The Business Review, Cambridge

Vol. 21 * Number 2 * December 2013

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

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Does The Revolving Door Lead To Corruption Or Capture?

Dr. Glen Taylor, California State University, East Bay, Hayward, CA

Sandy Luong, California State University, East Bay, Hayward, CA



The legitimacy of government is undermined when the public comes to believe that elected and appointed officials are more interested in advancing their own careers than in serving the public interest. With apparent ease, elected officials become lobbyists, lobbyists become government regulators, regulators become corporate executives, and corporate executives become senior government officials. This is commonly referred to in politics as the ‘revolving door.’ Despite its prevalence in political circles, and despite a growing interest in understanding the causes of corruption, in both government and private firms, this revolving door phenomenon has received little if any attention from management scholars. In this paper, we explore the primary economic and institutional perspectives that might explain why and how the revolving door might in some cases lead to outright corruption, while in other cases it might lead to more subtle forms of questionable influence that fall short of intentional abuse of power and position but still raise concerns that private interests are taking precedence over the public good. Government and industry managers and representatives seem to effortlessly move from private sector employment to public sector employment and back again in what is commonly referred to as a ‘revolving door.’  In 1966, the American journalist James Deakin described the way in which lobbyists coming from government take advantage of their work experience on Capitol Hill or the federal bureaucracy and put it to use in specific lobbying and legal fields (Salisbury et al., 1989).  There is also a ‘reverse revolving door’ phenomenon in which private sector lobbyists and industry executives leave the private sector for public sector employment. Government employees have long-standing relationships, coupled with knowledge of the inner workings of government.  Government employees also have legislative experience that is highly valued by lobbying firms. The most knowledgeable, experienced and well- connected people in any field are bound to be the most valuable and hence the most potentially mobile in their careers.  Within this revolving door environment it is safe to assume there are opportunities to make use of personal and professional connections gathered over the course of a career in both the private and public sectors.  According to the Revolving Door Working Group, the private sector depends on the migration of people in and out of key positions in government to give them access to power (Revolving Door Working Group, 2005).   The potential for corruption due to the revolving door phenomenon is a long-standing concern.  Early reports of personnel movement between the private and public sector alleged that it created “cozy triangles” of congressional committees, executive agencies, and private interest groups (Salisbury et al., 1989).  Motivated by these concerns, Lester Milbrath (1963), Zigler and Baer (1969), Berry (1977) and Schlozman and Tierney (1985) conducted studies on the effect of lobbying personnel transitioning into government. Salisbury and Johnson concluded that we do not know enough about the traffic moving through the revolving door to discern the real extent of the damage it causes to the effectiveness of government (Salisbury et al., 1989).  More recent studies would challenge the early findings of Salisbury et al. (Transparency International, 2010; Bryner, 2011). What is clear is the widespread perception that the revolving door is a gateway to the “influence-peddling business” as more and more public employees join the ranks of lobbying firms and lobbyists join the ranks of senior managers in government (Transparency International, 2010).


Market Sentiment and Momentum Effects:A Comparative Study with the Stocks

Dr. Zi “Nancy” Ning, Delaware State University, DE

Dr. Nicholas Gressis, OH



This study compares the profitability of a traditional momentum strategy with directional momentum strategies (a modified version of traditional momentum strategies) in US stock markets. Directional momentum strategies take into consideration monthly price changes within a quarter; past quarterly returns and the subpatterns of monthly returns within that quarter also are considered. The typical directional momentum strategies that select the stocks with the accelerated monthly returns prove to be more profitable than their traditional counterparts over the 20-year period of our study. Such investment strategies exhibit superior performances especially during the late 1990s to early 2000s, when the US stock market experienced what is called “irrational exuberance.”  An extensive range of literature has documented that stock prices exhibit momentum; that is, continuation in a price direction, over three- to 12-month horizons. So what goes up tends to keep rising and vice versa (Jegadeesh and Titman 1993, 2001; Chan et al., 1999). Jegadeesh and Titman (1993, 2001) report that trading strategies of buying past winners and selling past losers realized significant positive returns over the period of 1965 to 1998, with a compounded excess return of 12% per year. In a more recent study, Jegadeesh and Titman (2011) reexamine the performance of the momentum strategy from 1990 to 2009. The momentum strategy produced an average annual profit of 13.5%, even though the strategy experienced a severe loss of 36.5% in 2009. Using data from 12 European countries, Rouwenhorst (1998) finds that the magnitude of the momentum returns is similar to those in US stock markets. Momentum has also been shown to be robust across international financial markets (Griffin, Ji, and Martin, 2003).Many explanations have been put forward to account for the sources of momentum returns. However, no measures of risk have been found that completely explain the profitability of momentum strategies. Furthermore, a standard three-factor asset pricing model cannot explain the returns of the short-term momentum (Fama and French, 1996; Grundy and Martin, 2001; Lee and Swaminathan, 2000).  Behavioral and cognitive biases theories have been developed to explain the momentum effects, which argue that momentum profits arise because of inherent biases in the way investors interpret information. Daniel et al. (1998) demonstrate that the momentum effects come from the overreaction of informed investors. When the market is rising, investors’ overconfidence is boosted. Thus, momentum profits are stronger following bull markets. Cooper et al. (2004) find that momentum profits exist only after market gains. From 1929 through 1995, the momentum strategy generated a significant mean monthly profit of 0.93% after the UP markets. The results were insignificant following the DOWN markets. Antonious et al. (2011) notice that when the investor sentiment (measured by the Consumer Confidence Index) is optimistic, the six-month momentum strategy yields significant profits, equal to an average monthly return of 2.00%. However, when sentiment is pessimistic, momentum profits decrease dramatically to an insignificant monthly average of 0.34%. Hong and Stein (1999) develop the theoretical models to show that investors’ delayed overreactions to information pushes the prices of winners (losers) above (below) their fundamentals. Chan et al. (1996, 1999) present empirical evidences that support these theories.


The Predictive Value of Bankruptcy Models

Dr. Gurdeep K. Chawla, National University, San Diego, CA



The United States (US) economy plunged into a recession in 2008, and this recession has been more severe than other recessions in recent history.  The Dow Jones Industrial Average (DJIA), one of the chief economic indicators, fell from 12,650 on January 2, 2008, to 8,000 on January 2, 2009, representing a decline of approximately 36 percent in a one-year period. According to, when compared with previous years, 2009 ranked as the third-busiest year for corporate bankruptcy filings in the United States. also determined that companies which filed for Chapter 11 bankruptcy protection in 2008 held a cumulative total of more than $1 trillion in assets.  The sudden downturn of the economy, which had been doing extremely well, was a surprise not only to the general public, but also to pundits and experts.  Some of the usual questions included:  How could this happen overnight?  Were there any early warning signs?  Could the bankruptcies of so many companies have been predicted?  This paper focuses on some of the bankruptcy models that have been developed and that are routinely used to analyze the financial statements of companies.  The bankruptcy models were applied to the financial statements of selected companies that filed for bankruptcy in 2009 to determine if the bankruptcies could have been predicted.  Financial data from 2007 and 2008, when these firms were going through a difficult economic period which led to bankruptcy filings in 2009, was used to examine the predictive value of the bankruptcy models.  A number of studies have been conducted to develop models and provide tools to financial statement users and stakeholders, such as investors, bankers, suppliers, etc., in order to analyze the financial position and financial performance of companies.  The studies conducted by Beaver in 1966 and by Altman in 1968 not only provided valuable insight and analytical tools, but also provided a strong foundation for further research in this area.  These studies have been frequently cited by other scholars and authors in their attempts to extend and expand the state of knowledge regarding this critical issue.  Beaver computed and analyzed the financial ratios of selected companies to examine their financial positions and to predict failure of these companies.  Altman, on the other hand, developed a relatively concise model, referred to as the Z Model, which uses financial ratios to predict corporate bankruptcies.


Blogging Around the Twittersphere: Has Social Media Changed the Way A Destination is Developed?

Sharon Kiely,  Limerick Institute of Technology, Ireland

Annie Cowhey,  Limerick Institute of Technology, Ireland

Dr. Noelle O’Connor,  Limerick Institute of Technology, Ireland

Dr. Sinead O’Leary, Limerick Institute of Technology, Ireland



The development of Web 2.0 which facilitated the creation of social media technologies has revolutionised the way destinations brand themselves.  Social media has enabled customers to generate and share their own content over the internet.  This new source of information has changed the way a destination’s identity, image and brand is formed as consumers now play an important role in the development of these destination aspects through the use of social media technologies.  This study investigates the impact social media is having on a destination and tries to establish if this new platform has changed the way a destination is developed.  Findings from the case study analysis show that destinations such as Ireland are recognising that consumers are now co-creators of their marketing activities, and are embracing different social media strategies in order to effectively strengthen their brand.  However, examples utilised throughout the paper illustrate that other destinations such as Italy are failing to acknowledge the significant role that social media is playing in destination development.  With respect to that, this conceptual paper will try to determine if a social media presence is required for the development of today’s destinations. It is imperative for Destination Management Organisations (DMO) to consider Information and Communication Technology (ICT) when developing a destination brand (Buhalis and Law, 2008).  This is due to the impact ICT has on the branding of a destination (Munar, 2011).  Traditionally tourism destination brands were created and generated by DMO’s (Blain, Levy and Richie, 2005).  DMO’s developed the brand in order to create a positive image of the destination and thus differentiate it from competition (Cai, 2002; Blain et al, 2005).  Lim, Chung and Weaver (2012) believe that this conventional type of marketing produced a one way conversation between destination stakeholders and potential tourists.  While this type of communication was a step up from destinations possessing relatively no communication, the development of Web 2.0 which facilitated the creation of social media enabled a two way conversation and the creation of User Generated Content (UGC).  Social media can be explained as an internet application which facilitates the development of UGC and allows internet users interact and share content with each other online (Ayeh, Au and Law, 2013; Cowhey, O’Leary and O’Connor, 2013).  UGC is the amalgamation of user’s contributions (opinions and / or experiences) to the web (Munar, 2011).  Due to the introduction of such online communication mediums destinations are in turn changing the way they are marketed.  This new two way communication has since changed the way in which destinations market themselves as customers are now becoming part of the destination’s brand image and identity by posting / blogging online (Lim et al, 2012).  Hvass and Munar (2012) share this view and note that social media has developed opportunities for destinations to create a relationship and engage with potential tourists.  Hence, this supports the fact that methods of marketing communication have changed due to the introduction of the internet and illustrates why DMOs have begun to incorporate social media into the creation and development of a destination brand.  A literature review based on destination branding and social media was conducted, the results revealed a massive gap in the knowledge of how social media was affecting consumers and DMOs alike form an image, identity or brand of a destination online.  This conceptual paper will attempt to review the impact social media is having on destinations and furthermore, try to establish whether or not these destinations need to encompass social media in the location’s future marketing efforts. 


IT Intellectual Property Rights - Employee's Software Side Projects

Ashley Coleman,  University of Central Missouri, Warrensburg, MO

Dr. Mustafa Kamal, University of Central Missouri, Warrensburg, MO



During the Industrial Revolution in America, courts drew from the legal traditions of common law and created a doctrine of “shop rights,” and applied in the absence of an express written agreement. Under this doctrine, whatever inventions were made at work stayed at work, and whatever inventions were made at home stayed at home.  Shop rights also allow an employer to claim any innovation the employee creates while on company time and using company resources. Later in the 20th century, employers increasingly required that all employees assign to the employer any inventions they might make. ‘Massachusetts Model’, as it was called, impled that every creative thought of the employee is company property.  Courts favored employment contracts to the words and even if the contract stated so, an ex-employee was compelled to continue assigning his inventions even after leaving the company.  In 1977 came the “Minnesota model,” which offered both the employer and employee some measure of protection without either being unfairly disadvantaged.  20th century saw the explosive growth of software industry and software applications started to become integral part of all businesses. This gave birth to the new workforce of ‘knowledge worker’ like programmers, software developers, etc. The laws originally applied to employee inventions were naturally extended to knowledge workers that create / develop software bringing them under the umbrella of the above-mentioned doctrines and principles.  In the absence of a formal written agreement between the employer and employee, certain rules may apply to code innovation / software development. Usually, the author of the code/software is the owner of the copyright, unless the work was prepared by an employee in the scope of his or her employment. If so, then the work is a “work for hire” and the employer is the owner according to the Copyright Act of 1976. In case of an independent contractor, the work does not belong to the employer. It is often difficult to distinguish between an employee and independent software contractor.  Factors such as who determines how long the worker works for an employer, how the worker is paid, source of tools or materials used to create a work, and so on determines the relationship.  The two most important factors in the relationship are who pays the worker's social security taxes, and whether the hired party receives employee benefits. 


Human Resource Policies on Workplace Safety: A Case for Incorporating Anti-Bullying Measures

Dr. Bernadette Baum, National University, San Diego, CA



Human resource managers are tasked with many duties concerning the safety and welfare of an organization’s employees, not least of which includes keeping the workplace free from unlawful activity.  A recent challenge facing human resource managers involves behavior from coworkers or supervisors commonly known as bullying. Because no legislation currently exists to protect employees from bullying in the workplace, human resource managers are left to consider ways of dealing - or not dealing - with the consequences bullying.  This paper outlines the need for workplace protections against the adverse impact of disruptive behaviors on the working environment in light of the increasing problem of workplace bullying. In the absence of anti-bullying legislation, the paper proffers an argument in favor of preventive measures in the form of human resource policies and training to be implemented in an effort to mitigate potential liability for the employer and, more importantly, foster a healthier working environment for all employees. It features suggestions for a code of conduct to be considered as part of an education and training program against workplace bullying.  The author draws on 15 years of experience as an employment law practitioner and counselor to human resource managers, as well as over 12 years teaching experience in the area of legal aspects of human resource management.  This paper provides no legal advice and, as such, nothing contained herein is intended to be construed as legal advice.  The author strongly encourages individuals and employers to seek the advice of an attorney specializing in labor and employment law for all inquiries concerning legal workplace issues, including safety policies and training.  This paper proceeds from the premise that the dignity of every employee must be preserved in order to achieve a healthy work environment.  Over time, when that dignity was shattered by discriminatory, retaliatory, or harassing conduct condoned and repeated - year after year, decade after decade - legislation was championed and enacted to assist in protecting the rights of the employee to a healthy workplace.  One example of a dignity-robbing experience in the workplace comes in the form of sexual harassment.  By way of illustration, Ann, a hostess at a popular restaurant is told by her supervisor, Bob, that her duties have been extended to cocktailing in the bar after the dining room closes.  The servers in the bar exercise the common practice of pooling their tips during any given shift; that is, all tips earned by each server are pooled together and divided equally among the wait staff working the shift.  The gratuities are distributed by the supervisor after an employee clocks out for the evening. At the end of her first night of cocktailing, Anne approached Bob after clocking out and asked him for her tips. Bob escorted Anne into his office at the back of the restaurant.  After he shut the door, Bob asked Ann to perform a sexual favor.  When she refused, Bob said, “Well, I guess you don’t want your tips.”  Anne left Bob’s office and complained to another server, Cathy.  Cathy described experiencing a similar situation with Bob.  Cathy told Anne that she was afraid to complain because Bob was the owner’s son.  Later that week, Anne worked another shift after which she approached Bob for her tips.  When Bob told her to follow him to his office, Anne refused.  Bob said, “Fine, I’ll keep your tips.” Anne and Cathy complained to the human resource manager who promptly initiated an investigation.


A Regime Switching Approach to Analyzing Bank Non-Performing Loans in Barbados

Tiffany Grosvenor, Central Bank of Barbados

Kester Guy, Central Bank of Barbados



A frequently used metric associated with bank vulnerability is the non-performing loans ratio (NPLs), and many studies have analyzed and developed frameworks for forecasting this variable. The primary critique against many of the previous work is the failure to account for the nonlinearities inherent in the relationship between bank NPLs and the economic cycle. As a result the generalized conclusions on the linkage between NPLs and gross domestic product (GDP) may be misguided, especially when prudential rules impose natural asymmetries that may cause the association to change along different phases of the economic cycle. This study therefore, reexamines the relationship between NPL and GDP for Barbados using a regime switching approach. In doing so, the authors analyzed bank-impacts from a mix of macroeconomic and idiosyncratic data under different regimes to determine whether NPL outcomes across regimes and across institutions are homogenous. Further, the authors examined whether changes in systemic vulnerabilities are driven by all banks or only a subset. Answers to these critical problems, therefore provides a valuable framework that guides the authorities in developing appropriate policies to help strengthen the banking sector against systemic failures. The overall findings suggest that a non-linear approach to analyzing the NPL-GDP nexus is valid, but the relationship is not homogenous across institutions in different regimes. In addition, some institutions appear to be of greater systemic importance than others. Increased attention has been given to analyzing the asset and liability portfolio of banks since the global financial fall-out as the sizeable losses realized by banks across many jurisdictions triggered panic and financial instability, which also affected economies adversely [see Berrospide (2012) and Laeven and Valencia (2012 )]. Policy-makers have intensified their prudential monitoring and analyses, and to some extent have tried to identify factors that can provide early warnings for when banks’ stability have been compromised for example Davis and Karim (2008) and Bussiere and Fratzscher (2006). A widely-used variable of interest in this analysis is the non-performing loan ratio (NPL), as high NPLs have been found to be associated with many problem institutions. Several authors, such as Salas and Saurina (2002), Khemraj and Pasha (2009) just to name a few, have adopted various techniques to analyze the factors that might influence the non-performing loan metric, and by consensus the economic cycle – beyond the institutions’ operations – has been found to be a major determinant in the overall NPL outcome. In Barbados, authors like Chase et al (2005), Greenidge and Grosvenor (2010), Guy and Lowe (2012) and Belgrave et al (2012) have advanced the discussion on this subject and in each case there is an underlined assumption of linearity between NPLs and economic growth.


Impact on Survivors of Downsizing: A Generational Comparison

Dr. Yvonne Phelps, University of Phoenix



This quantitative research study examined the impact of downsizing on survivors; specifically, it explored the attitudes of those who remain in the organization after a downsizing event through data comparison based on gender and age cohort. A survey was conducted of 200 white-collar, private-sector employees who survived corporate downsizing of 10 percent or more within companies of 500 to 5,000 employees from 2008 through 2012. Job satisfaction and organizational commitment postdownsizing were evaluated and compared between genders and Gen X and Baby Boomer cohorts. A strong correlation was found between organizational commitment and job satisfaction. No significant difference in reported organizational commitment or job satisfaction was found between either the gender or age cohort.  When organizations experience a decline in revenue, leaders often resort to downsizing the workforce to balance the difference between revenue and expenses. Since 2008, the U.S. economy has been affected by mass layoffs as a result of the recession that began in 2007, at which time the U.S. Bureau of Labor Statistics (BLS, 2007) reported nearly 1 million workers were involved in layoffs. By September 2008, the number of layoffs was the largest since September 2001 (BLS, 2009). The BLS (2011) reported layoffs in February 2011 of 130,818 workers. While downsizing an organizational workforce can be an effective cost-reduction measure, the results can have collateral negative effects such as slow response to new opportunities, poor public relations, increased hiring costs and training, and damaged employee morale (De Meuse & Marks, 2003). Specific implications related to gender and age were not included in prior research. The latter result is part of the focus of this study. Corporate attitudes toward downsizing have changed over the years (Kim, 2009). In contrast to the historical perspective when a reduction in force was typically considered a last resort, in 2012, corporations considered downsizing as standard practice. One of the terms used to define downsizing is right-sizing, implying organizations may be overstaffed or technological advances and more competitive strategic applications have created an environment in which employees can be let go without negative side effects (Sheaffer, Carmeli, Steiner-Revivo, & Zionit, 2009). Unfortunately, cost-cutting measures often have a negative impact on the surviving employees either directly or indirectly. In the case of layoffs, the direct impact is felt immediately. Typically, the employees who remain are expected to increase productivity, be responsible for more output, and do so without complaint (Zweig, 2009). From a practical perspective, leaders often view downsizing as a way to reduce human capital in the short run with the expectation that the revised, smaller organization will be more efficient and create a permanent long-term cost reduction and financial benefit to the entity (Bolman & Deal, 2003).


A Study of Multiple Reference Effects in Brand Commitment

Dr. Zui Chih Lee, Susquehanna University, PA

Dr. Dauw Song Zhu, National Dong Hwa University, Hualien, Taiwan

Dr. Mark Heuer, Susquehanna University, PA

Su-Yan Liu, National Dong Hwa University, Hualien, Taiwan



Customer satisfaction and service evaluation studies have applied reference effects by examining Expectancy-disconfirmation paradigm. This study is planned to explore the interaction relationship between expectancy-disconfirmation, alternative attractiveness, and self-image congruity. The framework of multiple reference effects in brand evaluations adopted the theoretical insights from regret theory and self-image congruity theory. An empirical study of two shoe companies including other-object and self-based reference points contributes significantly to consumer satisfaction evaluations. Self-image congruity has a significant impact on both satisfaction and brand commitment. Consumers’ intuitive evaluation behavior, shaped by comparisons to multiple points, has been motivated research interests for several years. Specifically, the expectancy-disconfirmation model has indicated consumers’ evaluation based on the gap between customers’ expectation and their post consumption satisfaction. Across social psychology, consumer behavior, and service satisfaction, researchers have identified three major types of referents: focal-object, other-object, and self-based as follows. A focal-object referent has been applied to measure consumers’ existing expectations about the focal product or service object of their evaluation. Disconfirmation affects satisfaction about the focal object when a consumer compares the perceived performance of the focal object with his or her previous expectations (Oliver 1980; Tse & Wilton, 1988). Another-object referent helps consumers compare the performance of an alternative with the focal object (Ping, 1993; Rusbult, 1980). For example, a consumer may have a better/worse attitude toward an alternative product or service. Third, the self-image referent indicates a consumer’s comparison between symbolic values of the focal object (the brand image) with their own self-image. Specifically, Sirgy et al (1997) found consumers may be attracted by a product or service that ---- fits their self-image.This research applied the expectancy-disconfirmation model to explore the effects of the focal-object referent on service evaluations and purchase intentions (Oliver, 1980). We adopted theoretical insights from previous studies related to the regret effect during consumers’ decision making of a purchase.  This involved confirming the importance of self-image as a self-based referent to formulate purchase attitudes, preferences, and intentions (Inman et al., , 1997; Rusbult, 1980; Tsiros & Mittal, 2000).  In this conceptual framework, consumers adopted a “reference point” to compare with multiple referents when conducting their shopping judgments. These referents include (1) the focal object under consideration, (2) another object that is an alternative that also being considered and (3) consumers’ projected self-image.  In utilizing these subjective judgment referents, this research examined if consumers’ disconfirmation, alternative attractiveness, and self-image congruity will influence satisfaction, brand trust, and brand commitment. We also examined if consumers’ self-image congruity moderates the relationship between alternative attractiveness, consumer satisfaction and brand commitment.


Be Prepared: Barter Could Be Coming to your Neighborhood

Dr. William R. Smith, PCM, Pepperdine University, CA

Dr. David L. Ralph, Pepperdine University, CA

Dr. Stacy M. P. Schmidt, California State University, Bakersfield, CA



Anecdotal reports indicate that the use of barter and barter-like transactions is a growing phenomenon in almost every region of the world in both consumer and business markets.  While large transactions involving major defense and infrastructure expenditures often capture the attention of governments and media outlets, this old-fashioned form of exchange appears to be growing in usage across all types of industries and sizes of businesses.  Would companies, especially small and medium enterprises (SME’s), be well-served to anticipate growth in demand for barter-based exchanges and develop a facility in conducting business in this manner?  Could this knowledge become a competitive advantage as less knowledgeable competitors struggle to gain experience in the use of barter?  It’s not surprising to hear reports of increasing usage of consumer-based barter from recession-ravaged European Union countries such as Spain and Greece or developing African countries (e.g., Makkas 2012, Adams  2012). However, these anecdotal reports of the re-emergence of barter and barter-like exchanges are increasing in number in North American economies as well (e.g., Kouremetis 2012).  “Barter can be readily applied to all types of businesses seeking to improve their inventory management of tangible products as well as intangible services” (Mardak, 2002).  According to Spring (2013) “barter allows businesses to exchange services to help keep up cash flow”.  In 2009 (Truitt), the barter industry had grown to over an $8 billion industry. Visiting the web site for classified ads called Craigslist leads one to find a category for “barter” under the general category of “For Sale.”   Anecdotal observation of the barter category for several major cities in the United States seems to indicate that postings to this category are rapidly increasing in number as owners of a wide range of products seem to be struggling to locate cash buyers for their items.  For example, the number of postings in the “barter” section of Craigslist for the Los Angeles metropolitan area on November 14, 2012 was well over 300 (Craigslist 2012).  According to Kandra (2012), there are a variety of free barter sites that are available but individuals still need to be aware of terms and conditions as with any purchase. There are a variety of things that are not allowed to be bartered on websites including “anything illegal; porn, alcohol, and drugs (in most cases); live animals; and other regulated goods and services” (Kandra, 2012). 


Inflation Convergence of Euro Countries: A Nonlinear Perspective

Dr. Burcu Kıran, Department of Econometrics, Istanbul University, Istanbul



The main objective of this study is to test inflation convergence of eight Euro countries over the period from January 1999 to October 2011 by using two-regime threshold unit root estimation procedure. For this purpose, inflation differentials with respect to Euro area average are constructed. According to the obtained results, it is found that the inflation differential series belonging to Belgium-Euro area, France-Euro area, Ireland-Euro area, Italy-Euro area, and Spain-Euro area are nonlinear processes, while the inflation differential series belonging to Germany-Euro area, the Netherlands-Euro area, and Portugal-Euro area are not. Another finding of this study is that there is strong evidence of stationarity for all the inflation differential series, except Ireland-Euro area, implying inflation convergence.  As the convergence of inflation rates was incorporated as one of the requirements to admit a prospective country as a full member of the European Monetary Union (EMU), the issue of inflation convergence within European countries has received considerable attention during the last decade. In the 1992 Maastricht Treaty, the convergence condition for inflation rates is defined as follows: The inflation rates of individual members should not be more than one and a half percent higher than the average of the three lowest inflation rates in the European Monetary System (EMS). According to the statement of the European Central Bank, price stability is guaranteed if the yearly area-wide aggregate inflation rate in terms of the harmonized consumer price index is below, but close to, two percent over the medium term (Holmes, 2008). This tight inflation criterion motivates the authorities to pursue policies of short-term demand stabilization or price and indirect tax interventions at the expense of long-term structural reforms that would create a low inflation environment (Bulir and Hurnik, 2009). Since the beginning of the 1980s until the introduction of the Euro, the inflation rates have been observed to decline within the Euro area (Mentz and Sebastian, 2003). In the literature, several papers that have examined the issue of inflation convergence to analyze the inflation patterns of a group of regions and/or countries within the unit root and cointegration tests give mixed results. Caporale and Pittis (1993) investigate the relationship between the concept of convergence and univariate and cointegration analysis by considering inflation convergence within the EMS. They take into account the issue that the cointegration of inflation in Germany with inflation in the other EMS countries is a necessary condition for the “German leadership” thesis. Their empirical results, based on unit root tests and Johansen cointegration analysis, confirm the validity of the German leadership hypothesis. Hafer and Kutan (1994) test for policy convergence among EMS countries within cointegration procedures. Using both short-term interest rates and the monetary base as measures of monetary policy, they test whether a complete convergence of policies has been achieved in the EMS. Their findings support the policy convergence.


Mobile Commerce Acceptance Determinants Among South African Consumers: Does Gender Matter?

Nobukhosi Dlodlo, Vaal University of Technology, Republic of South Africa

Chengedzai Mafini, Vaal University of Technology, Republic of South Africa



The purpose of the study was to validate the determinants of mobile-commerce acceptance and establish the existence of any gender-based difference towards m-commerce acceptance among South African consumers. A survey was conducted with the aid of a structured self-administered questionnaire with a view to collect primary data from a sample consisting a cross –section of 204 consumers based in the Vaal area of Southern Gauteng, South Africa. Reliability of the survey instrument was ascertained using Cronbach Alpha values. Content validity was established through pre-testing the questionnaire prior to the main survey. Convergent validity was established through inter-dimensional correlation analysis. Statistical and practical significance were established through t-tests and Cohen’s D measures. There were positive correlations among the five m-commerce acceptance dimensions, namely; technology application (TA); perceived ease of use (PEOU); perceived enjoyment (PE); perceived usefulness (PU) and subjective norms (SN). Cronbach Alpha values ranged between 0.714 and 0.898, thereby indicating high internal consistency among the sub-scales as well as within the entire survey instrument. Correlation coefficients ranged between .164 and .677 at both the p<0.01 and p<0.05 significance levels (2 tailed test) indicating very high levels of association among the sub-scales. T-test results revealed that gender does not influence two factors namely technology application and subjective norms. However, females consider PEOU and PE to be more important than males. On the other hand, PU had a greater impact on males than in females. The major managerial implication of this study is that by making positive strategic alterations in line with the five mobile commerce acceptance dimensions mentioned in this study, marketers and business practitioners are presented with practical insights into dimensions that enhance gender-based acceptance of mobile commerce technology among consumers.  The use of wireless and mobile technologies for conducting commercial activities continues to rise in most countries (Ngai & Gunasekaran, 2007). Countries such as South Africa, France, Belgium, and Finland comprise the second tier of Internet intensive nations that have more than 75 000 hosts each (Awa, Nwibere & Inyang, 2010) Mobile commerce services have also relished tremendous success in terms of individual consumers’ acceptance in markets such as Japan (Alhinai, Kurnia & Johnston, 2007); Germany and the United Kingdom (Laudon & Laudon, 1999). However, it has not been very flourishing in Botswana and Nigeria (Uzoka, Shemi & Seleka, 2007) among other third world developing nations (Mutula, 2002). This trajectory continues unabated, despite ample evidence that mobile technologies enhance long-term growth rates of national economies and that their impact is stronger in developing nations than in developed ones (James & Versteeg, 2007). Moreover, mobile commerce (henceforth referred to as m-commerce) penetration leads to increased gross domestic product (GDP) growth particularly among low-income developing countries (Donner, 2008). As such, apparent need exists to stimulate and re-evaluate m- commerce and its related issues in most of the lesser developed countries (Mutula & Van Brakel, 2006).


Effects of Scale Display Formats, the Number of Variables per Display and Styles of Grid Lines on Line Graph Visualization in Response to Difficult Business Queries

Dr. Chatpong Tangmanee, Chulalongkorn University, Bangkok, Thailand

Prapapak Jiradnunyakul, Chulalongkorn University, Bangkok, Thailand



One of the well-known data analysis and presentation techniques, a line graph is adopted in various fields to portray a relationship between variables. The graph’s appropriate formats are critical if viewers must visualize the graph in order to deal with difficult business queries. However, research in the Thai context examining effects of scale display formats (i.e., conventional or unconventional), the number of lines per display (i.e., one, three or six) and styles of grid lines (i.e., rough or fine) on line graph visualization in response to abstract questions is rare. The current study intends to fill this gap.A lab experiment in which 360 Thai undergraduates in a business school were recruited in random to visualize 12 conditions of comparable line graphs in response to thirteen difficult queries (2 scale formats x 3 numbers of lines per display x 2 styles of grid lines) confirms that (1) the effect of the numbers of lines per display on visualization is statistically significant but (2) the effects of grid lines, scale display formats or the interaction effects of these three factors are not significant. In addition to extending insight into issues of information visualization in the particular context of Thai line graph readers, graph developers could apply the findings to enhance readers’ graph visualization.A line graph is well known in numerous disciplines (Tan & Benbasat, 1993; Katz, 2008; Kosslyn, 2006; Kumar & Benbasat, 2004). The wide acceptance is a result of graph readers’ capability in decoding quantitative data presented in the graph (Cleveland & McGill, 1985; Glazer, 2011). According to Kosslyn (2006), a line graph has three major components: framework, content and label. First, the framework is of an “L-shaped” format (Kosslyn, 2006, p. 76). On the Y (vertical) axis are amounts (or frequencies) of what is being measured. Commonly known as a dependent variable, it could be an currency exchange rate (measured in percentage) or temperature (measured in the Celsius unit). On the X axis are values of a variable in (1) at least an ordinal order such as ten years in one decade or (2) a few categories such as a group of countries. Second, the content is any symbol that exhibits a particular relationship between at least two variables identified in the framework. Such symbol in the current study is a line while that in the others could be a bar or a dot. In Kosslyn’s (2006) summary are recommendations on how to display content effectively. Finally, the labels are details supplementing the content. These details include names and units of Y or X axes, graph captions, graph titles, or background display. The labels may not be the graph’s main focus but they often enhance its readability. Figure 1 illustrates one example of a line graph. The Y axis indicates the temperature in (Fahrenheit) in the range of 30 to 90 °F. The X axis shows the order of the previous seven days on which the temperature was recorded. The two lines (one in solid and the other is dotted) signify the temperature in New York City (NYC) and Bangkok, respectively, in the past seven days. Also in Figure 1 are a legend and a label showing symbols indicating which line is the temperature in these two cities. The graph drawer should have had, however, a better reference to which readers would have known better what exactly these seven days were.


Country Specific Political Risk Indices and Economic Growth

Dr. Hussein Zeaiter, Lebanese American University, Lebanon

Dr. Raed El-Khalil, Lebanese American University, Lebanon



The interrelationship between corruption and democracy and their impact on economic growth is the main subject of this paper. This study utilize country specific risk index in order to test the relationship between three variables: democracy, corruption, and economic growth. Unbalanced panel data is used for 146 countries over the period 1984 - 2009. The results show that corruption has a negative impact on economic growth in countries with high democratic risk and no impact in countries with low risks. However, with the same classification, democracy has negative significant impact on growth in countries with low corruption and no impact on countries with high corruption.  The effect of democracy and corruption on economic growth per capita GDP has long been studied. Democracy is expected to trigger economic growth, and corruption is expected to decrease in democracies. However, many democratic countries have low economic growth whereas many non-democracies experience high economic growth. Previous scholarly work (Obayelu, 2007 and Shera, 2011) on the topic indicates that in democratic countries, there was no effect on economic growth. Obayelu (2007) showed that despite that Nigeria is a democracy, corruption exists and, it is rooted from terrible socio-cultural and political situations. Due to the paper the major challenge was to cure the causes of this terrible situation. In addition, despite the fact that Turkey is a democratic country, it faced corruption scandals Gillespie (2006). In 1976, Lockheed Aircraft Company was involved in a bribery scandal which involved the Turkish defense minister and high officials. The Middle East is considered unique for having a large number of countries that are ruled by royal families. It is a mistake to assume that countries which are ruled by royal families are always more corrupt than democratic countries. According to the Corruption Perception Index, Turkey, the democratic country, is considered more corrupt than Bahrain and Jordan that are ruled by royal families. Nonetheless, non-democracies such as Oman and the United Arab Emirates had the same corruption rating as Lebanon being a democratic country in the region. Also, previous studies have shown that corruption negatively affects economic growth. According to the 2004 report issued by Transparency International, Iran and Saudi Arabia were among the most corrupt countries in the world, knowing that they have high economic growth. Different economic growth nations have different democratic index. Factors that affect economic growth of nations seem different from those that affect political risks.  This study consists of eight parts: The first part introduces the paper. The second shows the literature of the subject. The third explains the contribution of this paper. The fourth explain the methodology. The fifth shows the empirical work. The sixth part concludes the paper, and the seventh part lists the references.


Saudi Arabian Sukuk Market: Recent Trends and Development

Mohammed Waleed Alswaidan, University of Portsmouth, UK



After the recent financial crisis impact on the financial industry, the risk factor of each financial instrument is the critical measurement for investors. Thus, fixed income securities such as Bonds or Sukuk (Islamic Bonds) addressed the option for lower risk investment. Sukuk is considered as a dynamic investment instrument and has been developed over the recent past. It is catching the investors’ interest due to its unique features. This paper attempts to follow the trends and developments in the Sukuk market in Saudi Arabia as it is the heart of the Islamic world. The paper provides a comparison between returns and duration of the Saudi Arabian Sukuk Market against the Global Sukuk Market. Results found that the Sukuk market in Saudi Arabia is the dominant trend of investors in the market and has consistency of positive returns over the period after the recent financial crisis lead to speed up the development in the Sukuk industry around the world.  Since the developments and changes in the financial industry over recent decades, Islamic finance found itself the major player with rapid growth over its sectors. It has evolved to become one of the most dynamic and fastest developing business areas in global finance (Pock, 2007), which is currently growing at between 10-15% each year (Ainley, Mashayekhi & Hicks, 2007), and the value of Islamic finance assets in the world have been estimated to reach over one trillion US dollars by the year 2012 (Mansor & Bhatti, 2011). In particular, after the recent financial crisis which started in the summer of 2007, it can be seen clearly that the expansion of Islamic finance has increased its position around the world. Beyond this expansion it can be seen that the main clients for the Islamic finance are the Muslim people, which are estimated today at around 20% of the world population. They might be the major drivers for creating the trend of demands on the Islamic finance. In spite of this, the expansion of Islamic finance as an industry is quite modern. According to Iqbal and Molyneux (2005), the age of the Islamic finance system started in 1975. The ideology of establishing a finance system or adapting Conventional instruments in a way that pleases certain customers is to have these banks trusted as money savers and investors in the Islamic world, which helps to stabilise banking systems in the rest of the world. Hameed and Ahamed (2010) indicated that Islamic banking is observed to be one of the fastest spreading economies in the world. They noted that Islamic banking contains around 400 financial institutions distributed in 51 countries. The growth of Islamic banking, according to Hameed and Ahamed (2010), is estimated to be 10% annually, which was noticed in the last few years. From these observations, it can be seen that the Islamic finance system has brought optional banking and investment services to particular customers. However, it can be inferred from the practice field that the Islamic financial system now plays a crucial role, side by side, with the Conventional financial system.


Testing Validity of the Purchasing Power Parity: Evidence from MENA Countries

Dr. Nilgun Cil Yavuz, Head of the Department of Econometrics, Istanbul University, Istanbul



This paper investigates the validity of the purchasing power parity theory for MENA countries by using univariate and panel unit root tests with and without structural breaks. The results of the unit root test which does not allow structural breaks show the importance of the breaks and give that each of the real exchange rates of selected MENA countries are non-stationary. Furthermore, the panel LM test supports these results. By allowing structural breaks in LM testing strategy, we find the evidence of purchasing power parity for Jordan and Turkey.  The purchasing power parity (PPP) theory is the one of the oldest and controversial theory in the determination of the exchange rate. First articulated by scholars of the Salamanca school in sixteenth century, simple empirical proposition of the purchasing power parity is that once converted to a common currency, national price levels should be equal. On the other hand, the modern origins of purchasing power parity trace to the debate on how to restore the world financial system after its collapse during World War I. The Swedish economist Gustav Cassel promoted the use of PPP as a means for setting relative gold parities and treated PPP as a practical empirical theory. Basically, he used inflation differentials to calculate the exchange rate changes needed to maintain PPP (Rogoff, 1996). Purchasing Power Parity asserts that the exchange rate change between two currencies over any period of time is determined by the change in the two countries' relative price levels. Because the theory singles out price level changes as the overriding determinant of exchange rate movements it has also been called the "inflation theory of exchange rates" (Dornbusch, 1998).The purchasing power parity doctrine has different versions, in its ‘absolute version’ states that the equilibrium exchange rate between domestic and foreign currencies equals the ratio between domestic and foreign prices. The ‘relative version’ of the doctrine relates equilibrium changes in the exchange rate to changes in the ratio of domestic and foreign prices (Frenkel, 1978).The basic building block for any variation of purchasing power parity is the so-called "law of one price" (LOP). Simply put, LOP states that once prices are converted to a common currency, the same good should sell for the same price in different countries. Needless to say, the law of one price holds mainly in the breach. Tariffs, transportation costs, and nontariff barriers drive a wedge between prices in different countries with the size of the wedge depending on the tradability of the good. While few empirically literate economists take PPP seriously as a short-term proposition, most instinctively believe in some variant of purchasing power parity as an anchor for long-run real exchange rates (Rogoff, 1996).


A Study of Interpersonal Influences and Opinion Leader’s Expertise on Purchase Decision of Fashion Goods: A Cross-Cultural Study

Dr. Pongsiri Tejavibulya, Chulalongkorn University, Thailand

Somkiat Eiamkanchanalai, Chulalongkorn University, Thailand



This study aims to measure the influence of opinion leaders towards purchase decisions of opinion seekers through opinion leader’s expertise, and interpersonal forces of tie strength and perceptual homophily. This study also seeks further explanation from cross-cultural dimensions. This findings show that the influence of opinion leaders towards purchase decision of opinion seekers do not have equal weighting on the purchase decision due to opinion leader’s expertise and interpersonal forces. It is also found that varied level of influence on purchase decisions is due to cultural background. Collectivists are influenced by opinion leaders more than individualists. Thus, marketing academics and marketing managers should find that different cultural background may require different marketing. As such, they can utilise this study to plan a more suitable and effective marketing strategy.  Many studies have shown that opinion leadership is in many markets the single strongest factor causing a purchasing decision, e.g. Bansal and Voyer, 2000 [1]; Kohli, 1989 [2]; Webster, 1988 [3]. However, it has actually not received adequate attention in previous literature. In particular, there has been surprising little research conducted that has examined the effect of social influences on the receiver’s purchase decisions across cultures. The importance of social influences has been exemplified in a classic consumer behaviour theory, Theory of Reasoned Action by Ajzen and Fishbein (1980) [4], which specifies that individuals’ behavioural intentions are predicated by their own internal attitudes and their motivation to comply with others. Firms and marketers acknowledge that successful marketing of new/existing products or services depend on the impacts that the important others have on their potential customers. The focus of this study therefore rests on an assumption that some customers’ adoptions and opinions have a disproportionate influence on others’ adoptions. Previous literature has shown that interpersonal influence arising from opinion exchange behaviour is an important factor in consumers’ product adoption in Western societies (e.g. Bansal and Voyer, 2000 [1]; Gilly et al., 1998 [5]; Reagans, 2005 [6]; von Wangenheim and Bayon, 2003 [7]).  Clark (1999) [8] notes a high level of agreement amongst social scientists on two dimensions of national character reflecting: firstly, relation to self, secondly, relation to authority.


Increasing the Effectiveness of Succession in the Family Business: Suggestions from Outperforming Successors

Markus Baur, University of Latvia, Riga



Research concerning succession in family-held businesses is not new. Many attempts have been made to further advance the understanding of this very important phase for family businesses. However, only few authors have let the successor to be in the spotlight. This paper summarizes the results of a dissertation aimed to identify propositions for effective succession in family businesses by exploring the perspectives of outperforming successors. Based on the framework of systems theory and a qualitative research approach, 13 successful cases of mediumsized family firms have been studied. For this purpose, problem-centered interviews with outperforming successors in the close-to-boarder-area of Austria, Germany, and Switzerland have been conducted. The paper shortly introduces the fundamental theoretical background and the applied research design before outlining a variety of suggestions derived from the results and findings of the work addressing primarily prospective successors.  The family business can be approached by using several different theoretical lenses. Amongst others, the resource-based explanatory approach (i.a. Habbershon & Williams, 1999, Peteraf, 1993), the life-cycle approach (i.a. May & Koeberle-Schmid, 2012, Gersick et al., 1997), the principal-agency theory (i.a. Dyer, 2006, Jensen & Meckling, 1976). and the systems theory (i.a. Simon, 2012, Wilms, 2008). have provided valuable frameworks to investigate on the family business. The resource-based explanatory approach and principal-agency theory have advanced the field especially to explain performance distinctions compared to non-family-held businesses. The life cycle approach enabled the academic body to explain the increase of the complexity along the ownership dimension, the reduction of risk along the investment dimension (on the basis of the portfolio theory of Markowitz), and the increase of the principal-agency problem along the governance dimension. Systems theory provides the field with a basic concept applicable universally to the family business as it stresses the reciprocity of the interacting systems business, family, ownership (and further arbitrary subsystems). Probably best known and mostly applied is the three circle model that emerged from the works of Tagiuri and Davis (1982) who advanced the original two circle model (business and family).


Illumination of Mission Statements of Public and Private Universities in Turkey: A Content Analysis

Ozlem Araci, Istanbul Technical University



Universities encounter various pressures and conflicts in their environment. Satisfying all pressures is impossible for universities and they need to make choice. In that case, mission has potential to direct universities when they need to decide basic and strategic situations. This study assesses the mission of public and private universities in Turkey. Aim of the study is revealing differences between missions of public and private universities based on the content analysis and frame their strategic focuses. For that purpose, mission of 101 public universities and mission of 50 private universities were examined and three judges evaluated the content of the mission statements. Also reliability analysis was implemented to judges’ assignment themes to the categories. Conclusions supported that “serving to society” is the most mentioned statements for both public and private universities in Turkey and private universities use “being international” statement as much as “serving to society”. This study may serve as a reference point for universities who will develop or change their mission for the future of the university.  Knowledge society transforms the society into the knowledge based from industry based. Universities role ascends in the knowledge society. They contribute to production and dissemination of scientific knowledge and technologies. They bring up leaders and labor power of the society. Their role on the development of the societies is undeniable. While knowledge gets more and more important today, universities should be aware of the global developments and give place to these developments in their strategies, policies and procedures. Universities are in the sector that includes highly institutional pressures (Scott & Meyer, 1992).In that case not only survivability, but also being legitimate university is important in their decisions. As an organization of the society, universities have to deal with these pressures and conflicts and make decisions to serve for the society. Mission statements have important function for a university not only for the directive function, but also for the legitimating function they serve. University gives the message of understanding “rules of the game” to be considered as a legitimated university by explaining mission statements (Morphew & Hartley, 2006). Developing well defined mission and shared vision is important to be successful university. They feed qualified decision making and strategic planning process under the condition of competition and conflict (Yukl, 1994). Determining the content of the mission becomes a matter because of the role of mission in the organizational fundamental processes (Bart C. , 2007). Priorities, strategies, plans and work assignments are directed by mission statements (Drucker, 1974).


The Influences of Type of Corporate Social Responsibility Initiatives and Donation Situation on Consumer Responses

Dr. Yimin Zhu, Sun Yat-sen University, Guangzhou, China

Dr. Miao Zhao, Roger Williams University, Bristol, RI



This study compares consumers’ responses to firms’ donations made through different corporate social responsibility initiatives (philanthropy vs. cause-related marketing (CRM)) and under different donation situations (disasters vs. ongoing causes). Our results suggest that 1) philanthropy type of donation generates more positive consumers’ attitude toward a firm, evaluation of the firm’s donation motivation, and purchase intention of the firm’s products than CRM; 2) donations made to disasters, compared to ongoing causes, will evoke more positive attitude, evaluation, and purchase intention; and 3) When donations are made to ongoing causes, the differences in consumer responses diminish between philanthropy and CRM. The paper concludes with discussions and managerial implications.  Corporate social responsibility (CSR) initiatives have been identified as a key to success (Lichtenstein et al. 2004) since it is considered an effective marketing tool to build and differentiate corporate image (Barnes and Titzgibbons 2001; Cheron, et al. 2012) and improve customer attitude (Lii and Lee 2012; Nan and Heo 2007). Every year, a great amount of money is donated to innumerable causes through various CSR initiatives such as philanthropy, cause-related marketing, employee volunteerism, and other innovative programs (Lichtenstein, et al. 2004). The importance of CSR to corporations is identified not only in the U.S. but also in many other countries worldwide (Anuar and Mohanad 2012). For example, researchers have examined CSR initiatives and their impacts on consumers’ responses in both developed countries such as German (Langen, et al. 2013), Netherlands (Vanhamme et al. 2012), Japan (Cheron, et al. 2012), etc. and in developing countries such as India (La Ferle, et al. 2013), South Africa (Bester and Jere 2012), Malaysia (Anuar and Mohanad 2012) and so on. Corporations’ views of their donation behaviors have evolved, from voluntary actions at the very early phase, to a phase in which mandatory social responsibilities are required by legislations, and now to a phase in which CSR is viewed as an investment (Varadarajan and Menon 1988; Dean 2003). The CSR initiatives, referred to “the various forms of company involvement with charitable causes and the nonprofits” (Lichtenstein, et al. 2004, p.16), have been updating as well. The early philanthropy was voluntary donations with no string attached (Varadarajan and Menon 1988). Later, many different CSR initiatives were introduced to achieve certain marketing objectives. Among those initiatives, cause-related marketing (CRM) has received great attention.  Since American Express conducted the first recorded CRM campaign in 1981 (Barnes and Fitzgibbons 1991), more and more corporations understand that CRM functions as a ‘co-alignment of marketing strategy and corporate philanthropy’ (Varadarajan and Menon 1988).  CRM has been defined as “an offer from the firm to contribute a specific amount to a designated cause when consumers engage in revenue-providing exchanges (Varadarajan and Menon 1988, p.60). For example, Pepsi Corporation donated 10 cents for every Pepsi consumed to the National Easter Seal Society, who actually registered the term “social responsible marketing”, during the telethon month of 1982 (Barnes and Fitzgibbons 1991). Since a firm’s CRM campaign not only makes donations to a cause but also generates revenues for the firm, many consumers might criticize the motives behind of the CRM to be self-interested, and such skepticism toward CRM significantly affects consumers’ attitude and evaluation (Anuar and Mohanad 2012).


Equity Premium Puzzle: Evidence from Turkey

Dr. Sinem Derindere Koseoglu, Istanbul University, Istanbul, Turkey



This paper attempts to find out if there is an equity premium puzzle in Turkey for the period 2003-2010 based on the standard general equilibrium model which was followed by Mehra and Prescott (1985). In the USA, historical data of equity markets showed that the equity risk premiums were too high and could not been explained by the standard general equilibrium model and Mehra and Prescott (1985) entitled this phenomenon Equity Premium Puzzle (EPP) for the first time. Then several researchers have estimated the same high equity risk premium for many countries and confirmed the EPP for their economies. In this study, the equity premium has been calculated as 9.37 % by historical data of Turkey, whereas it should be 3.15% according to the estimations based on standard general equilibrium model. The equilibrium of 9.37% is much higher than the theoretical equity premium of 3.15%.  In addition, the standard general equilibrium model implied that the relative degree of risk aversion coefficient of Turkey is 30.5848 which is much higher than the Mehra and Prescot’s (1985) boundary level 10. Therefore, it has been concluded that there is the EPP in Turkey for the period 2003-2010.  Fama (1965, 1970), Mossin (1966), Sharpe (1967), Lintner (1965, 1969) and Black (1972) all illustrated that assets with higher risks have higher returns. Therefore, because stocks are riskier than bonds or T-bills, investors require higher premium for this additional risk and this is identified as equity premium. However, how large should the equity premium need to be? Are we able to explain the historical equity premiums of countries by finance theories? These questions are more challenging to answer. A quantitative explanation was needed to answer these questions and Mehra & Prescott (1985) realized it by standard general equilibrium model. In their 1985 seminal paper Mehra and Prescott calculated average annual real return on the US equity market about 6.98% between 1889 and1978. As the risk free rate of return (T-bill real return) was 0.8% over the same period, they calculated an extremely high risk premium of 6.18%. This equity premium was difficult to explain by standard general equilibrium model, since then is called the Equity Premium Puzzle (EPP). Mehra and Prescott (1985) claim that the equity premium should be at most 0.35% according to the standard general equilibrium model in which agents have additively separable utility functions and constant relative risk aversion coefficient. In addition, the degree of relative risk aversion coefficient was estimated to be between 30 and 40 through the equilibrium model. Mehra and Prescott (1985, 1988) chose an upper bound of the coefficient as large as 10 as a metaphorical figure.  Since then, there have been many attempts to figure out whether there is the EPP of other financial markets. The empirical results have been showed that the equity premium puzzles are not unique to the US economy. This study examines if Turkish equity market participants obtain such unexplainable returns similar to those in the US economy and many other economies.


Lean Management Adoption Level in Middle Eastern Manufacturing Facilities

Dr. Raed EL-Khalil, Lebanese American University, Beirut, Lebanon

Dr. Maya F. Farah, Lebanese American University, Beirut, Lebanon



Lean manufacturing (LM) process, also known as Toyota Production System (TPS) or lean management, provides tools and methods that focus on eliminating waste and adding value to assembly and manufacturing operations. The success achieved by Toyota Motors through the implementation of lean has fascinated every company in the world and inspired it to follow its footsteps. This paper focuses on examining the degree of lean production implementation in Middle Eastern manufacturing plants and its impact on operational metrics. In addition, it shows the relationship between lean dimensions and operational outcomes. This research has utilized a questionnaire that is based on a similar research conducted on US, Chinese, and Indian industries. The survey was altered to fit the Middle Eastern industry. The companies surveyed are located in three different Middle Eastern countries, namely, Jordan, Lebanon, and Syria. The survey was given to 318 manufacturing companies out of which 96 responses were considered usable. The lean dimensions that the survey examined include” the 7 wastes, 5S’s, standardization, total productivity maintenance (TPM), supplier related (performance), problem-solving, statistical process control (SPC), Total quality management (TQM), setup time improvement or reduction, pull system (based on demand), and customer requirement or need. The result for implemented dimensions of lean indicates that while most of the respondents have scored between 40-59% levels, only very few are above 60% levels, and none of the companies has scored above 89% implementation levels. The study indicates that the operational performance has improved in all metrics except for space reduction. In addition, respondents have indicated that cost conversion reduction, productivity increase, and inventory reduction are the three main drivers of lean implementation.  Subsequent to World War II, Japanese companies suffered post-war economic realities. The challenges that Japanese companies like Toyota Motors had to face included such issues as limited capital to invest in new equipment and facilities, smaller market demand with respect to the United States and Europe, well-defined competitors, and workers’ refusal to be treated as variable cost (Womack et al., 1990). In order to overcome these challenges, Toyota Motors needed to be innovative (Wilson, 2010). This innovation focused on three main objectives, namely, reduce cost, increase quality, and reduce lead time throughout the organizational process. Based on those objectives in the early 1950’s, Taiichi Ohno, Toyota Motors chief of production, established the Toyota Production System (TPS) utilizing some new tools to supplement existing ones. The LM process has been the main driver behind Toyota’s success. Currently, Toyota is one of the top automotive manufacturing companies in the world (Ghosh, 2012). Summers (2011) and Wilson (2010) indicate that the improvements that can be achieved with the implementation of LM techniques are not limited to a certain operation or industry regardless of its size and or the resources utilized.


Impact of Textile Imports on the Competitiveness of the Textile Industry in Ghana

Dr. Kofi Poku, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana

Mariama Zakari,  Kwame Nkrumah University of Science and Technology, Kumasi, Ghana



Under the Import Substitution Industrialization (ISI) policy in the 1960s, Ghana’s textile industry which had many firms, enjoyed blanket government protection including high import duties and import quotas.  The advent of trade liberalization to overcome the limitations and resultant adverse effects of the ISI Strategy in the 1980s brought in its wake a shrunken number of domestic textile companies where barriers to trade were either removed completely or reduced significantly.  This represented a paradigm shift towards market based competition where firms no longer operated under protective barriers.  Thus, forcing firms to compete in both domestic and export market on the basis of their own efficiencies with a consequence of free flow of goods across countries but arguably, a damaged industry with mass unemployment.  This study was designed to examine the impact of textiles imports on the competitiveness of the Ghanaian textile industry.  Using quantitative data obtained from Ministry of Trade and Industry, Ghana Statistical Service, Customs Excise and Preventive Service, as well as IMF’s World Development Indicators from 1975-2002, imports were observed to have positive correlation with output growth as well as growth in productivity.  It was observed that output started to fall long before trade liberalization, whereas output recovery started after liberalization. This indicated that, there may be other variables of interest that might have caused output decline. Furthermore, output using regression analysis revealed that import was significantly elastic in both long and the short run. Labour and the Dummy variables were also  significant and elastic in the long run, and that trade liberalization has a positive impact on domestic output in the long run.  Interest Rate was found to be negatively significant in the short run output while Real Exchange Rate was not significant in both long and short run.  Over the last three decades, the Ghanaian textile industry has experienced the most turbulent chapter in its history. The emergence of the trade liberalization policy by the then government (PNDC government) in 1983 which was part of the Economic Reform Program (ERP) is believed to have created a competitive market economy due to the high influx of imported goods at lower prices relative to price of domestic goods. As a result, domestic textile manufacturers have found it difficult to compete and have often described this type of competition between them and their foreign counterparts in the domestic market as unfair.    Moreover, the purchasing power of the Ghanaian consumer is believed to have declined, resulting in low demand for domestic products because of high prices and some consumers resorting to second hand clothing which are relatively cheaper.  Furthermore, domestic manufacturers have become uncompetitive due to the high cost of production.  All these have led to the decline of the textile industry in Ghana which used to be a key player in the manufacturing sector, engaging over 27% of total manufacturing employment in the 1970s.  Consequently, a number of textile factories (large, small and medium scales), have folded up and laid-off their workers.  This has led to an overall impact of low levels of industrial output and employment and loss of revenue to the state (MOTI & PSI, 2005).  Thus, this research purports to examine the impact of import competition on the competitiveness of the Ghanaian textile industry as a result of trade liberalisation.  Such a study is considered imperative because of the rapid liberalization of domestic and international trade and the consequential paradigm shift from import-substitution industrialization strategy of development (Kosiba, 2004). 


Improving Economics of Thermal Desalination Process Through Energy Analysis and Optimization

Dr. Fahad S. Al-Mubaddel, King Saud University, Riyadh, Saudi Arabia



For an arid country like Saudi Arabia, the quest for more fresh water never ends. The country has adopted the multi stage flash distillation (MSF) process as the prominent process for the production of fresh water. Nevertheless the process is complex, costly and energy intensive. Consequently, energy analysis has evolved to be a useful tool for the optimization of the thermal process. Benefits are not limited to the reduction in energy consumption. Several energy optimization projects resulted in a decrease in unit product cost, an elongation of the service life of the plant through the conservation of its material of construction and an increase in profit margin generated by the process.  The simulation of five plant configuration types (namely, Single Stage Flash distillation, Multi-Stage Flash distillation and three types of Multi-Effect Distillation) was run using HYSYS. The various runs established the energy utilization of the various processes.  The results of the various HYSYS runs were then fed to Super Target software program. The program was developed by Linnhoff-March [9], which contains a suite of pinch-technology programs that provide fundamental insights to heat recovery options in a process, which then results in lower operating costs or reduced capital cost by auditing energy consumption or emission. The program was used to find and calculate the maximum possible heat recovery and to compare the existing design with targets. It was clear from the analysis that there was a lot of wastage in the SSF plants and that increasing the number of stages improved the energy utilization. In the SSF, the energy that could be saved was as high as 82.4 % while it was only 63.5 % when an MSF plant is used. When a conventional MED plant was used, the savings of 80.5 % that was achieved was comparable to that of SSF. However, when the feed was pre-heated by the vapor and liquid/vapor of the columns savings of –10.6 % and –11.5 % were achieved respectively. For the latter, the minimum delta Ts indicated the need for heat exchangers with small areas.


Why Do Department Chairs Suffer the Most in Higher Education Hierarchy?

Dr. Sinem Vatanartıran, Bahcesehir University, Turkey

Dr. B. Cagla Garipagaoglu, Bahcesehir University, Turkey



The purpose of this study is to investigate the experiences of middle level managers at higher education institutions in ways of managing relationships at the both end of the hierarchy chain. This study focused on accounts of department chairs and the study design was based on qualitative study with the aim of reflecting department chairs’ experiences and thoughts on the challenges of being a middle level manager. 13 department chairs from two foundation universities in Turkey were interviewed. Semi-structured interviews were conducted to collect data. Data was analyzed by content analysis method. Their experiences about the challenges of managing the relationships in the hierarchy chain were categorized under the following four themes: 1) building working relationships with upper echelon, 2) building working relationships with the department staff, 3) building working relationships with other department chairs, and 4) the role of the middle manager.  Academicians generally have two career paths when they enter the academic world. In the former one, they may decide to continue only as an academician and in the latter; they may decide to undertake a role at the administration. Many of them appear to be reluctant to take over an administrative post with the intention of allocating more time on research and teaching activities (Hacıfazlıoğlu, 2010a; Hart, 1993). While climbing up the ladder of administration, academic administrators generally pass through the path from being a department chair, which may be followed as being a Dean or even a President in the future.  As asserted by Wolverton and Gmelch (2002), the road to deanship entails a period as a department chair, a position that is not always embraced by many academicians. This study is designed to examine the accounts of department chairs working at foundation (non-profit, private) universities in Turkey.  The department chair represents the department to the several levels of the administration and is responsible for assigning course duties and budgetary resources as well as for personnel administration. This position is subject to the classic “linking pin” stresses (Balderston, 1995, p. 107). As put forward by Balderton (1995), the higher levels of university administration regard the chair as a first-line supervisor, responsible for interpreting and enforcing university policies and regulations and for making sensible allocations of the department’s budgeted resources. Department members, on the other hand, regard the chair both as a colleague and as their agent in bringing to the department what it needs from the university administration. In situations of conflict and scarcity, the chair cannot satisfy both forces all of the time (Balderston, 1995, p. 107). Therefore, chairing a department as a middle level position requires effective leadership as with any other leadership position. Sergiovanni and Corbally (1984) describe effective leadership as the extent to which empowerment is maintained to others and the extent to which a commitment of mutuality is created in an organization. Kerr and Gade (1986) talks about plural presidency a leadership group exercises multiple leadership in a loosely coordinated way twenty years ago. Bensimon and Neuman (1993) analyzed leadership not in terms of single individuals but in terms of teams. As in the cases of college presidents and deans (Cohen & March, 1974; Hacıfazlıoğlu, 2010a, 2010b; Vatanartıran, 2013; Kerr & Gade, 1984; Turner, 2007; Amey & Twombly, 1992), department chairs are expected to take a lead in creating a culture of collegiality among their teams. In her study, McDade (1987) underlines university administrators’ role as being both leaders and administrators in order to accomplish the goals of their institutions and build for the future.


Perceptions of Saudi Tourist about Tourism to Egypt

Dr. Osama A. Abdelkader, University of Dammam, Saudi Arabia



This research paper aims to explore the impact of some variables, upon both positive & negative perceptions of Saudi tourists about tourism to Egypt, and their decisions to visit Egypt for tourism. The research based on a questionnaire, which was prepared after reviewing a number of literatures and semi-structured interviews. The validity of survey instrument and the reliability of the gathering data were tested. In total 346 respondents responded to the questionnaire. The research shows the recent good situation of Saudi perceptions about tourism to Egypt. Research confirms that three variables have significant impacts upon negative perception of Saudi tourists about tourism to Egypt. Finally, research finds that positive perceptions have the stronger influence on the decisions of Saudi tourists comparing with the negative perceptions. The paper is a useful source for understanding the Saudi tourists and their perception about tourism to Egypt. It helps in situation analysis of Egyptian inbound tourists from Saudi Arabia. This paper provides useful information for improvement of the Egyptian inbound tourism. It offers a practical help to tourism planners and marketers in Egypt to understand the perceptions of Saudi tourists about Egyptian tourism. According to the available literature review, this research is the first of its kind in this area.  In the last decades, tourism has become an important alternative for economic development for many countries. In 1995, the number of world tourist arrivals was 536 million; this number exceeded a billion in 2012. World tourism expenditures reached 1035 billion US$ in 2012 (UNWTO, 2012). Today, world tourism expenditures come after the expenditures on weapon and medicine (Abdelkader, 2013). History confirms that Egypt has more than one-third of the world ancient heritages. So, tourism has been one of the main factors for Egyptian development before and after the revolution of January 2011. Egyptian tourism is currently representing 11.3% of Egypt’s GDP, 40% of the total Egypt’s non-commodity exports and 19.3% of Egypt’s foreign currency revenue (SIS, 2013). In 2010, the number of the Egypt's tourists exceeded 14.7 million, with revenue around 13 billion US$ (MOT, 2013). More than 76% of Egyptian inbound tourism comes from Europe and America (CAPMS, 2013). From another side, Saudi outbound tourists expended more than 16.2 billion US$ in 2012 (MAS, 2012). Although, Saudi tourists make up one of the top 10 countries exported tourists to Egypt, but their numbers are still not more than 6% of the tourists’ arrivals to Egypt. According to the study of (VISA, 2013) for the data of 25 countries, Saudi tourists have the biggest average among them by spending around $6,666 per trip exceeding the world general average (which is $2,501). Amount of researches have addressed the issue of tourism to Egypt from the general view, but a little attention has been paid to the Egyptian inbound tourism from Saudi Arabia. This research aims to shed light on the perception of Saudi Tourists about Egyptian tourism, and analysis of some impact variables on their decisions to visit Egypt for tourism. The research not only aims to study the way to increase the number of Saudi tourists to Egypt, but it also aims to extend their loyal decisions about tourism to Egypt.


The Local Innovation Networks: An Explorative Study of Success Cluster

Dr. Gilda Antonelli, University of Molise, Italy



The present study is an explorative paper on the local development network supporting innovative startups. It is based on 15 famous networks cases collected in different countries and chosen among the most famous ones referred both in the literature and in the economic press. I have used these 15 cases to formulate interesting hypothesis on how networks form and on the characteristics of the actors supporting  this creation. By observing and analyzing the networks, I developed a three-stage network model, using Larson & Starr model (Larson & Starr, 1993). I then obtained a spin out network’s life cycle that allowed me to place the case studies in the different stages and formulate my hypotheses. I noticed that all cases showed a focal role played by one of the actors that changed depending on the stage the network was leaving.  The spin-off phenomenon is very common in the USA, although its origins can be traced back to the 19th century in Germany, when three pupils of the famous chemist von Liebig set up the Basf & Hoechst Company. Silicon Valley and Boston areas developed when numerous researchers and scientists left their laboratories to set up businesses. In the United States the demarcation between basic and applied research ceased to exist in the Fifties  when Universities began to support Professors who not only created knowledge, but also applied it. Both in the United States and in Europe this has led to the creation of contextual networks by different players who linked with one another to support the creation of new spin offs. Information travels in the network without difficulty and allows each player to reach his aim. This process involves researchers, universities and research centers, local extant businesses, investors and public institutions (such as technology and innovation Parks, incubators, development agencies).  In Europe the phenomenon is less common than in the USA. The most famous studies in Europe were conducted in France by Mustar (Mustar, 1995), in Sweden by several researchers who developed empirical analysis and described university activities to support spin-off businesses; Autio (Autio, 1995) who developed the Finnish case. In Italy, one of the first to study this phenomenon was Amendola (Amendola, 1992); recently other researchers from Scuola Sant’Anna in Pisa (Arrighetti & Vivarelli, 1998; Piccaluga, 1999; Piccaluga e Chiesa, 1991, 1996) studied academic spin-offs.  Several studies (Daval, 1999; Fontes, 1998; Mustar, 1995) confirmed that research-based spin offs are mostly configured as new technology-based firms (NTBF) that are younger and more innovative than average. They give important direct and indirect contributions to knowledge and wealth creation as well as to the diffusion of technology and new employment, especially when the business application and scientific research results need more extensive transformation activities  to acquire an industrial scale. 


University Accounting Education and Employment: Survey on Non-Accounting Business Graduates

Mei-Hsiu Tsai, National Taichung University of Science & Technology, Taichung, Taiwan



The purposes of this study are:  (1) survey current accounting education by obtaining comments from chairmen of non-accounting (but business-related) departments, (2) realize the first jobs of those non-accounting (but business-related) major graduates, (3) ask whether business executives of SME are more inclined to employ accounting major graduates for their accounting jobs, and whether non-accounting major graduates can meet their professional work performance in the accounting field, and (4) analyze the important knowledge for accounting and non-accounting (but business-related) courses required by business executives so as to improve the university accounting education for non-accounting departments between teaching and employment.  This study finds that small and medium enterprises (SME) prefer to employ accounting majored graduates as accountants. It is tend to believe that those non-accounting majored graduates who in favor of being accountants was because there were more job opportunities, can be accumulated more experience in business practice, especially for their poor English, for English is not necessarily required in accounting jobs. On the prospect of business practice, executives believe that non-accounting majored graduates from university can satisfied their requirement of works. In terms of curriculum, executives in SME suggest that non-accounting majored students should enhanced following courses to meet their need in the careers: Tax Laws, Financial Accounting, Financial Statement Analysis, Tax Accounting, Computer Application, English, Financial Management , International Trade, and Business Law.  In the commercial and industrial environment of Taiwan, accounting function has been polarized. Those listed or public corporations would persistently employ certified public accountants (CPA) for their professional services, which can reach international accounting standards. Whereas, small and medium enterprises (SME), as for budget-minded, accounting function is self-appointed in a state of whatever-it-is confusion, or authorized to accounting agents whose performances may vary by degrees. This kind of phenomena offers a critical issue for SME to improve their accounting functions. Currently, the majority of literature review studies on the work performance in public or listed enterprises for university accounting majored graduates. However, SMEs account for large percentages in Taiwan’s economy. There are more and more non-accounting business majored graduates are   devoted to the accounting jobs.


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