity of labor, but the distribution of capital stock appears to be closely connected to the marginal productivity of capital. In such an environment, alternative ways of allocating public investment can boost total output but they usually also widen territorial income gaps. The promotion of both growth and equity simultaneously is possible in the case of sufficient income-elastic labor mobility and efficiency-oriented investment policy. Regional disparities in allocations of production factors affect the economy in two ways. When labor and capital concentrate in productive regions, it leads to a growth of total output but usually is accompanied by widening territorial gaps. Opposite patterns of distribution can lower possible growth rates but bring more regional equality. Theoretically, it is quite possible to find an optimal balance between effectiveness and equity. But in practice, in most countries the optimum solution cannot easily be achieved.  Russia also faces some fundamental difficulties in devising a balanced regional policy. Starting from the beginning of the 21st Century, the amount of public investment for regional development was constantly growing, but the effectiveness of that expenditure is still highly questionable. In this regard, two major problems attract substantial attention of scholars and government officials. The first is the correlation of regional distribution of labor and capital and the effectiveness of production, and the second are the trade-offs between effectiveness and equity in territorial development. Both mentioned questions are examined in this paper. The first part presents a brief literature review, the second explains the data and methods of estimations, the third part tests the relationships of effectiveness with the actual spatial distribution of factors of production among Federal Districts of Russia, the fourth part presents the simulated results for different scenarios in regional allocation, and the fifth part concludes the paper.  Numerous studies are devoted to territorial differentiation in Russia.


Effects of External Pressure on Workforce Development and Supply Chain Management in Healthcare Industry

Dr. Hui-chuan Chen, University of Tennessee at Martin, Martin, TN

Dr. Edmund Prater, University of Texas at Arlington, Arlington, TX



Long Term Care facilities are a highly regulated industry due to funding sources being subject to Medicare and Medicaid reimbursement. The demand for nursing homes is increasing significantly with anticipation of the Baby Boomers reaching age 65. Most of the long-term care studies are focused on quality improvement and reduced deficiencies. This study provides a different view on how external pressure affects strategic planning in employees learning to benefit operations and supply chain management for long-term care providers. The findings indicate that normative behavior has an important effect on workforce development. Furthermore, staff knowledge-building also enhances the firm’s operational performance and improves supply chain communication.  According to a 2009 report by the American Health Care Association, 15,691 nursing facilities with a workforce of 1,784,016 care for 1,401,295 patients every day (AHCA, 2009). Long Term Care (LTC) facilities produce an estimated $529 billion or 3.7% of the nation’s economic activity. Meanwhile, Medicaid is the major funding source for those nursing home facilities—having  contributed more than $60 billion in 2008 (Nursing Home Buyouts Face Scrutiny, 2007). The average reimbursement shortfall for Medicaid nursing home was estimated to be $19.55 per Medicaid patient day in 2011 (AHCA, 2011). Allowing private equity or investment groups’ nursing facilities to generate net income, the effective strategy would be cutting costs, including caretakers. As for both non-profit and for-profit nursing homes, the strategic planning to generate income with managerial decisions through external and internal environment is a challenge to achieve governmental performance requirements. Budget deficits of the U.S. government have a strong impact on Medicare and Medicaid reimbursement payments in the healthcare industry. Since the financial stability and quality performance of long-term care facilities is subject to Medicaid reimbursement rates, long-term healthcare facilities must effectively utilize limited financial support and follow a well-planned strategy to meet governmental quality requirements. Institutional theory and strategic planning fulfill a major role in the decision-making processes of long-term care providers. Due to the uncertainty that SNFs face regarding government policies, firms can efficiently and effectively implement business processes and knowledge in order to achieve organizational objectives. Therefore, the objective of this study is to measure the impact of the external pressure on the firm’s strategic planning regarding employee development and operations processes.


Return Patterns: An Underappreciated Risk Factor

Dr. David Cary, University of Michigan, Dearborn, MI and California State University, Northridge (Emeritus), Northridge, CA

Sheila M. Walker, California State University, Northridge, CA



While variability in returns is well known to impact the geometric rate of return over time, when significant changes are made to the investment through either additions or disbursements, the pattern of returns can potentially have as large of an impact on effective returns as either the average return and/or the variability of returns. In discussions about long term investment planning, professionals such as financial analysts, advisors and planners, and retirement savings plan administrators and sponsors, tend to rely on clichés such as “the latté effect” or “the miracle of compounding interest” when explaining and projecting savings growth.  “The latté effect” refers to small daily indulgences, such as lattés, smoothies, and vending machine snacks, which, if foregone and the money channeled into savings, could yield a substantial amount over time for retirement or other goals.  Saving the cost of a daily latté, about $100 per month, over a period of 5 years would yield $6,000 in savings. Through “the miracle of compounding interest,” which is simply adding the interest earned in an interval to the principle amount saved, thus creating a new balance upon which interest is earned from that moment forward, “the latté effect” investment will have earned $629.90 at 4% per year, compounded monthly.  In these examples, the professional will typically use an average rate of return to determine the future values.  While an average return is appropriate when a single amount is invested and left for a period of time, if additional deposits are made to save for retirement or periodic withdrawals are made over time, then the pattern of the returns can also be important. For a simple example, assume $1,000 is invested for two years.  Under Scenario 1 assume the first year’s return is +20% and the second year is -10%. Scenario 2 reverses the order.  For Scenario 1 the investment would grow from $1,000 to $1,200 (+20%) at the end of one year and then decline to $1,080 (-10%) at the end of the second. With Scenario 2 the investment would drop to $900 at the end of the first year (-10%) but then grow to $1,080 at the end of the second.  The ending values are the same and the order of the returns does not matter.  The compounded rate of return is 3.923%.  Note that an investment of $1,000 at 3.923% would grow to $1,039.23 in one year and $1,080.00 in two.. However, now consider an investment for retirement and $1,000 is invested at the start of each year for two years.  If the fund earns the same geometric average annual return of 3.923% as above, the fund would grow from $1,000 at the start of year 1 to $1,039.23 at the end of the year.  Then the second $1,000 is deposited bringing the total to $2,039.23 at the start of year 2.  Using the geometric average return again, the total would grow to $2,119.23 at the end of year 2. For Scenario 1, the fund would grow in the first year from $1,000 to $1,200 and then $1,000 would be added giving $2,200.  The 10% loss in year 2 would cause a loss of $220, decreasing the value of the fund to $1,980, less than actually deposited and significantly less than earned with the geometric average return.  The effective return is -0.67%. With Scenario 2 the results would be quite different.  The $1,000 at the start would drop to $900 with the -10% return.  The $1,000 deposit at the start of year 2 would bring that up to $1,900 and the +20% return for year 2 would bring the total to $2,280, about $160 more than with the geometric average and $300 more than for Scenario 1.  The effective return is 9.06%.  There is the same issue with withdrawing funds from a retirement account.  Assuming a $2,000 starting balance, and withdrawing $1,000 at the end of year 1, the remaining balances at the end of year two will be quite different for the three alternatives. 


An Empirical Investigation into the Impact of Class Size, GPA and the Timing of Classes on the Performance of Accounting Students

Dr. David E. Morris, Sr., University of North Georgia, Dahlonega, GA

Dr. John Scott, University of North Georgia, Dahlonega, GA



The purpose of this paper is to report the results of research investigating the effect, if any, of class size, the timing of classes and GPA on the performance of accounting students. Specifically, this study examined how these three factors affected the performance of students in the second introductory accounting course that is required in most post-secondary business programs. The research covered a time period of eleven years with a sample size of 493 students. All data was obtained from one instructor’s classes. This helped to ensure the validity of the results in that all sections of the course received the same lecture, teaching style and exams. This study was conducted at a medium- sized four year state university. Prior research regarding the effect of class size on student success has been mixed.  There is a perception among many students and professors that large class sizes have a negative impact on the effectiveness of the class. However, in one study (Hill 1998) it was concluded that larger classes performed better than smaller classes. Only very limited research has been conducted regarding the effect, if any, that the timing of classes has on student performance.  One such study (Vruwink and Otto 1987) found that the timing of classes had no significant effect on student performance. However, there were limitations of the study. There have been numerous studies examining the ability of students’ cumulative college GPAs to predict the success of students taking various courses. However, there has been limited research investigating students’ GPAs’ ability to predict success specifically in the introductory accounting classes. The results of this study indicated that there was not a statistically significant relationship between the timing of classes and student success in the class. There was also no statistical significance between the size of classes and student performance in accounting classes. There was a strong statistical significance between GPA and student success in the accounting classes. These results have policy implications for school administrators and for accounting instructors. The results suggest that school administrators and instructors should not be as concerned with the timing of accounting classes or the size of classes with regards to their impact on student performance.  Accounting educators have an interest in factors that affect student success in accounting classes.


Perceptions of Students in Relation to the Gender of Professors in a College of Business

Dr. Marian C. Schultz, The University of West Florida

Dr. James T. Schultz and Dr. Thomas Sieland, Embry-Riddle Aeronautical University



This study sought to determine if there was a significance difference in the perceptions of male and female students related to their instructors with disciplines in a College of Business Management, Finance Economics and Accounting. Previous research studies were had revealed conflicting data in that some reflected a difference between male and female students towards female instructors while other had not. A two dimensional Chi-Square test was used to quantify the data. The results of this study in the four discipline analyzed revealed a difference in all of the disciplines. For three of the disciplines, Finance, Economics and Accounting the study found that there was no difference between the female and male instructors. For Management however, the study found that female students rated female instructors as significantly more credible than male students.  The purpose of study was to explore how genders are perceived in educational contexts, and how these perceptions form stereotypes that may be an unintended gender bias. Perceptions regarding gender have implications in both the education and work environments.  Whether based on past experiences or stereotypes, there are differences on how we all perceive gender in certain occupations. Various studies have investigated assumptions including research by Siegle and Reis (1994), which surveyed students on how the gender of the instructors affected their perceptions.  Male and female students may have different perceptions of the way they view professors, especially when considering the gender and subject taught. There have been several studies based on student perception utilizing variables including the gender of the student, gender of the professor, and the discipline being taught. Sex stereotyping can limit the development of the natural talents and abilities of both women and men, as well as their educational experiences and life opportunities (Bohan, 2011). As identified in the Seigle & Reis (1994) study, teachers believe that even though females work harder and put in more effort, they do not receive higher grades Studies also show that teacher gender played a role in the student’s perceptions of teacher credibility, and Clune points out that Hargett “found that students rated male instructors as more credible than female instructors” (Clune, 1999, p. 3). 


The Development of Corporate Social Responsibility in Poland

Professor Krystyna Kietlinska and Professor Bozena Mikołajczyk, University of Lodz, Lodz, Poland



This paper refers to the social activities of enterprises. The aim of this paper is to present and assess the role of business in the implementation of social objectives in Poland. Due to difficulties in assessing the effects of Corporate Social Responsibility only the ranking of companies involved in these activities and the results of 2013 the “Liderzy Filantropii” [Leaders of Philanthropy] competition were used. The concept of corporate social responsibility began as an activity that aims to improve the image of the company, as part of its development strategy. This means is that the aims of the company involve not only profit but also the implementation of certain social objectives. Corporate Social Responsibility (CSR) is a mutual relationship between business and non-governmental organizations, local authorities, and the local community. CSR covers a variety of activities, such as investment in human capital, preventing social exclusion, development of culture, science, the environmental protection, etc. The aim of the paper is to assess the degree of involvement of Polish companies in social activities.  According to the European Commission (Promoting a European Framework for Corporate Social Responsibility, 2001) corporate social responsibility is the management consisting in integrating social, environmental, ethical, and human rights issues with business operations and strategy, in collaboration with stakeholders.  In a similar way, CSR is defined by Polish authors (Stafiej-Bartosik, Łukasik, 2008): “CSR is the way of managing the company assuming such business decisions that take into account the interests of shareholders (owners, investors), as well as the needs of stakeholders - customers, employees, suppliers, local communities, and the environment.”  It follows from these definitions that the social activity of economic operators may refer to different social groups and take different forms. The literature distinguishes the following forms of social activity of companies:. Defensive CSR, which is focused on improving the image of the company as soon as possible. This often means the creation of the company’s image inconsistent with the reality. For example: a company producing goods harmful to health compensates it with social involvement; Socially oriented business - involves producing products tailored to consumers’ expectations and their ethical sensitivity; Socially engaged marketing is focused on increasing sales of a commodity or a group of commodities by donating a certain percentage of the income derived from these commodities to a specific charity; Charitable foundations established by the company, through which it conducts social activity and thus builds its image.


Working and Learning of the Aged in South Korea

Dr. Jisun Chung, Korea Research Institute for Vocational Education and Training




This study is conducted to analyze the situations of working and lifelong learning of older adults and to suggest future directions and policy implications in South Korea where society is experiencing the most rapid aging. A look into the labor market reveals that a higher percentage of aged workers are working till late years compared to other OECD countries with less learning opportunities. Particular emphasis is placed on the social responsibility of higher education to provide learning opportunities for older learners to improve their vocational competency. Analyzing some forward-looking older adult learning institutes in advanced countries, policy implications are drawn to make a blueprint. It is suggested that the future directions should contribute to the policy implication on establishment of older adult friendly lifelong learning system at colleges.  Currently South Korea is the fastest aging society in the world. In terms of demographics the population aged 65 and older accounts for 12.2% of the total population in 2013 (KOSIS, 2013).  The rate accounted for more than 7% in 2000, which means South Korea has entered into an aging society (United Nations, 2007). The percentage of the aged is projected to double to 14.3% in 2018, and the country shifts to an aged society. It is supposed to be over 20%, entering into a post-aged one in 2026. This flow demonstrates that South Korea transits from the aging society to the aged within 18 years and from aged to post-aged within 8 years. Increasing life expectancy and declining birth rates have been key trends causing a fast-paced demographic transition.  The proportion of the aged population, 65 years and older, has increased dramatically over the past few years in South Korea. Compared to other industrialized countries the aging speed of South Korean society is faster. For South Korea it took 18 years, 2000-2018, to transition from an aging society into an aged society; while 115 years for France, 1864-1979; 73 years for the United States, 1942-2015; and 24 years for Japan, 1970-1994. The old-age dependency ratio is expected to jump from 15% in 2007 to 77% in 2050, which is the highest increase among OECD countries. South Korean society is pushed to prepare for the aging society, especially with lifelong learning and the labor market policy.  The life styles and patterns of aged people are changing with improvement in health and added years of longevity. The traditional ideas of old age as a roleless role or a time of disengagement from the social world has been challenged by new concepts of successful aging, productive aging, second career, and extension of midlife career. Successful aging is generally known to be composed of three components; low probability of disease and disease-related disability, high cognitive and physical functional capacity, and active engagement with life (Rowe & Kahn, 1998).


Effective IT Governance: An Exploratory Study

Dr. Humam Elagha, Royal University for Women, Kingdom of Bahrain



What is the impact of IT Governance Domains, Maturity, and Mechanisms on the overall Effectiveness of IT Governance and through that on realizing business value from IT? This question has recently gained importance, as IT Governance is high on the corporate agenda. This study empirically examines the impact of IT Governance Domains on IT Governance Maturity and the impact of IT Governance Maturity and Mechanisms on the overall Effectiveness of IT Governance. In this study, a special attention is paid to the discussion of the research results and the practical implications. The discussion is enriched by the indication of some of the most related results of the previous studies. Major finding is that organizations with more Mature Governance Domains and more Effective Governance Mechanisms likely obtain a higher degree of overall Effectiveness of IT Governance. The findings contribute to the IT Governance literature on the importance of IT Governance Domains and Mechanisms in implementing Effective IT Governance.  In recent years, there have been spectacular failures of large information technology (IT) investments - major enterprise resource planning (ERP) systems initiatives that were never completed, e-business initiatives that were ill-conceived or poorly executed and new systems developed that were never used effectively [1]. In contrast, some firms get above industry average returns from their IT investments year after year. These successful firms not only make better IT decisions, they also make better IT decisions consistently. These firms must have better IT governance - they have the right people making IT-related decisions more effectively than their competitors [2]. According to [3], top-performing enterprises succeed in obtaining value from IT where others fail, in part, by implementing effective IT governance to support their strategies and institutionalize good practices. There is IT governance in every organization that deals with IT. However, the quality of the IT organization may differ between enterprises depending on issues such as if rights and responsibilities are distributed over the appropriate people, if formalized processes for important tasks are implemented, and if appropriate documentation exists. We call this internal IT organization efficiency IT Governance Maturity. One might argue, however, that internal efficiency metrics of the IT organization are of moderate interest only; what really matters is the Effectiveness of IT Governance in delivering the objectives or influencing the desired measures of success of the organization. We refer to this latter effectiveness as IT Governance Performance in this study.  Even though little research had previously shown the existence of a direct link between IT governance and organizational performance, some progress has been made. A number of studies have focused on finding different linkages, e.g. Weill and Ross’ survey on how financially top-performing companies manage IT decision rights [1], Dahlberg & Lahdelma’s study on IT governance maturity and the degree of IT outsourcing [4], De Haes & Van Grembergen’s research on IT governance and IT/Business alignment [5], and [6] evaluated how a firm’s internal alignment and governance processes impact the service quality received from an external IT outsourcing provider. Even though [7] found a significant relationship between IT governance maturity and IT governance performance, the correlation of IT Governance Maturity and IT Governance Performance, however, need to be analyzed in more detail. 


Water Crisis in the Nile-Basin – Is It Really a Zero Sum Game?

Dr. Habil Laszlo Kozar, Professor, Head, and Dr. Gyorgy Ivan Neszmelyi

Institute of Commerce, Budapest Business School,

College of Commerce Catering and Tourism, Hungary



The paper gives an insight to the increasing conflict and dispute on the issue of distribution and utilization of the water discharge of Nile River among ten African countries. (Burundi, Egypt, Ethiopia, Kenya, Democratic Republic of Congo, Rwanda, Tanzania, Uganda and Sudan - which has been splitted to two independent countries in 2011). These countries are all affected by this issue, however each of them in different extent and way, but all of them strive for asserting their own economic and security interest. The impacts of this issue extend far beyond the direct geographical region itself, and of course, it has a predominant influence on the water and food supply of around 300 million people who live in these countries. The sharpest disaccord can be seen between the group of Sub-Saharan riparian countries laying in the upper part of Nile and Egypt. The rapidly growing population and her almost exclusive dependence on the Nile-water makes the Egyptian government insist strongly to her quota, which was set in international agreements long ago. The Sub-Saharan countries would amend the prevailing sharing system to another solution which served their interests more, so they considered it more rightful. The international community has been trying to make efforts to settle the issue, (the dispute which almost led to armed conflicts in the past). The best known of them is the Nile-Basin Initiative (1999) which is backed by several international organizations like the World Bank, UNDP, etc. In spite of the international efforts, it looks still too far to achieve and acceptable solution for all parties.  River Nile is one of the longest rivers of the world, its length is 6,667 km, its catchment area is 3.37 million km2 (somewhat bigger than the total territory of India). Nowadays Nile has a decisive or at least a very significant role in feeding and supplying 11 countries and their 300 million inhabitants with water. These countries are as follows: Egypt, Sudan (North and South – the latter became independent in July 2011), Ethiopia, the Democratic Republic of Congo, Kenya, Tanzania, Uganda, Rwanda, Burundi and Eritrea. The latter is not riparian country but the catchment area of the Nile extends to Eritrea as well.  On the basis of forecasts the population of the river basin of Nile will be doubled between 1995 and 2025. The prevision of the annual flooding periods of the river is cumbersome, the quantity of the surplus-water discharge varies from year to year, and it is also difficult to estimate in advance. From among the eleven countries from the aspect of the Nile the following countries have special importance: Egypt, North and South Sudan, Ethiopia and Uganda (these ones are most concerned by this issue) while in the water supply of the other Sub-Saharan countries the Nile plays a lesser decisive role. 


Case Study About a Study Abroad Program: An Entrepreneurial Approach to Non-Profit Education

Dr. Joseph Bonnici, Professor, Central Connecticut State University, New Britain, CT



This case study article is primarily divided into two major sections. The “Case Narrative” section introduces what goes on in setting up a study abroad course. The case study is ideal for business and tourism students and also for education students who plan to organize study abroad courses during their academic career. Most students never take a study abroad course; much less are they aware of what goes in setting up and running such a course. The “Teaching Narrative” section serves as a teaching aid for any instructor who would like to use this case study. It also suggests reading material and electronic sources that could be useful in understanding the setting up of study abroad courses.  Study abroad programs offer a challenge to everyone involved, especially those on the organizing side of the venture. The academic subject to be taught should somehow tie in to the places visited. The syllabus has to be tailored to a non-classroom setting taking into account the short duration of the program and the behavioral challenges ahead. Destinations and budgetary expenses have to be planned. Recruiting students for the program is difficult and necessary.  Universities are increasingly looking for faculty who are not just qualified in a field of study but also at ease in internationalizing the students' university experience. As for university students, education majors would benefit from coursework that addresses their professional goals in expanding their prospective students’ new global frontiers in international education. Likewise, business and tourism majors derive multiple benefits not just by participating in study abroad programs but also by analyzing the business decisions that drive most study abroad courses.  As a result, most American universities offer credit-level courses that are held on foreign campuses for durations that last from a few days to one or two semesters. The purpose of these programs embedded in international cultures is to educate students how to host study abroad programs. A study abroad is also challenging to the professors who organize the course. The main challenges facing the university community in organizing the study abroad experience include: (i) the need for academic rigor beyond the four walls of the traditional classroom, (ii) administrative demands which may specify that the course generates enough tuition fees to at least break even, (iii) logistical challenges across the countries, and (iv) course promotion to a student population which is already burdened with debt from campus studies.


A New Form of On-line Sales in Commerce and Tourism: Trends, Advantages and Risks

Dr. Krisztina Zimanyi, Professor; Dr. Laszlo Kozar, Professor; Istvan Kovari

Budapest Business School, College of Commerce, Catering and Tourism



E-commerce is one of the few economic sectors showing significant growth even in the years of recession regarding both its volume and turnover in commercial sales. Shopping habits in Hungary have greatly changed, partly due to the development of new distribution models, yet the spread of technological innovations (e.g. smartphones, tablets, etc.) may play an important role as well. Development of technology and payment methods and the expansion of social spaces guarantee further opportunities of improvement. On the other hand, these also carry risks that can be outweighed by information, awareness and appropriate security measures.  According to international surveys, the development of e-commerce has been continuing steadily since its nadir in the year 2000. Both its volume and turnover have become a major part of commercial turnover, in the countries of the European Union (EU27) as well. Regarding Hungary, the development’s rate is slightly slower than in several other countries, yet the ratio of electronically realizable net sales revenues compared to the total revenues (19% in 2012) does exceed the EU average. Even though the turnover’s growth has levelled off in the last 3 years, but was still over 10.000 billion HUF (33,3 billion €). The most represented companies in the field of online sales and procurements via digital channels are involved in the sectors of information, communication, accommodation services, hospitality and commerce, and car repair services. (Hungarian Central Statistical Office, 2013)It is possible to claim, almost regardless of the countries, that generally B2B commerce gives almost two thirds of e-commerce. It is still an interesting question though, how B2C and C2C sales will change. Researches in Hungary show (involving 490 companies) that online shopping sites’ revenues have increased significantly. 24% of the surveyed companies had a revenue growth greater than 50% in 2012 compared to 2011, while 20% experienced a rise between 20% and 50%. However, their conversion rate (showing how many visitors actually purchase goods out of 100 visits) is only 1.03%, which means that only every 100th visitor buys something in their store. The appearance of low-cost airlines and their marketing policies had played a major role in the growth of online shopping in Hungary. Regarding its outcomes and effects, a similarly significant change may be promised by a new selling and purchasing model, the coupon or bonus selling sites.  The first system based on the Groupon model was launched in November 2008, Chicago, and in the autumn of 2010 it already had 35 million users worldwide, from North and South America, through Europe to Asia. The first web store appeared in Hungary in the autumn of 2010, of which over 60 exists today, intermediating hundreds of offers usually proposing a discount of 50% as a deal-of-the-day. In 2013’s first quarter the selling of 736,000 coupons was realized from 13,600 offers (with an increase of 12% compared to the previous year).


Perception of Physical Fitness and Leadership Ability: Is It A Perceptual Advantage?

Dr. Charles Chekwa, Troy University, AL

Eugene Thomas, Jr., Dillard University, AL

Joshua Sanders, Troy University, AL



Although, by definition, “leadership” and “fitness” are not interrelated, the authors suggest that, consciously or subconsciously, one’s fitness can influence others’ paradigm regarding one’s ability to lead. This document seeks to delve into the attributes of physical fitness and its impact on leadership ability. The authors will discuss physical fitness in relation to the external perspectives of bosses, subordinates, and peers as well as previously accepted observations. Some data indicate that “regular exercise is positively correlated with leadership performance based on independent observer ratings.  Furthermore, in the military world, one report even showed a significant positive relationship between a cadet’s physical aptitude and being evaluated as having leadership ability Therefore, it is the authors’ intent to answer the following question: Does physical fitness affect leadership? The authors suggest that perception of physical fitness can inevitably affect subordinate and leader perceptions of ability to lead. The authors also argue that the most impactful perceptual fitness indicators are energy, stamina, and/or appearance. However, a literature review revealed studies that suggest a possible negative effect of exercise and fitness on mental health. In 2000, Al Gore and George W. Bush squared off in a heated presidential race and, despite their frantic and grueling schedules, each made fitness “a top priority in their lives” (Neck, Mitchell, Manz, Cooper, & Thompson, 2000). The authors submit that this can be a perceptual example of what fitness means and has always meant to both presidents and presidential candidates in the past. In fact, Forbes magazine reported that only five presidents (11.6%) have been “obese” according to the antiquated body mass index (BMI): Taft (42.3 on the BMI), Cleveland (34.6), McKinley (31.1), Taylor (30.2), and Teddy Roosevelt (30.2). Bill Clinton was overweight with a BMI of 28.3. The authors explore whether this spurs debate and lends itself to a correlation between being fit and “being in charge.”  In a 1996 Schlesinger poll, historians and experts were asked to rate presidents, past and present, on greatness. (Scale ratings with point equivalents were Great = 4; Near Great = 3; Average = 2; Below Average = 1; Failure = -2) The three presidents who rated as great were Abraham Lincoln, George Washington, and Franklin D. Roosevelt. Coincidentally, neither of these presidents was rated as obese. Hence, the authors’ pose the following questions, “Does physical fitness affect perceptions of leadership?” Also, although research within this document hinges on the outwardly physical persona, the authors will divulge how physical fitness can be tantamount to perceived ability to lead. In contrast, Peluso and de Andrade (2010) found differences and suggested that although physical fitness is a useful tool in the prevention of certain physical diseases, “studies have shown that in addition to its beneficial effects, physical activity can also be associated with impaired mental health, being related to disturbances like ‘excessive exercise’ and ‘overtraining syndrome’” (de Andrade & Peluso, 2010, p. x).


The Social Normative Influence and the Purchase of LCD TV in Saudi Arabia

Dr. Hussein Abdulla El-Omari

Princess Sumaya University for Science and Technology, Amman, Jordan



As one of a series of articles on consumer appliances in Saudi Arabia, the results of this article have indicated the strong influence of the social normative influence on Saudis when buying Liquid-crystal display television (LCD TV). This influence comes from personal sources such as (friends, relatives, colleagues, or neighbors). Methods of seeking and sending information used by Saudis when making the purchase decision of Liquid-crystal display television (LCD TV) were examined. Face-to-face interaction form of communication was found to be the most frequently used. The findings, also, showed that LCD TV opinion leadership exists in Saudi Arabia and those opinion leaders were found to have exerted great amount of influence on the purchase of Liquid-crystal display television (LCD TV). Further, personal sources of information were found to have exerted a great deal of social normative influence on Saudis when purchasing an LCD TV.  The nature of Saudis' social structure, its organization and welfare services are rooted in the values and traditions of Arab Muslim Culture. One of the Five Basic Pillars of Faith in Islam is the practice of alms-giving and care of the needy. Saudis' behavior is heavily influenced by the value, norms and expectations of Islam. Saudis' social structure involves strong kinship patterns. The clan is the basis of the Saudis' tribal society and the extended family is the foundation of rural and urban society, thus there is a strong sense of loyalty to the clan or family.  Whoever uses marketing, at whatever level and wherever in the world, the marketing environment in which he or she operates must be understood. There is an intimate relationship between the organization (whether public, private, commercial or non-commercial) and its ever-changing environment. To be successful the marketer must understand the basic issues - especially the external uncontrollable ones, anticipate developments and respond to them. There is no denying that the marketing environment characteristics in any society are affected by environmental circumstances. Thus marketing environment characteristics have an important role to play in the form and direction of any social activities, especially in the consumer behavior field and in particular in the consumer’s face-to-face interaction with others. These characteristics are different from one society to another, and the investigation of these characteristics, therefore, is very important in understanding and developing a picture of the consumers’ behavior and activities within the Saudi context. These characteristics in Saudi Arabia can be summarized as; a)  Although the Saudi market has many dealers, domestic and international, industrial traders and co-operatives, there is little relevant data about the existing marketing systems, i.e., scarcity of market data and information concerning demand, consumption, opportunities and competition; b) Marketing is viewed in Saudi Arabia as a wasteful activity inappropriate to economies and, therefore, little attention has been given to the role of marketing in economic growth. A major cause for this relative lack of emphasis on marketing in Saudi Arabia stems from the fact that most business firms and organizations are production oriented rather than consumer oriented; c) Saudi's public sector plays the most important role in the domestic economy in both the production (e.g., Petrochemicals) and in the investment field; d) For the purpose of protecting Saudi consumers, the monopoly system is still employed by the Saudi government for some essential products (e.g., Nutritional products). 


Analysis on Employment of Junior College Graduates with Reference to Korea

Dr. Miyeong Lee, Professor, Korea Tourism College, Korea



This study purposes to investigate the supply and demand of Korea’s junior college graduates and analyze the behavior of young generates’ participation in the Korean labor market. To this end, the study conducts an in-depth analysis of existing government documents and recent statistics. And it includes the number of enrollment, the graduates’ economic activities, major fields of study, employment pathways, and differences between the employees in the capital and non-capital area such as characteristics of the employees by college location, correlation between work and majors, and periods of job search. Junior colleges in the face of the change of national and international environment recently have met a crisis which should retain provide skilled manpower adaptable to the world changing as an educative role. In 2011, approximately 757,721 students enrolled in private two-year colleges (the Ministry of Education, 2013). Junior colleges have the lack of new college student resources by the rapid decrease in the school-age population, the problem of the restriction by quantitative expansion of institutes of higher education, and the predictions of the decrease in demand for the intermediate level of technical manpower. They are a large part of the nation’s higher education system and provide an important access point to post-secondary education for many students in Korea. Over the past forty years, policymakers have paid increasing attention to students getting jobs after graduating from a college. Government and college institutions try to increase jobs in the labor market. A weak labor market already has left half of young college graduates either jobless or underemployed in positions that aren't fully used their skills and knowledge in Korea. College graduates are increasingly scraping by working irregular, lower-wage jobs. About 321,000 bachelor's degree-holders under the age of 25, or 3.1 percent were not employed in 2011 (National Statistics Office, 2012). The government’s multilateral efforts to create youth-friendly jobs have helped to take preemptive actions against the shock of the 2009 global economic crisis and to minimize the aggravation of youth employment conditions. Throughout 2013, the youth employment rate has remained relatively low, however, the employment rate of young people aged 25~29 and the largest employment-seeking group has grown, signaling the recovery of the youth employment market (2).


An Event Analysis of Open Market Reactions Study From 2006 – 2012 Towards Share Repurchases Among Malaysian Firms

Sohail Ahmed, University MARA, Shah Alam, West Malaysia


Since limited studies have been done on share buybacks in Bursa Malaysia, this study intends to provide additional inside information on this practice.  This study was undertaken because of eagerness to know more about the true financial and economic significance of share buyback. The objectives of this study were:To investigate the effects of share buybacks on share prices and the related risks in the short run before, at and after share buybacks. Financial theorists subscribe to a number hypothesis and theories to explain the motivations for share buyback program. Investigating the determinant and relationship of the share buyback volume with other financial variables from the financial reports and the financial characteristics of firms reveals the motivation for undertaking the share buyback program. The study investigates which testable hypothesis, out of all mentioned in the literature review, significantly contributes to share repurchases within the Malaysian context. The two objectives are generalization out of all the data collected. In generalization, individual effects on firms are ignored or averaged out. Therefore, using event studies and Multivariate Regression Analysis output produced from the regression analysis, this study intends to forecast future share prices. In short the research objectives can be summarized as follow:  To examine and test the explanations of share repurchases within Bursa Malaysia (regression analysis);  To investigate the effect of share buybacks on share prices (t Test); To identify the change in risk in the short run before, at, and after share buybacks (Standard Deviation); To predict the share price of firm’s undertaking share repurchase programme.  Analyses of market reactions are made based on the company listed in Bursa Malaysia which is  the main market. At BSKL, the main board and second board had been combined since 2009 and it will create a milestone in the development of the market for fund-raising firms in Malaysia.The new framework as well as the new board structure will enhance the attractiveness of Bursa Malaysia as a listing destination, providing efficient access to capital and investments.” Under the new framework, rules and processes for equity fund-raising have been streamlined to provide greater certainty, shorter time to market and lower regulatory costs. Often, these mean certain flexibilities have been introduced. For example, only certain substantive corporate proposals will require the SC’s approval under Section 212 of the Capital Markets and Services Act. There are known to be numerous reasons why firms deploy capital. For this research, firms have two alternatives for deploying capital. First is by reinvesting into the business via mergers and acquisitions, capital expenditures and working capital or second is by returning capital to shareholders through dividends and share repurchases.


Financial Export Support and its Appropriateness for SMEs – Example of the Czech Republic

Ing. Stanislav Richter, University of Economics, Prague, Czech Republic



This paper strives to discuss the issue of financing the export of SMEs on the example of a small open economy of the Czech Republic. Current situation on the international markets is presented and contrasted with the unique traits of SMEs. The paper then introduces the relevance and definition of SMEs in the context of European Union with specific focus on the Czech Republic. Restrictions and limitations to application of extensive state support financing of OECD and WTO members as well as national regulations are presented and explained. The magnitude of the state export support is being examined on the approach of the Czech Republic and its Export Strategy for period 2012 - 2020. Within this strategy the key institutions providing the export financial support are determined and concisely described. The most significant contribution of this paper is then the field research which was conducted to detect the general awareness and usage of these services provided by state owned financial institutions among SMEs. This research also presents the needs and possible future changes proposed by the SMEs to the whole export support framework and is concluded with possible future threats that could affect means of financing of foreign trade.  The Czech Republic, largely because of its geography in the centre of Europe, is highly trade dependent. Some 80% of its GDP is accounted for by trade, and 90% of this is accounted for by its trade with the European Union” (HSBC, 2010, p. 27). Such an openness of the country’s economy can be hardly observed in any other European Union member state and represents an integral factor when pursuing well-being and GDP growth sustainability. Foreign trade is for the Czech Republic a substantial driver that determines whether the country is heading for the boom or a slump. The dependence on the performance of neighbouring states and the European Union as a whole is second underlying matter. The Eurozone experienced in the fourth quarter of year 2012 fall of GDP by 0,6% (Reuters, 2013) and might be pulled back into a recession as it has been its second consecutive quarter of contraction, which is usual definition for a recession. The whole year 2012 meant for Eurozone shrink of 0,9% (Guardian, 2013), when even resilient Germany, the Czech Republic’s leading trading partner, with around 1/3 share on its exports (Czech Statistical Office, 2012), accounted an unpleasant dip. Germany witnessed the deepest downswing since the height of the financial crisis, when their economy was hit by sharp decline of own exports, which was pointed out as a decisive factor for the drop (BBC, 2013).  However experts have agreed on much more promising outlook for following years, as the positive sentiment has been restored on the markets an could reinforce once hard-fought trade volumes that are in jeopardy.If contemplating about the solutions or possible responses for this severe macroeconomic setup on the European and global market from the point of view of Small and Medium-sized Enterprises, one must consider the natural strengths, competitive advantages or non purchasable abilities arising from unique interaction of inner and outer environment of the company. If there are abnormal conditions on the market, certain features are necessary for the company to be successfully engaged in foreign trade. Specific modifications of current business models might be essential, some product or communication adaptations could be required or the market entry strategy must be adjusted.


Using Deductive Data Warehouses to Analyze Data

Dr. Kornelije Rabuzin, University of Zagreb, Faculty of Organization and Informatics, Croatia

Dr. Mirko Malekovic, University of Zagreb, Faculty of Organization and Informatics, Croatia

Dr. Alen Lovrencic, University of Zagreb, Faculty of Organization and Informatics, Croatia



In one of papers that have been published in the field of data warehousing and business intelligence the idea of deductive data warehouses has been proposed. It has been recognized that deductive databases and data warehouses are quite similar and the main idea of the paper was to define deductive data warehouses and to show how Datalog can be used to analyze data i.e. to perform OLAP analysis on data. The idea seems to be interesting but many things need to be explored further on. In this paper we explore how deductive data warehouses can be used on two real case scenarios and we examine the benefits and drawbacks of such an approach.  Databases have been with us for a long time and they are still very much in use because they can efficiently store and manage large amounts of data. In the world that we live in this is crucial as knowledge doubles every few years. Further on, many people use many different applications on a daily basis; all such applications need to store data and databases are (almost) unavoidable. In order to work with databases we use some database management system. Many such systems are available, but most known (relational) database management systems (DBMS) are IBM DB2, Microsoft Access, Microsoft SQL Server, MySQL, Oracle, Alpha Five, PostgreSQL etc. Existing database management systems are different, but they (mostly) support SQL as a language that is used to work with databases. SQL is a standardized language and it is good to know SQL in order to be able to work with databases. SQL contains many different statements; Data Definition Language (DDL) uses CREATE statement to create objects (tables, views, etc.), Data Manipulation Language (DML) uses INSERT, UPDATE and DELETE statements to work with data and Query Language (QL) uses SELECT for querying purposes. Many other statements are supported but they are not important for now. The main characteristic of a relational database management system is that data is stored in tables (we are all familiar with the concept of tables); tables contain rows and columns and have some desirable properties. Table 1 represents a date dimension that is usually used when analyzing data in data warehouses, but it usually has a much larger number of attributes:  Many databases that people use on a daily basis are important, but data integration from different databases (and other data sources) seems to be even more relevant; recent research shows that more money is invested in data integration than in database development.


Economic Analysis and Management Models for Metallic Materials Industry

Dr. Adrian Ioana, University “Politehnica” of Bucharest, Romania

Dr. Augustin Semenescu, University “Politehnica” of Bucharest, Romania

Dr. Cezar Florin Preda, University “Politehnica” of Bucharest, Romania



The article presents specific aspects of management and models for economic analysis. Thus, we present the main types of economic analysis: statistical analysis, dynamic analysis, static analysis, mathematical analysis, psychological analysis. We also present the main object of the analysis: the technological activity analysis of a company, the analysis of the production costs, the economic activity analysis of a company, the analysis of equipment, the analysis of labor productivity, the analysis of the goods flow. Moreover, the paper presents an algorithmic analysis of the marketing mix in metallurgy. It also analyzes the main correlations and their optimizing possibilities through an efficient management. Thus, both the effect and the importance of the marketing mix, for components (the four “P-s”) are analyzed in the materials’ industry, and their correlations as well, with the goal to optimize the specific management. The article briefly presents the main correlations between the 4 marketing mix components (the 4 “P-s”) for a product within the materials’ industry, including aspects regarding specific management. At the same time we present and analyze in our article new concepts such as: Level of Product Completion (LPC), Quality Control Activity (QCA), Cost Control Activity (CCA), Turnover Analysis (TA).  The etymology of the term "economic analysis" is the Greek word "analisi" (Ioana, 2013, *** 2002). The term “analysis” is from Medieval Latin “analysis”, from Ancient Greek: “ἀνάλυσις” (analusis), ἀναλύω (analuō, “I unravel, investigate”), ἀνά (ana, “on, up”) + λύω (luō, “I loosen”). The economic analysis is a research method, based on decomposing and dismantling an object or a phenomenon in its components or its basic elements (Ioana, 2009, 2007). By means of economic analysis we investigate various phenomena, their structure, we verify those phenomena, find out their intimate rules and based on that we substantiate and take actions concerning the future of the company’s economic activity (Nicolescu, 2000, Ioana et all, 2013). The economic analysis examines the activities or phenomena from the economic point of view. The essential issue when performing economic analysis is that it observes the structural relationships, including functional relationships and the cause and effect relationships (Kotler, 2003, Patriche, 1994). The determinant word “economic” sets up the analysis type, which can be economic, technical, administrative, military, etc. At the word “analysis” one can associate terms to indicate either the analysis character, such as: economic analysis, technical analysis, mathematical analysis, managerial analysis etc. The analysis (economic or other form) may be:   Statistical analysis; Dynamic analysis; Static analysis; Mathematical analysis; Psychological analysis.  The object of the analysis may be: The technological activity analysis of a company; The analysis of the production costs; The economic activity analysis of a company: The analysis of equipment; The analysis of labor productivity; The analysis of the goods flow. The synthesis is an important component of the economic analysis, which recomposes the parts or elements of an object or phenomenon as a whole.  Whilst the analysis process involves the decomposition of a phenomenon, the synthesis process examines the elements of an object, studied together as a whole.  Adoption of innovation (Ioana, 2004, Ioana, 1998, Scarlat, 2003) has suggested that those consumers who eventually accept an innovation can fall into five groups shown in figure 1.


Outsourcing Reasons and Results - Survey Outcomes Discussion

Professor Beata Slusarczyk, Czestochowa Technical University, Poland

Professor Sebastian Kot, Czestochowa Technical University, Poland



 Outsourcing is more and more popular management strategy for cutting costs, functioning effectiveness increase and competitive market position strengthening. There are many various reasons for outsourcing implementation for enterprises as well as different results including some negative ones. The authors in their study try to analyze the reasons and results of outsourcing implementation focusing on small and medium enterprises in the survey. The outcomes show that not only costs reduction but focusing on core activities are main determinants for outsourcing. In the analysis Authors consider main areas of outsourcing implementation, variables of outsourcing partner choice procedure as well as costs and customer satisfaction of outsourcing services.  Globalization and continuous increase of competitiveness give new challenges for organizations (Ślusarczyk, 2013). They require companies to adapt their structures and activities to new market standards. This necessity must be implemented quickly and efficiently to prevent loss of customers and market shares. For many years, modern companies are being focused on issue for improving and streamlining operating processes. Sometimes implementation of new solutions causes drastic changes in organization and its environment. It also results in reduction of employment, change of trading partner, enhancement or narrowing of implemented products and services. A choice of appropriate method of management depends on company’s selected strategy and must be adjusted to its structure and possibility. Outsourcing is one of the most popular and applied management concepts. It removes less necessary tasks or functions from company and allows organization to focus on the most important strategic activities (from company’s point of view). Henry Ford characterized very appositely phenomenon which is specified today with name of outsourcing. "If there is something we cannot do more efficiently, more inexpensively and better than our competitors, so there is no sense we do it. We should employ somebody for executing this work who will do it better" (Michałek, 2005). He didn't foresee at the same time probably that the assertion just even often unwittingly is a base for today's entrepreneurs' wondering reflections above applying outsourcing to one's companies. Outsourcing describes the deliberate movement of a series of connected business processes to a which manages them on behalf of the company. The classic processes were IT, warehousing and distribution, acilities management, and payroll – and to these can now be added call centers, manufacturing, web development, home shopping, credit cards, and even merchandising and design. In these movements the commercial risk and assets are usually passed to the outsourcing company (Waters, 2007).  „Harvard Business Review” found outsourcing as one of the most important concepts in field of management over the past 75 years and Shreeveport consulting agency defines an outsourcing as „a transfer to a third party, permanent managerial responsibility for performance of services specified in contract” (Gay and Essinger, 2002). 


Hiring Malaysians with Disabilities: Act of Kindness or Act of Law?

Dr. Magdalene C. H. Ang, Labuan School of International Business and Finance,

Universiti Malaysia Sabah, Malaysia



 Inadequate knowledge about disability can breed erroneous ideas and beliefs about persons with disabilities’ (PWDs) potentials and abilities to perform in the workplace. Managers who hold misconceptions about PWDs are as such likely to perceive PWDs as “risky hires,” and subsequently deny PWDs the jobs for which they are qualified and capable of doing. To protect PWDs’ rights to equitable employment opportunities, numerous affirmative action policies have long since been legislated in many developed countries and more recently in Malaysia. While the extant literature shows that disability legislation can influence PWDs’ employment, the topic has received limited research attention in Malaysia. Also, no known research in Malaysia has examined the influence of organizational culture and social desirability within the context of hiring decisions for PWDS. To bridge the research gap, this paper documents a study which explored how legislation, organizational culture, and social desirability might influence managerial hiring decisions for Malaysians with disabilities. Two hundred non-disabled employers from private organizations located in east Malaysia participated in the survey. Partial least square (PLS) modeling was employed to test the hypothesized linkages. Consistent with expectations, legislation, organizational culture, and social desirability significantly predicted hiring decisions for PWDs. The findings offer important implications for policy makers and interest groups.  High unemployment rates of persons with disabilities (PWDs) remain a long-standing issue and a global phenomenon to date. In developed countries (e.g., US, UK and Singapore), the unemployment rates of PWDs have been reported to fall within the range of 50 to 70 percent (United Nations, 2013). These figures could be even higher for less developed or developing countries. For instance, in Latin America, Caribbean, and Argentina, unemployment among PWDs is as high as 80% (United Nations, 2013). On the Malaysian front, the unemployment statistics for PWDs stands at a staggering 95% (Ministry of Human Resources, 2010). Some Malaysians with disabilities may in reality lack the skills and qualifications to work, thus rendering them unemployable. However, a large proportion expressed that they are able and willing to work if given the opportunity (Ministry of Human Resources, 2010; Tiun and Khoo, 2013). Unfortunately, PWDs’ ability, capability, and enthusiasm to work do not seem to help much in landing the jobs they want.  The aforementioned poses a cause for concern as employment for Malaysians with disabilities is of utmost importance for the following reasons. The disabled population is a ready but untapped significant resources of labor (Salleh et al., 2001: Tiun and Khoo, 2013). More so in the face of pressing issues relating to skills shortages and talent retention in this country, there is no other more opportune time to integrate PWDs in the mainstream workforce (Khoo et al., 2013) as an alternative and non-traditional source of labor (Chong, 2010).


Web page Use by Enterprises in European Union: Multiple Regression Analysis Approach

Dr. Ksenija Dumicic, Faculty of Economics and Business, University of Zagreb, Croatia

Dr. Berislav Zmuk, Faculty of Economics and Business, University of Zagreb, Croatia

Irena Palic, Faculty of Economics and Business, University of Zagreb, Croatia



The analysis of the percentage of enterprises in the EU-28 countries that have a web site or homepage is conducted in this paper using multiple linear regression modelling. In order to improve their market positions and gain competitive advantage enterprises create their own web site or homepage. Nowadays, because of fast and strong technology development enterprises are persuaded to have a web site in order to survive. Enterprises in high-tech countries have recognized the importance of having a web site and because of that almost all enterprises in these countries have one. On the other side, less technologically developed countries, like Romania and Bulgaria, recorded a significantly lower share of enterprises that have a web page. Because of that it is assumed that level of Information and Communication Technology (ICT) development has a significant impact on a share of enterprises that have a web page in a country. Overall twelve variables are recognized as variables which could have significant impact on share of enterprises having a web site. These variables are grouped into four groups. Each group of variables covers and describes ICT development level indicator which is considered important. The multiple regression analysis has shown that variables Percentage of enterprises that provided to the persons employed portable devices that allow a mobile connection to the Internet and Percentage of enterprises that employed ICT/IT specialists are the most appropriate explanatory variables for Percentage of enterprises having a web page. Due to the fact that having a web page has a positive impact on competitiveness of enterprises as well as of countries, research of the variables that determine the share of enterprises which have it is important and justified.  Information and communication technologies continue to make businesses more efficient in the conduct of key tasks as well as more productive overall. When aggregated, this effect is apparent over the past fifteen years, but even before that the boosts to enterprise efficiency have taken place more in the manner of punctuated equilibrium, rather than smooth growth. Under the current conditions of economic downturn, enterprises consider cutting back on capital expenditure and delay systems upgrades. They also consider the balance between allocating resources for IT department expenditures internally versus utilizing outsourcing. In this corporate search for efficiency, regional demand interplays with global economic trends in shaping the future environment for IT tools (Kärrberg and Liebenau, 2009)  Many companies use information technology (IT) as a competitive weapon to gain sustainable competitive advantage in their industry. In addition, it is widely accepted that information technology will enhance effectiveness and efficiency of products and services. Moreover, organizations can use IT as strategic business tools.

Ingolstadt as Automotive Center

David Fekete, Szechenyi Istvan University, Doctoral School of Regional and Economic Sciences, Hungary



Considering the current economic trends in Eastern and Central Europe the role of the automotive industry cannot be ignored. The development of the single automotive centers contributes to a large extent to the growth and development of municipalities, city regions or even countries. These centers, however, need to face countless challenges and to solve these the cooperation of the participants is a necessity, just like in case of the maintenance and enhancement of economic development. In this paper we study the Ingolstadt automotive district, with a special regard to the impacts of the automotive industry (AUDI AG) on urban development and the cooperation model established between the region’s economic actors, higher education institutions and the city’s functional region. We are going to study in detail the city’s infrastructural facilities and the role of the local government in the development of local economy, when analyzing those local government operated companies and projects, which contributed to the enhancement of  the quality of the city’s business premises (Development Cooperation, logistic park, R&D center, Business Development Company, telecommunications company etc.). The goal of this paper is to explore the ongoings, cooperations and the best practice in the Ingolstadt automotive district in order to formulate the operational model of the Ingolstadt automotive center. This operational model may serve as a guideline for the further development of other automotive centers both at the stage of establishment and already operating.  Territorial and regional structures are tightly linked to economic development. The example of automotive industry, as a driver for economic development, and its distinctive presence in the Central-Eastern European region explains why we should examine the ways how the development of automotive industry affects a given municipality or city region and the system of cooperation that is characteristic for the given region. This study examines the automotive district of Ingolstadt, with special regard to the automotive industry’s (AUDI AG) impact on the city’s development and the cooperation model between the economic actors of the region, the institutions of higher education and the functional region of the city. In the study we provide an overview on the history of Ingolstadt, its major statistical data and its relationship with the automotive industry. Afterwards, we are going to detail the infrastructural facilities of the city and its role in the local economic development, we are going to examine those companies and investments of the local government that contributed to the enhancement of the quality of the business premises in the city (Development Cooperation, Logistic Park, R+D Center, Business Development Company, Telecommunications Company etc.).  On this basis we intend to present the actual projects aiming economic development and the plans for the future as well. Nevertheless, we highlight the projects carried out with the assistance of AUDI AG. While analyzing the supply of universities we present the higher educational institutions and those joint research initiatives, which can be associated with the economic actors currently presented in the city.


A Framework for Modelling the Lateness of Manufacturing Processes

Sebastian Bertsch, Institute of Production Systems and Logistics, Leibniz University of Hanover



In the last 20 years, logistic performance and in particular schedule reliability has become one of the most important factors for manufacturing companies to keep a competitive edge. Despite of the importance of schedule reliability, many companies face an insuperable challenge to achieve a satisfying level. Designing a production system capable of realizing a top-of-the-class schedule reliability remains a great endeavor. One of the main obstacles is that practitioners cannot identify the reason for the low schedule reliability of their specific production system. Hence, they have no evidence of how to redesign the production system in order to improve the schedule reliability. Scientific research can contribute to overcome this deficit. Science can develop impact models that calculate the quantitative effect of the different influencing factor of schedule reliability. This way, practitioners can identify the main influencing factors and can estimate the effect of measures to improve the schedule reliability. This paper contributes to the development of logistic impact models. It provides a comprehensive overview of lateness related key performance indicators, descriptive models, and impact models. Based on this overview, the need for further impact models is derived. Furthermore, a framework for the development of lateness impact models is presented. This framework structures the different influencing factors of lateness and describes their interdependencies.  Since 1980, the competition among manufacturing companies has altered fundamentally. The number of high-performance competitors has increased. Customer satisfaction became the crucial factor for a sustainable competitive edge and knowing the needs of your customer an elementary prerequisite. According to a study performed by Siemens, the customers value the factors product quality, price, schedule reliability und delivery time the most. A lot of effort has been spent so far on optimizing the product quality and price, similarly in science and industry. Since most companies have exploited their potential of optimizing quality and price, the logistic performance becomes a decisive factor for success. Especially a reliable shipment of orders on the promised delivery date is an important factor for success. This statement has been proven by a wide variety of national and international publications (Hon 2005; Schuh, Westkämper 2006; Jodlbauer, Gmaier 2006; Sarmiento et al. 2007; Paulonis, Norton 2008; Soepenberg et al. 2012).


Impacts of Large-Scale Foreign Direct Investment on the Local Economy

Katalin Czako, Szechenyi Istvan University, Hungary



Role of foreign direct investment in a given region can be potential success factor according to the literature. (Lengyel I, 2010.) Level of private capital and connected owner networks are quite objectively measurable items in the framework of new conception of territorial capital. (Camagni R. 2009.)  In case of Győr, entrepreneurialism is strongly affected by foreign capital, which has visible and institutionalized outcomes in everyday life. The following study introduces the main points of cooperation between Győr and Audi Hungaria Motor Ltd. Beside this the study highlights the main characteristics of the hosting region and the company itself, which have possible effects on each economic actor. The study has five main points. First point is a general introduction of Audi Hungaria Motor Ltd. Secondly the study analyses the demography, especially data of labor market in Győr and surroundings and introduces the main points of the expansion process. Third point gives detailed picture of the logistics and supplier group of the company. After that the study introduces the economic developer role of the local government through the given industrial infrastructure and the tax system. Finally CSR activities of the company are collected. The study is aiming to highlight those effects, which can be originated from the presence of Audi Hungaria Motor Ltd. and can be potential critical points in aspect of long-term regional economic development.  Audi Hungária Motor Kft (1) develops and produces engines in its Győr based facility for the AUDI AG and other premises of the Volkswagen Concern. Besides this, in cooperation with the Ingolstadt based facility, the models Audi TT Coupé, Roadster and A3 Cabriolet are produced here.  Following its 1993 establishment, the company soon grew to be one of Hungary’s major exporters and one of the best-capitalized corporations in Hungary. Its share capital was 100 million Euros at the time of establishment. Its major fields of activity are production of engines, engine components, automotive devices (2), tool engineering and technical development.  The history of AUDI AG goes back to the end of the 19th century. Audi was founded in 1909, at the end of the 1800s, in the era of the German automobile factory establishments. Later, in 1932 it merged to Auto Union AG with the 1885 established Wanderer, the 1899 established Horch and the 1907 established DKW. In 1949 the corporation was renamed to Auto Union Gmbh. The next important date in the company’s life was 1969, when, following the merger with NSU Motorenwerke AG -the successor of 1873 established, Neckarsulm based NSU-  Audi NSU Auto Union AG was established with its head office in Neckarsulm.  From 1985 the Corporation was operated under the corporate name of AUDI AG with new headquarters in Ingolstadt. Today Audi is a member of the VW (Volkswagen) Concern and its facilities are present across the globe: from Japan to Brazil, from Italy to Australia.  The city of Győr –due to its favorable geographic features- has been of central importance for centuries. In the Roman times a fortified town was fulfilling defensive functions here. It became an important nod in the Pannonian road network; the map of the subsequently important commercial routes evolved in this era. 


Transformative Learning Illustrated! Entrepreneurship Education as a Projection of a Business Life

Dr. Agnieszka Kurczewska, Faculty of Economics and Sociology, University of Lodz, Poland



This study explores and discusses the characteristics of successful transformative learning in the entrepreneurship education context. It is based on a two-year investigation of a group of students from the international organization Enactus. As a result of the ethnographic study, the concept of autonomic learning is illustrated by a real life case and is translated into practical guidelines on how to enhance students’ entrepreneurial thinking and behavior. Transformative learning is incorporated into the broader concept of entrepreneurship education as a projection of a business life. In particular, the notion of creation of entrepreneurial responsibility through entrepreneurial experiences is developed. The study offers a new insight into the dynamics and complexity of authentic entrepreneurial learning process held outside the classroom. Entrepreneurship education is flourishing rapidly both in theory and practice (Fayolle, 2013). The need for and the merits of entrepreneurship education are broadly recognized among scholars and educators. However, the pedagogy and didactics, i.e. methods, ways and strategies of teaching entrepreneurship are still in their emerging phases. On the theoretical grounds, entrepreneurship education has incorporated many concepts from general education discipline, like the concept of learning by doing (Cope and Watts, 2000), the experimental learning (Kolb, 1984; Politis, 2005), the action learning (Leitch and Harrison, 1999), or the self-regulated learning (Zimmerman, 1990). What most theorists and practitioners seem to agree on is that entrepreneurship education calls for active and innovative approaches to teaching and learning. This usually means abandoning the traditional lecture-based teaching and stepping out of the classroom (Cooper et al., 2004). However, as Lackéus (2013) notices, action-based approaches are commonly supported but seldom used. We lack empirical studies illustrating how action-based learning is actually working and how it could be advanced. The next big challenge that entrepreneurship education is facing is that it has to be developed on research grounds but at the same time has to meet the criteria of easy application and be related to actual entrepreneurial processes. As educators, we know what we want to achieve - entrepreneurial graduates but we do not fully understand the process behind entrepreneurial learning and nature of effective teaching interventions. There is an evident gap between the theory and practice of entrepreneurship education.  To face these two challenges – the low number of empirical investigations on how entrepreneurial learning evolves, and the lack of coherence between theoretical and practical sides of entrepreneurship education, a group of students acting in an international students’ organization Enactus was followed. The mission of Enactus is to enable sustainable progress through entrepreneurial actions. Students undertake entrepreneurial projects and support the idea of sustainable development and entrepreneurship. Thus, in case of Enactus we have a chance to witness entrepreneurship education in action where the responsibility for the learning process is left to the students and entrepreneurial learning is held beyond regular courses, through diverse, real-life experiences. We use this opportunity to answer the question:


Does Financial Liberalisation Affect the Relationship Between the Stock-Market and Economic Growth in Singapore?

Dr. Min Kok Seet, Singapore Institute of Management, Singapore



The study analyzed the impact of financial liberalization on the relationship between the stock-market and the real economy in Singapore.  As a longitudinal study, it examined whether the relationship between stock-market activities and economic growth could change over time, particularly when subjected to major shocks.  The research employed vector auto-regression analysis of time series data over the period 1978-2006, with in-depth analyses in the sub-periods 1978-1996 and 1998-2006 which are separated by the 1997 Asian financial crisis.  Impulse response functions were also utilized to assess the dynamic inter-relationships between the stock-market and economic development in Singapore.  From the perspective of stock-market development, the study indicated positive bi-directional causality between stock-market activities and economic growth in Singapore, with the mutually beneficial linkages between the stock-market and the real economy becoming less persistent after the 1997 Asian financial crisis.  The implications for policy and research were also examined in the study. The role of the stock market in fostering the economic growth of countries has been a topic of debate, particularly in relation to the financial liberalization of Singapore after the 1997 Asian financial crisis.  The onset of the Asian financial crisis in 1997 abruptly stemmed and reversed the robust pre-crisis growth performance of Singapore, with the domestic stock-market falling sharply as well. In the aftermath of the 1997 financial crisis, the Monetary Authorities of Singapore implemented a 5-year liberalization programme for the domestic financial sector (Tan, 2006).  The financial liberalization in Singapore ranged from encouraging domestic financial institutions to expand overseas in seeking out global opportunities to tightening corporate governance and ensuring greater transparency in corporate finance and processes relating to the Singapore Exchange.  While the post-crisis financial liberalization helped to restore investor confidence and enabled the Singapore stock-market to return to pre-crisis levels by the late 1990s, growth prospects were substantially lacklustre in comparison to the exhilarating growth rates prior to the crisis.  In the light of such significant economic developments, it would be useful for policy-makers to have a better grasp of the relationship between stock-markets and the real economy, particularly before and after the 1997 Asian financial crisis, with a view to adopting relevant policies for the stock-market in stimulating long-term economic development.   The research analyzed the relationship between stock-market development and economic growth in Singapore over two important phases of the nation’s financial history.   The linkage between the stock market and the economy in the first phase of Singapore’s financial development, which spans from 1978 to 1996, will be examined and compared with the second phase of Singapore’s financial development from 1998 to 2006.  


Gated Globalization and North American Economic Integration: The Choice of Reason

Dr. Igor M. Paramonov, Southern Alberta Institute of Technology, Calgary, AB, Canada




Globalization has entered a new, more fragmented and regionally regulated phase.  Greg Ip of The Economist magazine has described this phase as “a new, gated kind of globalization.”   Instead of moving toward more trade liberalization multilaterally, nations have been cautiously negotiating the creation or expansion of regional trading communities protected (“gated”) against non-members by economic and political barriers.  Regional trade arrangements between countries and groups of countries have grown in scale and scope in the last twenty years.  Nation-states are increasingly having to make choices in favour of or against joining, expanding, or declining membership in a growing number of trading blocs.  The North American triad (triad) – Canada, the United States, and Mexico - is dealing with the necessity of modernizing one of the most powerful but old gated trading communities, while simultaneously addressing the challenges of forming new alliances across the Pacific and Atlantic Oceans.  This paper suggests a balanced approach to the building of new trading relations with Asia and Europe while deepening integration within the North American Free Trade Agreement (NAFTA).  The choice of reason or “NAFTA Two Plus” formula outlined by the author in previous papers and presentations has been corroborated by conclusions made by leading experts in the field of North American economic integration in their recent publications.  Regional economic integration is becoming a mainstream of trade liberalization and more countries are joining gated trading communities.   This paper continues to examine North America’s current state and future development in the context of ongoing continental integration and emerging transcontinental partnerships with the European Union (EU) and Pacific Rim countries.  Most recent literature reviews indicate a certain revival of interest in NAFTA and new perspectives on its role in serving the triad for internal and external purposes (Crowley, 2014; “Deeper, better NAFTA,” 2014;  Lanthemann, 2014;  “Ready to take off again?”, 2014;  Sangillo, 2013;  Villarreal and Ferguson, 2013; Wilson, 2014;  Wood, 2014).  Businesses in Canada, the US, and Mexico require freer movement of goods, services, capital, and people across their borders despite remaining security and immigration concerns.  Simultaneously, all three countries are pursuing free trade agreements with new communities like the Trans Pacific Partnership (TPP), as well as existing gated trade communities in Europe, Central and South America, including the Transatlantic Trade and Investment Partnership (TTIP), Comprehensive Economic and Trade Agreement (CETA), the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), and others.  Can NAFTA be a vehicle for both – deepening integration within, and growing transcontinental trade and investment relations outside of North America?  If it can, the next logical question is - how? 


The Effect of Mediators on the Relationship Between Cultural Diversity in Top Management Team and Performance of International Joint Ventures in Thailand

Dr. Pornlapas Suwannarat, Mahasarakham Business School, Mahasarakham University, Thailand



This study has concentrated on the mediating effect of four mediators: conflict, social integration, effective communication, and creativity on the relationship between cultural diversity of top management team and international joint venture (IJV) performance. Also, the direct impact of cultural diversity on IJV performance has also been investigated. The Thailand Board of Investment has provided the original dataset, an official database of IJV firms that operate in Thailand, to be the target of the study via the survey method. The findings show that above-mentioned mediators partially mediate the association of cultural diversity and IJV performance. The direct negative effect of cultural diversity on IJV performance has also been found.  The results of this study are both consistent and contradict previous studies.  This is an original attempt to fill a knowledge gap in the literature.  A number of researchers (e.g., Lassserre, 1999; Glaister and Buckley, 1996; Sim and Ali, 2000; Suwannarat et al., 2010) argue that  international joint ventures (IJVs) become a prevalent mode of entry of multinational enterprises (MNEs) into new markets and achieve strategic benefits.  Hambrick et al. (2001) point out that, in previous IJV studies, little attention has been paid to the top management teams in charge, although they play an important role in accomplishing the goals of the venture and determining the success and failure of IJVs.  According to Hambrick et al., (2001), the composition of top management teams within IJVs and the cultural characteristics of team members have implications for the functioning and effectiveness of the top management team. The IJV top management team often has members from different national, cultural, and demographic backgrounds. Previous studies (e.g., Julian, Wachter, and Mueller, 2009) prove that these differences affect the operation and performance of teams, [and eventually impact IJV performance]. However, few studies have been systematically conducted into the assessment of cultural diversity and empirically correlating such diversity with IJV performance, especially in the context of Southeast Asian countries.  This is despite the fact that IJV formation in this region has grown significantly in the past three decades (OECD, 2004; Suwannarat et al., 2010).   As well, comparing to other issues in cultural diversity, the literature shows that there is relatively little theoretical clarity concerning how the following mediators:  conflict, social integration, effective communication, and creativity influence the association between cultural diversity and IJV performance (e.g., Jackson et al., 2003; Stahl et al., 2010). This study will accordingly investigate the possible implications of cultural diversity on the process and performance of IJVs, and will focus on the effect of these mediators: conflict, social integration, effective communication, and creativity on the relationship between cultural diversity and IJV performance. It introduces new data and new empirical insights into the international business literature. 


Analysis of the Innovation Environment: A Case Study of the Innovation Dimensions in A Public Organization

Dr. Pedro Carlos Resende Junior, Professor, University of Brasilia, Brazil

Ricardo Ken Fujihara, Senac, Brasilia, Brazil



This article seeks to identify dimensions that explain the process of innovation in a Brazilian public organization. The methodology involved analyzing documents, as well as individual interviews. Data were collected using online electronic questionnaires, and analyzed via the technique of content analysis, in accordance with Bardin (2002). Results comprised four dimensions, constituted a posteriori, with factors relevant to the innovation environment: cultural; structural; organic and leadership. The research results indicate the presence of features that both promote and inhibit innovation, in all the dimensions of the organizational environment.  Given the complexity of the public sector, due to the peculiarities involved in managing public services, it is even more difficult for the environment at organizations to be fertile breeding ground for innovations geared towards citizens and service users. The concept of innovation, advanced by Dosi (1982), engenders the development and adoption of new organizational products and techniques. Innovation can be observed in the final characteristics of products and services, as the result of mobilizing technical capacity and skills of suppliers and clients in service provision.  The organizational environment, when geared towards innovation, tends to be open to new ideas, with a propensity for change through new technology, resources, abilities and administrative systems (ZHOU, YIM & TSE, 2005). It is in this context that the research, which gave rise to this article, can be inserted, with the aim of identifying characteristics from the organizational environment in a Brazilian public organization, taking into account the level of intensity and use of management practices oriented to innovation. In assessing the organization’s environment, attention was devoted to the commitment of the management structure to assimilating organizational innovations, such as the implementation of management practices, processes, structures or new techniques that help to achieve strategic objectives (BIRKINSHAW, HAMEL AND MOL, 2008). Nonetheless, the study sought to analyze different, relevant issues concerning vectors that can induce or inhibit innovation in the public sector.  Data for this study were gathered via documents and interviews. In the public organization studied, between the 3rd and 14th of January, 2014, in-depth interviews were conducted with 46 employees who corresponded to (at least) one of the following profiles: (a) innovation specialist; (b) management specialist with mastery of the organization’s functioning; (c) Management Excellence Model (MEM) specialist; (d) have participated in developing the management report; or, (e) have acted in presenting the practices to the board of external examiners during the visiting stage.  In reviewing the literature, attention was drawn to a group of studies that investigated conditioners of innovation in organizations (Chen & colleagues, 2009; Gebauer & colleagues, 2008),

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