The Journal of American Academy of Business, Cambridge

Vol.  19 * Num.. 2 * March 2014

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

 Online Computer Library Center   *   OCLC: 805078765 

National Library of Australia * NLA: 42709473

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Forecasting Excess Stock Return: A Comparative Study between U.S. and Germany

Dr. Noha Emara, Rutgers University, Camden, NJ



The results of Lettau and Ludvigson (2001) show that Cay-LL has a significant predictive power both in the in-sample and the out-of-sample forecast of excess stock return. Our study departs from Lettau and Ludvigson (2001) in adding and comparing other two estimates of cay namely Cay-OLS and Cay-DLS besides Cay-LL for forecasting excess return in both U.S and Germany over the period 1969:2 to 2005:1.  For the case of the U.S., the results suggest that Cay-OLS has the strongest in-sample and out-of-sample forecast for nested models.  The results also suggest, for the case of Gernamy, that the three alternative methods of estimating cay do not have any statistical significant effect in either the in-sample or the out-of-sample forecast of nested models. Finally analyzing the out-of sample forecast of non-nested models, using the Diebold Mariano test, the results show that for the case of U.S, Cay-OLS, Cay-DLS and Cay-LL have equal predictive accuracy. On the other hand, neither Cay-OLS nor Cay-DLS have equal predictive accuracy when compared to Cay-LL in Germany.  Within the financial markets, several types of financial variables such as the ratios of price to dividends, price to earnings, and dividends to earnings are used to forecast fluctuation of excess stock returns in both domestic and foreign markets. However, these indicators are oftentimes unreliable at predicting such fluctuations. Lettau and Ludvigson (2001) shows that the trend deviations of these macroeconomic variables is a strong predictor of the of the excess stock returns over a treasury bill rate, and can account for a substantial fraction of the variation in future excess returns. Where the variable that reflects these deviations is called “cay”. In this paper we will compare three different ways of estimating this trend deviation in Germany and U.S over the period 1969:2 to 2005:1. The variables are called Cay-OLS, Cay-DLS and Cay-LL. Where the first refers to estimating the macroeconomic trend deviations using the ordinary least square method, the second refers to estimating it by the dynamic least square method and finally the third variable refers to estimation by the Ludvigson and Lettau method.  The ability of these three variables, cay-OLS, cay-DLS and cay-LL, besides other traditional variables such as dividend ratio, payout ratio and bill rate to predict in-sample excess stock return over treasury bill rate in both Germany an U.S is compared. In addition the out-of sample forecast of cay-OLS, cay-DLS and cay-LL using fixed estimation scheme for the period 1990:1 to 2005:1 will also be estimated. The mean squared error MSE-F test is used to test for the ability of the unrestricted model (the one includes the variable cay) to hold all the information contained by the restricted model or “encompass”. The out-of sample forecast of alternative non-nested models will also be compared. The Diebold Mariano (1995) test is used to test for the equivalence accuracy of the two models under comparison. The paper is organized as follows; Section I explains three ways of estimating the trend relationship among consumption, labor income, and asset holdings. Section II explains the asset return data and the correlation matrix; section III quarterly in-sample forecasting regressions; Section IV Out-of-Sample Nested forecasting regression; Section V Out-of-Sample Non-Nested forecasting regression; Section VI concludes and section VII references. The data used for the estimation are quarterly, seasonally adjusted, per capita variables, measured in 2000 Deutsche mark for Germany and 2000 dollars for the U.S, over the period of the second quarter of 1969 to the first quarter of 2005 for both Germany and U.S.  The consumption data are for non-durables and services in 2000 chain weighted deutsche mark and 2000 chain weighted dollars for Germany and U.S respectively. The data for the stock market capitalization and demand deposits in Germany and U.S were used as a proxy for asset wealth. Finally the data for gross national income was used as a proxy for labor income. All the data for Germany and U.S have been collected from the databases of the “Global Finance” and “International Financial Statistics” As a preliminary step, the variables are tested whether each variable passes a unit root test. It has been found that consumption, labor income, and assets for both countries contain a unit root.  In Lettau and Ludvigson (2001) they showed that  can be a good proxy for market expectations of future asset returns as long as expected future returns on human capital and consumption growth are not too volatile, or as long as these variables are highly correlated with expected returns on assets.  All the terms on the right –hand side of equation (1) are presumed stationary, c, a, and y must be cointegrated, and the left side of (1) gives the deviation in the common trend of .


The Deming Philosophy of Management: Causes of Its Difficulties and Failures

Dr. Tony Polito, East Carolina University, Greenville, NC

Dr. George Audi, Ohio University, Athens, OH


The population of Deming subject matter experts (SMEs) were surveyed in order to determine their beliefs regarding the causes of implementation difficulties and failures associated with Demingistic principles. The results indicate an informal conclusion that management, especially senior management or corporate leadership, represent the most common root cause of such difficulties and failures. This finding is, in general, in keeping with Deming’s posture that the commitment of leadership is requisite to successful quality management. W. Edwards Deming is regarded by many individuals as the most important and influential management philosopher since Fredrick Taylor. Deming’s perspective on management is almost totally contrary to that of common practices of Western management and that of business school curriculum. Deming argued such practices and curriculum are a path to poor quality, higher customer dissatisfaction, higher costs and lower profits. He is widely credited as the individual most influential in the economic recovery of post‑World War II Japan as well as the rise of quality as a operations technique and a management philosophy during the late 20th Century; many statements to that effect can be found in print, comments within Bean (1985), Dixon (1987), Kusumoto (1987), Lazzareschi (1993) and Milstein (1992) are exemplars. In 1980, a year in which t1he per capita gross national product in the United States, once first in the world, had fallen to seventh place, an NBC broadcast If Japan can, why can’t we? highlighted Deming’s teachings. Thereafter, Deming’s advice was avidly sought in America; he consulted regularly at Ford, and at GM as well. In 1986, Deming authored Out of the crisis (1986) to warn Western managers as to the causes and severity of the decline in their economy. In 1991, Deming developed within his final book The new economics for industry, government, education (1994), his System of Profound Knowledge, which he called “a comprehensive theory for management, providing the rationale by which every aspect of life may be improved.”  Dr. Deming and his philosophy have been honored and respected worldwide. The Second Order Medal of the Sacred Treasure was bestowed on Deming by Emperor Hirohito for his contributions to Japan’s economy. In 1950, Japan’s highest national award for quality, named the Deming Prize, was established by JUSE, the Japanese Union of Scientists and Engineers. The main lobby of the Toyota headquarters building in Tokyo is today still dominated by three portraits, one of the company’s founder, the second of its current board chairman and the third, and largest, of Dr. Deming. In 1983, Deming was elected to the National Academy of Engineering. In 1985, Deming began lecturing at Columbia University under the title of Distinguished Visiting Scholar. In 1986, he was inducted into the Science and Engineering Hall of Fame. Also in 1986, Deming received the National Medal of Technology from President Reagan “for ... his advocacy to corporations and nations of a general management philosophy that has resulted in improved product quality with consequent betterment of products available to users as well as more efficient corporate performance.” Shortly thereafter, Deming received an award for his “Distinguished Career in Science” from the National Academy of Sciences. In the early 1990s, Newt Gingrich lectured on the value of Deming methods, finding that they would be “one of the five pillars upon which American civilization would be renewed in the 21st century.” In 1995, the American Statistical Association established the Deming Lecturer Award in honor of Deming’s accomplishments. The cover story of the April 22, 1991 edition of U. S. News and World Report gave even greater weight to Deming’s significance when it discussed the “nine hidden turning points in human history;” the ninth turning point was Deming’s fathering of the Japanese quality revolution, and the magazine called him “a turning point of business history made flesh.” President Bill Clinton, in a July 1993 Chicago speech on the future of the American workplace, named a book about Dr. Deming and his philosophy as one of three, that, if read by every worker, would vastly improve the productivity of America. And in 1999, the American Management Association included in its list of “The 75 Best Management Decisions Ever Made” that of Toyota’s acceptance of Deming’s advice. The abundance of anecdotal support, astride the absence of significant academic research regarding such a revered topic as Deming’s philosophy, effects a compelling call to some type of research of the topic. Indeed, one call for research into the Deming prescription found in the literature is based on this exact argument: “Despite the apparent effect that the Deming management method has had on the practice of management around the world, there is little empirical research support for its effectiveness beyond anecdotal evidence. … Academic attention on the Deming management method has, in fact, been surprisingly sparse. …  Other researchers are encouraged to critically examine the Deming management method approach to quality management.” (Anderson, Rungtusanatham, & Schroeder, 1994)


Forensic Accounting – A Growing Niche in the Field of Accountancy

Dr. Consolacion Fajardo, Professor, National University, California



This piece of research will examine the reasons why forensic accounting is an expanding field.  The objective is to comprehend the drive for going into forensic accounting.  It will include a summary of some red flags or indicators of possible fraudulent activities that organizations need to watch out and to be careful about.  It is hoped that this article will contribute to the discussion on the importance of forensic accounting in making an autopsy of the financial records to document fraud or crime, as well as a preventive measure for companies to minimize fraud in the organization. Modern forensic accounting first emerged in the 1970s and early 1980s, most notably in connection with insider stock-trading fraud cases and the scandals in the savings and loan business.  Forensic accountants were called in to reconstruct the books of failed institutions and determine what went wrong.  Unlike conventional accounting which operates from the assumption of honesty, forensic accounting treats all figures suspect until proven otherwise. Forensic accountants are similar to investigators because they track suspects based on financial documents.  Forensic accounting can be used not only to hunt down the culprits, but also to prevent fraud and other white collar crimes.  Forensic accounting is not part of the usual routine accounting.  It is considered an additional tool that can be utilized to prevent, white –collar crime and stop irregularities before they grow into crises. “When America’s federal investigators wanted to prosecute Al Capone, who did they call? An accountant.  Times have not changed much since the bean counters brought down Chicago’s crime boss for tax evasion.”  (The Economist, 1996).  With the growing complexity of the business environment and the growing number of business related investigations, forensic accounting professionals are increasingly asked to assist in the investigation of financial and business related issues.  The integration of accounting, auditing and investigative skills yields the specialty known as Forensic Accounting.   Forensic accounting provides an accounting analysis that is suitable to the court which will form the basis for discussion, debate, and ultimately dispute resolution.  It encompasses both litigation support and investigative accounting.  Forensic accountants utilize accounting, auditing, and investigative skills when conducting an investigation.  Equally critical is the ability to respond immediately and to communicate financial information clearly and concisely in a courtroom setting.  Forensic Accountants are trained to look beyond the numbers and deal with the business reality of the situation. In 2008, Digabriele conducted a nationwide survey on a random sample of 1,500 accounting academics, forensic accounting practitioners, and users of forensic accounting services (attorneys).  The objective is to identify relevant skills of forensic accountants and whether any differences exist in the views of those skills among the three significant stakeholders. Nine competencies were included in the study:  (1) deductive analysis, (2) critical thinking,  (3) unstructured problem solving, (4) investigative flexibility, (5) analytical proficiency, (6) oral communication, (7) written communication, (8) specific legal knowledge, and (9) composure.  The results indicate that practitioners and academics agree that critical thinking, unstructured problem solving, investigative flexibility, analytical proficiency, and legal knowledge are important skills of forensic accountants.  Users of forensic accounting services rated deductive analysis as less important than did academics.  However, both groups agreed with practitioners, who viewed deductive analysis as important. The groups did not differ on oral communication, written communication, or composure rankings. These results show that some skills are relevant and important to the outcome of forensic accounting education (Digabriele, 2008). Employment of accountants and auditors is expected to grow 16 percent from 2010 to 2020, about as fast as the average for all occupations.  Demand for thorough financial documentation is expected to increase in response to recent financial crises and subsequent financial regulations.  Between 2008 and 2018, experts predict the creation of 279,400 new accounting jobs in total, with forensic accounting as one of the top growth areas. Many of these jobs will be in the private sector, as forensic accounting practices are adopted more widely outside of government agencies. There are likely to be particularly high concentrations of new jobs among businesses that are expanding through globalization. The forensic accounting job growth rate in the United States between now and 2018 will be substantially higher than the national average for other jobs (U.S. Bureau of Labor Statistics, 2013). The research methodology will involve a review of literature on the reasons why forensic accounting is one of the fastest growing sectors in the field of Accountancy, why accounting firms are dedicating more resources in forensic accounting, and the red flags to consider in the audit of financial report, to deter, detect, and reduce fraudulent activities.


An Integrated Approach using Markov and Rolling Forecasting Models for Predicting Long-Term Academic Performance

Dr. Siva Sankaran, California State University, Northridge, CA

Kris Sankaran, Stanford University, Stanford, CA



This research looks at student academic performance as measured by Grade Point averages (GPA) in sequential quarter intervals and proposes a methodology to construct a transition matrix that captures the probabilistic movements of GPA over time. A Markov model is then proposed to calculate the steady state probabilities and predict the proportion of students in each grade group over the long run. To minimize prediction errors due to non-homogeneity in the academic strengths of students who are admitted over time, a rolling forecasting procedure based on individual student performance is integrated into the Markov approach. Two worked out examples are given, one to demonstrate the steps in applying the Markov model and another to demonstrate the integrated forecast procedure. The average root mean square error of the proposed integrated forecast procedure is less compared to the standard mean-based prediction. The integrated forecast procedure also offers the benefit of requiring only minimal student data for prediction, yet a paired t-test comparing the predicted steady state probabilities under the Markov and the integrated approach shows the latter to be just as effective. The integrated approach is an additional strategic decision-making tool for administrators in monitoring and maintaining consistent academic performance. Every educational institution wants its students to learn and succeed. From admission to graduation, students go through rigorous curricula with guidance from instructors, staff and administrators. One of the best measures of performance available to these institutions is how the students do academically. The most commonly used measure is the Grade Point Averaging (GPA) system which typically is tracked over successive time periods such as quarters or semesters. Many institutions require a minimum GPA of C for graduation and allocate sizable resources to minimize the dropout rate. After all, every educational institution realizes that student success reflects upon the quality of the institution as well as the public perception of it.  In this paper, we model the movement of the student GPAs as results of repeated trials over successive time periods. Such a period can be a quarter or a semester. While the exact state of GPA cannot be predicted with certainty for a given period, it is reasonable to hypothesize that transition probabilities are good predictors of the movement of GPA from one state to the next. If we have a large enough student population data collected over time from which to compute the transition probabilities, we can be reasonably confident of the stability and robustness of the transition matrix so derived. We can thus model the process as a Markov chain with stationary transition probabilities. The benefit of this approach is that administrators can estimate the proportion of students in the various grade categories and if needed adopt new policies and intervention strategies supplemented by additional resources to maintain academic performance. This paper is organized as follows. First, prior research in education that has applied mathematical modeling based on probability theory is discussed. Second, the theory and the mechanics of the proposed Markov model to predict student performance is presented. Third, a worked out example of the Markov model is given. Fourth, an enhancement to the model that integrates forecasting is described along with related statistical results. We conclude by commenting on the strengths and limitations of the model and providing directions for future research. Applicability of mathematical models to education was eloquently argued by Taylor (1994) despite an appearance of disconnect between what administrators in educational institutions seem at first to conclude as largely an arena best engaged through behavioral research methods. In the past, researchers have applied mathematical modeling to education at both at micro and macro levels. While the micro-educational models focus on predicting the individual teaching/learning processes, macro models deal with issues such as planning and budgeting typically external to classroom. Investigators at both levels have used deterministic, probabilistic, regression and linear programming approaches. Among the probabilistic methods, the Markov modeling has been the choice of some researchers. Zhang and Zhang (2010) studied teaching effectiveness in a classroom setting by asking the participating students evaluate the teaching quality of their instructors on a periodic basis. The author found the approach to be valuable in predicting teaching effectiveness over the long run. Bartolucci, Pennoni and Vittadini (2011) also evaluated teaching effectiveness by examining the improvement in student cognitive skills as they progressed through the middle school level. Mohamed (1979) investigated finding an efficient method in planning a professional career. The author developed a goal-seek strategy in identifying the sequence of coursework that would lead ultimately to becoming qualified for such a career.  At the macro level, some of the studies that used Markov approach that relate to the current paper can be classified into two: i) student and faculty planning, and ii) general administration. They are summarized below. Johnstone and Philp (1973) investigated the planning process involved in managing student growth enrollment using Markov approach. Their model projected enrollments that compared well to the actual numbers. Predicting graduation rates was the focus of a study by Uche (1978). The author applied the Markov modeling approach by comparing the graduation of a student to that of reaching an absorbing state. A study by Al-Awadhi and Konsowa (2007) of 250 students analyzed data on student flow in a campus using Markov model and determined that the retention rates of freshman students was far less than those of students who were in sophomore and junior status.


The Impact Product Quality has on Perceptions of Price-Value, Satisfaction, and Behavioural Intentions

Dr. Sean M. Hennessey, University of Prince Edward Island, Charlottetown, PEI, Canada

Dr. Dongkoo Yun, University of Prince Edward Island, Charlottetown, PEI, Canada

Dr. Roberta MacDonald, University of Prince Edward Island, Charlottetown, PEI, Canada



A model is developed that considers the impact a tourist product's perceived quality has on three variables: the perception of price paid versus value received, satisfaction with the product, and behavioural intentions. The model was tested using responses to a survey of 3,235 golfers on Prince Edward Island (PEI), a major tourist destination in Canada.  Three types of golfers were considered: visitors, permanent residents, and seasonal residents of PEI.  A factor analysis was completed to develop five measures of the perceived quality of the golf course that the respondent had just played.  Three multiple regression models were then used to test the relationships between the variables of interest.  This appears to be the first study that models golfer behaviors and intentions by resident type. The results of the study indicate that a significantly positive relationship exists: 1) between the perceived quality of the course played and the feeling that value was received for the green fee paid; 2) between quality of the course, perceptions of price-value, and satisfaction; and 3) between perceived quality, price-value, satisfaction, and intentions to return to golf and to recommend the course to others. Overall, the results provide strong support for a the proposed model and contributes to a better understanding of tourists’ perceptions and their behavioural intentions for an important product offered by many tourist destinations. Prince Edward Island (PEI) is Canada’s smallest province with a population of just 140,000 on 5,684 square kilometres of land.  PEI is separated from its sister provinces of Nova Scotia and New Brunswick by the Northumberland Strait.  In 1997, a bridge was opened providing a permanent link to the mainland.  PEI has been called "the million acre farm," and agriculture is the biggest industry.  PEI is known for its potatoes, and fields with rows of green potato plants set in the red soil of the Island are a common sight.  The combination of the red and green of the fields, and the blue of the water makes for striking scenery, and is one of the reasons why tourism is the PEI's second largest industry.  In the mid-1990s, in an attempt to diversify the tourism product offered, the PEI Department of Tourism made golf a core part of its tourism marketing strategy.  With 25 courses spread over a relatively small area, PEI has become a golfing destination for visitors from across the country and continent. The golf market is a dynamic and growing activity globally (Kim & Lee, 2009) and if developed and marketed appropriately, can be successful and profitable.  As a niche tourism product, golf’s ability to attract certain types of visitors may lead to higher returns for the tourism destination. The golf market represents a significant opportunity to grow and maintain visitation to a destination, and generate substantial revenues for the tourism industry and government (Hennessey, MacDonald, & MacEachern, 2008).  With the high fixed development costs associated with golf courses, golf marketers need to understand visitors’ behaviours in order to improve profitability and competitiveness.  Research on tourist behavioral characteristics indicates that recommendations from others result in visits and revisits to a destination (Oppermann, 2000). These future behavioural intentions are related to levels of satisfaction (Cronin, Brady, & Hult, 2000; Hutchinson,Wang & Lai, 2010; Oliver, 1980) and value perceptions (Duman & Mattila, 2005; Hutchinson,Wang & Lai, 2009; Oh, 1999; Petrick & Backman, 2002; Zeithaml, 1988) at the destination. In addition, perceived quality of a product’s attributes is another important determinant of future behavioural intentions (e.g., Baker & Crompton, 2000; Chen and Chen 2010; Olshavsky & Miller 1972). Figure 1 presents the proposed model that identifies the causal relationships between the variables considered in the paper.  The model was designed based on a review of the theories of consumer behaviour and tourism marketing, including behavioural intentions, satisfaction, customer value, and service quality. In brief, behavioural intentions are influenced directly by the perceived quality of the golf course (the extent to which the course met/exceeded expectations), perceptions of price-value (the value of the golf experience for the green fee paid), and overall satisfaction. Perceived quality also indirectly affects intentions through perceptions of price-value and satisfaction. Finally, overall satisfaction is also influenced by perceptions of price-value. In the proposed model, behavioural intentions is the dependent variable, which is proxied by two measures:  intention to return to play the golf course and to recommend the course to others. Many studies have revealed that satisfaction is one of the most significant predictors of behavioural intentions (Baker & Crompton, 2000; Cronin, Brady, & Hult, 2000; Duman & Mattila, 2005; Hutchinson,Wang & Lai, 2009; Oh, 1999; Oliver, 1980; Petrick, Morais, & Norman, 2001; Tian-Cole, Crompton, & Willson, 2002; Yoon & Uysal, 2005). Also, a number of previous studies have investigated the relationship between perceived value and behavioural intentions (Cronin, Brady, & Hult, 2000; Duman & Mattila, 2005; Ho, Chung, Lin, & Chen, 2010; Oh, 1999; Parasuraman & Grewal, 2000; Petrick & Backman, 2002; Petrick, Morais, & Norman, 2001; Woodruff, 1997; Zeithaml, 1988). The results of this body of research support the influential role perceived value has in consumers’ repurchase intentions and in how the purchase experience is represented to others (word-of-mouth intentions).


Human Resource Issues in BYOD Policy Development

Dr. Kathryn J. Ready, Winona State University, Winona, MN

Dr. Marzie Astani, Winona State University, Winona, MN

Dr. Mussie Tessema, Winona State University, Winona, MN



As the number of Bring Your Own Devices (BYOD) continues to rise in the workplace, both for individual and collaborative use, increasing attention to the adoption of BYOD policies is warranted.  Well-defined policies are essential in providing direction to employees on devices that are supported and can be accessed in organizations for work-related means.  Despite the known risks, particularly among IT professionals, organizations have been slow to adopt security-awareness policies and training programs.  However, the adoption of a plan requires careful analysis as to the issues that an organization may be confronted with and/or the type of security breach it may face. Well-defined policies are essential in providing direction to employees on what devices are supported and can be accessed in organizations.  This research study examines fifty-seven responses from an organizational survey of service and manufacturing firms in the upper Midwest region concerning the use, training and policies in dealing with BYOD in the workplace.  Recommendations are provided to support the development of BYOD workplace policies. Bring your own devices (BYOD) is the practice of using personal devices for business or bringing one’s own devices to the workplace for work-related purposes.  BYOD include smartphones, tablets and laptops and the use of these technological devices to make life easier is significantly increasing. There are already more than 1.08 billion smartphone users in the world, and 91.4 million of these users are from the United States (Go, 2012). Smartphone users have increased by almost 47% during 2011-12, and are expected to reach 2 billion by 2015 (Worldwide Smartphone Users, 2012).  Approximately 89% of smartphone users use their smart phones throughout the day, 92% of smartphone users use their smartphone to send text messages to other phones and almost 84% of users use their smartphones for browsing the internet (Go, 2012). Worldwide devices (the combined shipments of PCs, tablets and mobile phones) are projected to total 2.4 billion units in 2013, a nine percent increase from 2012, and are expected to reach more than 2.9 billion units by 2017 (Gartner, Inc., 2013). Currently, the average number of connected devices is 2.9 (Eddy, 2013), and is expected to reach 3.3 by 2014 (Cisco, 2012).  As proliferation of technological devices continues, the need for synchronizing devices and developing means to prevent security breaches is a major concern.  One of the major reasons technological devices continue to increase in the workplace is that organizations and employees seek out new and more efficient ways to conduct business.  With more and more mobile devices being used for work-related purposes, organizations must develop policies and practices on how these devices can securely access corporate data and information. Users demand seamless access to corporate resources regardless of the type of device they use or where the device originates (Cisco, 2012).  This demand is being met by organizations due to the productivity gains that these devices allow.  Intel surveys reveal that on average, workers report saving 57 minutes a day, totaling 5 million hours annually, due to BYOD usage (Greengard 2013).  Yet, with these gains, organizations are struggling with heightened security threats.  According to a recent study by Ponemon of 671 IT security professionals, 47% of respondents concluded that more than half of employees in their organizations are using personal mobile devices in the workplace, up from 33% of respondents in 2011.  Yet, while more employees are using personal devices, 29%  of IT professionals, up from 21% in 2011, indicated that employers were not taking steps to secure employee-owned devices (Ponemon, 2013).  As the number of mobile devices increases in the workplace, many employers are requiring employees to have anti-virus and mobile device management (MDM) software installed on their personal mobile devices (SHRM, 2013).  MDM software has the ability to store all company-related information, including calendars and emails in one secure area that is password-protected.  As cloud-based applications increase in use, additional threats to company-related data can be expected.  In a recent survey of IT security professionals, the use of mobile devices and cloud-based applications are expected to increase in the next one to two years (Ponemon, 2013).  These results are consistent with a recent survey of 400 business technology professionals reported in InformationWeek (2012), which finds that the top five mobile security concerns in organizations are lost and stolen devices, penetration of  corporate wi-fi networks, mobile malware on applications from public app stores, users forwarding corporate information to cloud-based storage services, and security at public hot spots.  Physical access to mobile devices is important and can be just as critical of a threat as a third party hacking into the network (Cook et al, 2013).  Problems such as circumventing a password or lock on a mobile device can be accomplished quite easily for an experienced attacker and encrypted data could be accessed (Cook et al, 2013).  Corporate data, critical emails and passwords could be unknowingly compromised.  Digital copiers can also pose a threat as they are capable of storing personal and proprietary information contained in the document they copy, fax and email (Maurer, 2013). With the threat of security breaches looming, companies are increasingly at risk of losing proprietary data. More than one half of the largest U.S. corporations have lost data through the loss of portable disc drives such as USBs (Forrester, 2012). 


Accounting and Audit Decision Making With Fuzzy Multiple Payoffs and Dependent Probabilities

Dr. Awni Zebda, Texas A&M University-Corpus Christi, Corpus Christi, Texas



Recently, different models to address the problem of ambiguity in decision making have been provided by expected utility theorists, behavioralists, and fuzzy set theorists and have been used by several accountants in addressing the ambiguity in some accounting and auditing problems.  The objective of this paper is to review and evaluate some of these ambiguity models.  The paper also provides an extension of these models.  The proposed extension does not require the assumptions of single payoff and independent probabilities assumed by much of the literature on decision theory and previous ambiguity models and, thus, it provides for more realistic and flexible representation of decision problems when these assumptions are inappropriate. For the last thirty years, decision theory of expected utility (e.g., von Neumann and Morgenstern [1944], Savage [1954]) has been the most widely recommended model for decision making under uncertainty.  The theory has been extensively used by accountants as a basis for the development of models to solve accounting problems.  The theory has also been the basis for much of the behavioral literature dealing with accounting decision making. However, decision theory and, consequently, accounting decision models and analysis fails to deal with ambiguity for a number of reasons [Zebda, 1991, 1995].  First, decision theory does not allow for fuzzy states of nature which are common in accounting problems.  Second, the theory is not suitable to address the ambiguity attached to probability judgments.  Third, the theory requires precise payoffs that are difficult to obtain in real life decisions.  Finally, the theory mistakenly assumes a fixed level of accuracy and precision and, thus, it does not allow decision makers to express their perceived imprecision of the estimates required for the analysis. The problem of ambiguity and the inability of decision theory to deal with ambiguity were noted by fuzzy set theorists, behavioralists, and expected utility theorists, including Savage [1954] himself.  The effect of ambiguity on decision making was supported by the empirical research on Ellsberg's paradox (e.g., Curley and Yates [1985], Dolan and Jones [2004], Einhorn and Hogarth [1985, 1986], Ellsberg [1961], MacCrimmon and Larsson [1979], Slovic and Tversky [1974], Yates and Zukowski [1976]).  The paradox suggests that when given a choice between ambiguous and nonambiguous options, the majority of people display ambiguity avoidance behavior which violates the axioms of decision theory including Savage's sure thing axiom and the additivity of probabilities principle. Recently, some behavioralists, expected utility theorists, and fuzzy set theorists have provided models that extend decision theory to allow for some aspects of the ambiguity in decision making.  These models were also used by accountants in addressing the ambiguity in accounting.  The purpose of this paper is to review and evaluate some of these models.  The paper also provides an extension of these models.  The proposed extension allows for decisions with multiple payoffs and does not require the assumption of independent probabilities. The paper is organized as follows.  The next section examines the problem of ambiguity in accounting.  Section III evaluates some of the earlier ambiguity models.  An extension of these models is provided in section IV.  Section V provides an illustration of the extension.  Finally, section VI provides summary and concluding remarks. Ambiguity and vagueness are different from randomness.  Randomness deals with the uncertainty (in terms of probability) regarding the occurrence of events.  Ambiguity, however, has to do with the uncertainty due to the imprecision of words, events, estimates, stimuli, and judgments (such as probability judgments).  For example, the term Material Error involves vagueness because of the inexact meaning of the word Material.  But, the question about the probability of an error of $1000 involves randomness.  The event is well defined (an error is either $1000 or not); the uncertainty lies with the occurrence or nonoccurrence of the event. Randomness, as measured by probability, can be related to vague events as when one asks about the probability of having a Large Variance or Material Error.  On the other hand, probability judgments can be vague as when one expresses his probability judgments using values such as About 40% and Pretty Likely. Ambiguity and vagueness have been observed in many disciplines such as behavioral science, expected utility theory, psychology of personality, philosophy and linguistics, and computer and system sciences.  The definitions of ambiguity and vagueness provided in these disciplines emphasize the idea of inexactness but differ somewhat from discipline to discipline to reflect the subject matter of the disciplines.  For example, personality psychologists (e.g., Norton [1975]) suggest that ambiguity has to do with cues and stimuli that are vague, unclear, unstructured, incomplete, and with multiple meanings.  Zadeh [1965], a computer and system scientist, was concerned with set theory and suggested that vagueness (fuzziness) has to do with classes of objects (e.g., Tall Men) with no exact boundaries between what is and what is not.


Sustainability Content Analysis of Management Texts

Dr. Constance Bates, Florida International University, FL

Dr. Ronnie Silverblatt, Florida International University, FL



Although the concept of sustainability is familiar to many, it has not yet become a standard part of the business college curriculum.  While some business schools have sustainability courses and have integrated sustainability into the curriculum, others have not.  Perhaps schools are trying to determine if this new topic is truly mainstream or just peripheral,  much like corporate social responsibility was twenty years ago.  A study of the sustainability content of introductory management textbooks was conducted to help business schools ascertain how the subject is evolving in management textbooks. This content analysis provides an up-to-date look at how much space is being devoted to sustainability.  This may be useful to professors is designing their curricula and choosing their textbooks. There is no doubt that the word and concept of sustainability is familiar to many.  We often hear about going green and taking care of the environment.  Businesses proudly announce their efforts to go green in order to attract customers and clients who value this effort.  Accordingly, sustainability has become a mainstream opportunity for both consumers and businesses.  The question then arises: what, if anything, should colleges of business do about this topic?  Should they immediately create a sustainability major or integrate sustainability into the business core?  Or, should they wait until students or employers start requesting skills in this area before taking any actions?  Or maybe, there is some intermediate response to this new phenomenon.  A survey of business schools reveals a wide range of responses as a few have developed a sustainability major, while others have very little (Silverblatt, 2012).  While confronted with the opportunity to integrate sustainability into the business curriculum, colleges may want to take stock of how much the current business curriculum contains sustainability.  The goal of this paper is to assist professors with their decisions regarding sustainability in the curriculum.  The study is a content analysis of sustainability in introductory management textbooks.  This provides information on how much material in a text is devoted to sustainability.  With this information, curriculum committees can see how much sustainability their current business/management students are exposed to in their introductory management course.  The committees can then decide if they want to adjust the amount and teaching methodology of sustainability in the curriculum. Increasingly, the term sustainability has been used to cover the commonly referred to “three pillars”: society, economy, and the environment.  This paper focuses on environmental sustainability for companies: protecting the environment while making a profit. There are several factors to consider.  One important variable is what employers expect.  Research shows that many employers expect business school graduates to have a foundation of knowledge about sustainability.  Students themselves have displayed a high level of interest in sustainability.  A recent survey showed that 75% of students expressed an interest in taking a sustainability course (Silverblatt, 2012). Another variable is the competitiveness of the college curriculum.  If other schools are integrating sustainability into their curriculums, they may be viewed as more cutting edge.  Cutting edge curriculum usually translates into a better reputation for the school and more job opportunities for students. Students have a general idea what green and sustainability mean in their everyday lives.  They lack, however, an understanding of what they mean for a manager.  Colleges of business have the opportunity to provide students with a foundation of understanding what sustainability means for business.  Students could have guidance on how to identify a green opportunity.  They could learn to look throughout the firm, in such areas as energy, waste, packing and shipping, and so on.  They could benefit from studying implemented sustainability projects to see which projects failed and which ones succeeded and why.  They could learn the jargon, the technical issues, and the laws regarding sustainability.  No matter what our personal ideas are about going green, most people can see that exposure to sustainability and understanding sustainability in business can be helpful to today’s business students. There has been a struggle to define sustainability; there are even entire articles devoted to this task (Wright, 2002).  The definition has been changing over time and getting broader, which adds to the confusion.  It is has gone from just focusing on natural resources to including economic and social issues.  The “umbrella concept includes the environmental and social impact of corporate actions.  Environmental impact includes the use of natural resources and the impact on the ecosystem of the industrial and commercial practices.  Social impact encompasses the interconnected categories of economy, health, hunger, peace, and education” (Rimanoczy, 2010). Integrating sustainability into the business curriculum is a world-wide effort on the part of business schools across the globe.   Studies are available describing the process from the South Pacific (Corcoran, 2010)), to Australia (Mather, 2011)), to Asia (Naeem, Neal, 2012), to India (Chhokar, 2010) (Singh, 2011), to rural Amazon (Domask, 2007), to Wales (Roffe,2010), and to Canada (Calvert et al., 2011). There are studies devoted to describing different methods of integrating sustainability into the curriculum.  Redding and Cato describe how they embedded tools for sustainability into the business curriculum; they used lectures, debates, surveys, discussions, and assignments to encourage student critical thinking.  They felt students could benefit more from combining sustainability and critical thinking than learning simple facts and figures about sustainability (Redding et al., 2011). 


Member Orientation of the U.S. Credit Union Industry: Post-2008 Evidence

Dr. Su-Jane Chen, Metropolitan State University of Denver, Denver, CO



This research aims to determine if the credit union industry has been able to deliver significant value to its members in the post-Great Recession era by comparing all credit unions and banks’ national average interest rates over the time period of 2009-2012.  Empirical results show that credit unions have been offering significantly higher savings rates and charging significantly lower loan rates than banks since 2008 despite several ensuing market and regulatory developments adversely affecting the credit union industry during the period.  The only exception resides in the mortgage lending area, where neither industry dominates in its rate offerings.  Thus, the general tax-exempt status and not-for-profit co-op philosophy of the credit union industry appear to continue to benefit its members.  Given previously documented spillover effects of credit union presence on local markets, retail banking customers most likely have also gained from the credit union industry’s member-oriented practice.  A closer look at test statistics further reveals that credit union members on average save the most money from car loans, credit card debt, and home equity loans.  However, according to the Credit Union National Association, an industry trade organization, membership penetration in the industry as of mid-year 2012 for these most-advantageous services varied from 4.4% for new automobile loans to no more than 15% for credit cards.  Thus, the credit union industry administrators and leagues should develop effective strategies to educate its members, promote its products, and raise membership penetration rates.  This proposition should resonate particularly well with smaller credit unions, which have in general experienced much lower membership penetration rates than their larger counterparts.  The observation also suggests that the credit-union-generated benefit is not equally distributed among its members. While credit unions and banks offer virtually the same products to retail customers, they represent two distinct types of financial institutions.  Banks are owned by stockholders and are driven by profit.  In contrast, credit unions are not-for-profit organizations owned by members who normally share a common bond, such as belonging to the same association, living in the same community, or working for the same company, government agency, or nonprofit institution (Kaushik and Lopez, 1993).  Credit unions in general enjoy low operating costs and tax-exempt status.  The unique features have led them to provide personalized quality services with no or low fees and offer favorable savings and loan rates to their members.  Thus, it should not come as a surprise that credit unions have become the choice for many consumers to fulfill their financial needs.  The movement has been further heightened by the negative publicity suffered by large, fee-heavy national banks since the 2007-2008 financial crisis and manifested in “Move Your Money” campaigns and “Bank Transfer Day” of late 2011.  According to the National Credit Union Administration (NCUA hereafter), the federal governing agency of the credit union industry, there were 6,753 federally insured credit unions, 94.6 million members, more than $1.05 trillion in total assets, $877.9 billion in total insured deposits, and $599.9 billion in total loans as of March 31, 2013.  In comparison, information reported by Federal Deposit Insurance Corporation shows that as of March 31, 2013 there were 6,048 federally insured banks with $13.36 trillion in total assets, $5.6 trillion in total insured deposits, and $6.9 in net loans and leases.  Despite gaining some members at the expense of banks due to public outrage and outcry over excessive fees levied by banks to their customers, credit unions, along with their financial services counterparts, have faced several obstacles in the post-2008 era.  To stimulate the economy, the central bank has adopted aggressive monetary policies to push both short-term and long-term rates to historically low levels, reducing spread and putting downward pressure on the financial services sector’s earnings.  In response to the financial crisis, Dodd-Frank Act further squeezes the sector’s bottom line with its restriction on several major sources of the sector’s fee income, such as debit card interchange fees and the ensuing increase in regulatory compliance costs.  Besides these market and regulatory challenges affecting all financial institutions, credit unions have had to endure an industry specific setback. The credit union industry consists of both wholesale corporate credit unions and retail natural-person credit unions with the former providing the latter with check clearing, investments, and loan services.  Federal regulations stipulate that wholesale credit unions invest only in safe, liquid assets.  However, some corporate credit unions aimed for higher potential returns and took on excessive risk by loading up on subprime mortgage-backed securities. As a result, the NCUA in 2009-2010 closed five of the largest corporate credit unions, Constitution Corporate, Members of United Corporate, Western Corporate, Southwest Corporate, and U.S. Central Corporate.  These credit unions became insolvent after the collapse of the housing market led to unprecedented value declines in their investment holdings.  Since then, retail credit unions have been bearing the financial costs of these corporate credit union failures in the form of temporary corporate credit union stabilization fund assessment.  The NCUA has imposed the assessment in hope of covering billions of dollars of incurred losses and stabilizing the corporate credit union system.


Labor Mobility of Scientists and Engineers and the Pace of Innovation

Dr. Simona Lup Tick, Graduate School of Business and Public Policy, Naval Postgraduate School, Monterey, CA



This paper presents a first empirical estimate of the relation between the labor mobility of research personnel, as a measure of knowledge spillovers, and the pace of innovation, measured by the mean backward lag in patent citations. Using an unbalanced panel of firms across eight U.S. industries with the highest rate of innovation as measured by patents granted from 1984 to 1999, the cross-sectional results show evidence of a positive relation between the rate at which scientists and engineers change jobs and the pace of innovation within each industry. When the relation is estimated with industry fixed effects, the estimate on the labor mobility is not longer significant. Therefore, this paper presents an initial cross-sectional result that establishes a stylized fact between labor mobility of research personnel and the pace of innovation that requires further investigation. Decision makers have always been concerned with issues related to innovation, potential spillovers and their impact on the incentives and capacity to innovate. At least since Scotchmer and Green (1990), economists have accepted the idea that current research can build on the pool of existing technological knowledge, and the pace of innovation depends critically on the amount of knowledge transferred among firms. There are many channels through which knowledge spreads. One channel is the labor movement of scientists and research personnel from one firm to another. This idea was articulated in Arrow's 1962 article on the public good aspect of information, writing that "no amount of labor protection can make a thoroughly appropriable commodity of something so intangible as information. The very use of information in any productive way is bound to reveal it, at least in part. Mobility of personnel among firms provides a way of spreading information" (p. 615). In her 1994 book, Saxenian argues that frequent social and professional meetings of Silicon Valley engineers and the ease with which workers can change jobs led to the rapid dissemination and cross fertilization of ideas which fueled innovation in Silicon Valley.  The theoretical literature on labor mobility and knowledge diffusion is growing. Some studies focus on labor mobility and patenting, (Kim and Marschke, 2005), endogenous R&D and employment decisions (Gersbach and Schmutzler, 2003), labor mobility and spinouts (Franco and Filson, 2006). However, empirical research in this area is just beginning to take off. The main difficulty faced by the empirical literature is the lack of appropriate data. This paper contributes to the empirical literature on knowledge spillovers and innovation by presenting the first empirical test of the relation between labor mobility of research personnel and the pace of innovation. The pace of innovation is defined as the time lag between two consecutive generations of technology and it is measured by the mean backward lag in patent citations.  The empirical test uses patent citation data from the NBER/ Western Reserve University data on all utility patents granted by the U.S. Patent Office between 1963 and 1999, matched with Compustat firm data for an unbalanced panel of firms across eight U.S. highly innovative industries. The labor mobility is given by the rate of scientists and engineers that change jobs within a year, and it is constructed from the U.S. Bureau of Labor Statistics, the Current Population Survey March Supplements. The cross-sectional results show evidence that an increase in the annual measure of the labor mobility of scientists and engineers is significantly associated with an increase in the measure of the pace of innovation.  While this establishes a stylized fact of the relation between labor mobility and the pace of innovation, the fixed effects estimation make the relation disappear, requiring improved data  and further research into the relation between the labor mobility and innovation. The rest of the paper is organized as follows. The next section describes the data, section III presents the empirical strategy and discusses the empirical results, and section IV concludes. The data set used in this paper is an unbalanced panel of innovative firms across eight innovative U.S. industries, observed between 1984 and 1999, matched with an industry measure of the labor mobility of scientists and engineers.  The measure of the pace of innovation is based on patent citations. A key data item in the patent document is "References Cited -- U.S. Patent Documents". The references cited, known in the literature as patent citations, include previous patents and other published material (e.g. scientific literature) that identify aspects of the relevant technology that were previously publicly known. The patent applicant has a legal duty to disclose any knowledge of the "prior art" contained in such patents or other published materials. As a result, patent citations serve an important legal function as they delimit the scope of the property rights awarded by the patent. If a patent issued in year t, Pt cites a previous patent issued in year t-s, Pt-s, it implies that patent Pt-s represents a piece of previously existing knowledge upon which patent Pt builds, and over which Pt-s cannot have a claim. For this reason, patent citations are considered informative of links between patented innovations, providing direct observations of technological impact and innovation dynamics.  


Inward and Outward U.S. Foreign Direct Investment Performance During Recent Financial Crises

Dr. Lucyna Kornecki, Embry-Riddle Aeronautical University, Daytona Beach, FL



Foreign direct investment (FDI) plays an extraordinary and growing role in the global markets and represents an integral part of the U.S. economy. This research has descriptive character and focuses on the latest trends in inward and outward U.S. foreign direct investment illustrating the impact of the recent financial crises on FDI performance. The study analyzes the US FDI stock contribution to the global FDI and performance of the inward and outward US FDI flow and stock, during last decade. The essential part of this research relates to inward and outward US FDI employment and the structure of inward and outward US FDI financial performance, which includes: equity, reinvested earnings and intercompany debt. The International Monetary Fund defines foreign direct investment (FDI) as an investment that allows an investor to have a significant voice in the management of an enterprise operating outside the investor’s own country. The phrase “significant voice” usually means ownership of 10 per cent or more of the ordinary shares or voting power (for an incorporated enterprise) or the equivalent (for an unincorporated enterprise). This may involve either creating an entirely new enterprise—a so-called greenfield investment—or, more typically, changing the ownership of existing enterprises, via mergers and acquisitions. Other types of financial transactions between related enterprises, such as reinvesting the earnings of the FDI enterprise, are also defined as FDI (http://www.conferenceboard. ca/hcp/details/economy/outward-fdi-performance.aspx). The United States continues to be the leading destination for foreign direct investment (FDI) and the leading investor in other economies.  A.T. Kearney’s FDI Confidence Index measures investor sentiment on the basis of a survey of senior executives in the world’s largest enterprises, and ranks present and future prospects for FDI flows to different economies with respect to the factors that drive corporate decisions to invest abroad. The FDI Confidence Index Report of 2010 ranked China and the United States as the most attractive FDI locations in the world, recording unprecedented levels of investor confidence. According to the ranking for 2011, however, although the United States remained a strong magnet for FDI in the world economy, China, India and Brazil occupied the top spots in terms of the Confidence Index ( The financial crisis, which began in summer 2007, has led to a progressive deterioration of the investment situation in the world economies. Various indicators during the first half of 2008 already suggested a decline in world growth prospects as well as in investors’ confidence. This deteriorating climate began to leave its first negative marks in investment programs, including FDI, in early 2008. According to UNCTAD’s 2008-2010 World Investment Prospects Survey, conducted April–June 2008, 40% of the respondent companies already mentioned at that time that the financial instability had a “negative” or “very negative” impact on their investment ( wips2008_en.pdf.). This study constitutes a base for the further exploration of the importance of inward and outward US FDI in the global markets and in the U.S. economy. The goal of this research is to illustrate the impact of current financial crises on US FDI performance. The basic statistics related to US FDI flow and stock come from the UNCTAD’s FDI/TNC and from the Bureau of Economic Analysis (BEA), a section of the U.S. Department of Commerce. BEA is responsible for collecting economic data related to FDI flows in the United States. Monitoring this data is very helpful in determining the impact of FDI on the economy’s output and employment, but it is especially helpful in evaluating performance of the particular states and industry segments.  The current recession, which began in December 2007, could rank as the longest U.S. economic downturn since the Great Depression. In addition to the severe economic downturn of the U.S. economy, global economic indicators have registered sharper declines than in the previous two global recessions of 1981 and 1990. The current global recession corresponded with reduction in flows and stock of inward and outward of US and global FDI (Ibarra-Caton and Mataloni, 2010). During the recent economic crisis, between 2008 and 2009, inward US FDI flows decreased by 50%. This setback in FDI has particularly affected cross-border mergers and acquisitions (M&As), the value of which sharp decline as compared to the previous year’s historic high. International greenfield investments have been less impacted to this point but a large number of projects have been cancelled or postponed. The value of M&As and greenfield investment in the United States by foreign MNEs picked up again in 2010, contributing to a rise in FDI flows from US$ 153 billion in 2009 to US$ 198 billion in 2010 and further to US$ 227 billion in 2011. Although not yet back at their pre-crisis level, FDI inflows in 2010 and 2011accounted for 15% of global inflows in both years, still by far the single largest share of any economy in the world (Kornecki, 2013). Inward US FDI contribute immensely to the domestic output growth and employment.


Stock Price Volatility and Firm Capital Structure Decisions during the Financial Crisis

Dr. Deniz Ozenbas, Montclair State University, Montclair, NJ

Dr. Luis San Vicente Portes, Montclair State University, Montclair, NJ



Financial economics research establishes that there is a link between the stock price volatility of a firm and its capital structure decisions. We hypothesize that this relationship would become especially critical during periods of stress such as periods with heightened stock price volatility and diminished opportunities of debt financing (i.e. during a credit crunch). Towards that end, in this study we build on our previous theoretical and empirical work about the relationship between stock price volatility and capital structure at the firm level by specifically investigating the capital structure decisions and borrowing costs of publicly traded firms during the most recent financial crisis, i.e. 2007-2009. To account for possible systematic differences between smaller and larger firms (such as credit constraints, or credit market frictions) we analyze different size firm-groups based on their market capitalization. Through quartile regressions, we analyze the relation between firm risk and the debt ratios and the cost of external financing across the distribution of firms. We frame our analysis based on the Financial Accelerator Model of Bernanke et. al (1999). Since the effect of heightened risk on leverage is offset during investment booms, we propose that in a crisis period that directly follows a boom firms will be even more adversely affected due to their heightened levels of leverage, and the above described relationship will be more pronounced. Finally, we distinguish between financial and non-financial firms in order to identify the strength of such propagation mechanisms and hence would be able to provide policy recommendations for financial services regulation. This distinction proves crucial since we find fundamental differences between financial and non-financial firms in terms of their capital structure, and ability to borrow, where the former are more leveraged and exhibit lower cost of capital. Central to the analysis is the financial crisis and its disruptive effects. In the midst of the crisis, financial firms’ lower cost of funding advantage is reversed for middle-sized firms. In other words, during that time non-financial mid-size firms had lower cost of external capital than financial mid-size firms. The recent financial crisis was characterized by both extreme stock price volatility and a credit crunch as the debt markets dried in response to the uncertainty in the market, especially in the aftermath of the Lehman Brothers bankruptcy. It is established in the financial economics research that there is a link between the stock price volatility of a firm and its capital structure decisions as the firms try to steer away from debt during such periods (e.g.San Vicente Portes and Ozenbas, 2009). In this study, we investigate this relationship and hypothesize that it becomes especially critical during periods of stress with both heightened stock price volatility and diminished opportunities of debt financing (i.e. during a financial crisis).  Towards that end, we specifically investigate the capital structure decisions and borrowing costs of publicly traded firms during the 1985 to 2009 period, and we specifically isolate the recent financial crisis period, i.e. 2007-2009, to analyze the patterns of this period. We frame our analysis on the Financial Accelerator Model of Bernanke et. al (1999). Since the effect of heightened risk on leverage is offset during investment booms, we propose that in a crisis period that directly follows a boom firms will be even more adversely affected due to their heightened levels of leverage, and the above described relationship will be more pronounced. Moreover, this effect is expected to be larger in small and medium sized firms due to their lesser access to the credit markets, revealing financial accelerator like effects. One contribution of this study is to account for possible systematic differences between smaller and larger firms (such as credit constraints, or credit market frictions) in their financing choices during a crisis as we analyze different size firm-groups separately based on their market capitalizations. The importance of firm size in that firm’s financing decisions is established in the academic literature, and we are contributing to this body of work by specifically investigating the financial crisis period and measuring its impact on the borrowing costs and capital structure decisions of firms of varying size groups. Another contribution is to measure the impact of extreme stock volatility on the borrowing and capital costs of firms, again during the financial crisis period.  Since we distinguish between financial and non-financial firms when comparing the strength of the propagation mechanism between the economic crisis and the credit market, our findings have implications for policy recommendations for financial services regulation. This distinction proves crucial since we find fundamental differences between financial and non-financial firms in terms of their capital structure, and ability to borrow, where the former are more leveraged and exhibit lower cost of capital throughout the sample. However, in the midst of the crisis such cost of funding advantage for financial firms was reversed for middle-sized firms. In other words, during that time non-financial mid-size firms had lower cost of external capital than financial ones, reflecting the level of distress experienced in financial markets. Indirectly we also find evidence of deepening economic integration as there is a small increase in geographic segments served, particularly amongst the largest firms. There are several studies that investigate the volatility of the aggregate economy, the volatility of individual firms (idiosyncratic risk) and the relationship between leverage and volatility.


Predicting Firm Performance As A Function of CEO and Economic Factors

Dr. Gordon Arbogast, Jacksonville University, FL

Dr. Jim Mirabella, Jacksonville University, FL



This paper analyzes the relationship between Chief Executive Officers’ (CEO) age, graduate education, and tenure to the performance of a company in relation to its percentage change in revenue per year.  Information was gathered from the CEO's representing companies from the 2011 Fortune 500 list.  The time span of data gathered was from 1995 to 2010, a fifteen-year period.  Data was then eliminated on CEOs and companies that did not have complete information for the fifteen year period, or were outliers from the group. The final data collected includes information covering fifty-six CEOs from twenty-four different companies. The results indicated a strong relationship between a company’s change in revenue and CEO age.  Tenure and graduate education were eliminated.  As a result, the null hypothesis (there is no relationship between CEO age and a company’s percent change in revenue) was rejected in favor of accepting the alternative hypothesis i.e. there may well be a relationship between CEO age and a company’s percent change in revenue. Scholars in strategic management have increasingly studied the role of top management teams in strategy formation and organizational performance (Hambrick & Mason, 1984).  Often the emphasis has been on demographic characteristics such as the ages, organizational tenures, functional backgrounds, and education of top managers.  Empirical work on the link between the demographics of the leadership team and firm performance is not readily abundant, even though there is evidence that they are related (Norburn & Birley, 1988).  For example, Hambrick and D'Aveni (1992) found that the average top management team  tenure and functional experience in marketing, opera-tions, and R&D were less likely to file for bankruptcy.  Halleblian & Finkelstein (1993), in their study of the computer industry, found that team size was positively related to performance, and that CEO dominance was negatively related to performance, with performance being measured as return on assets, return on sales, and return on equity.  While the top management team has been shown to be important, the CEO specifically has been singled out in many studies, with extensive evidence that there is an inverse relationship between the likelihood of CEO turnover and firm performance (Murphy and Zimmerman 1993; Weisbach 1988).  This research was predicted on a firm’s performance revealing insights about how a CEO creates value for the company’s shareholders.  Logically, when firm performance was poor, a CEO was typically replaced and deemed to be ineffective at creating value. Also demonstrated was that perceptions about the CEO can change periodically based on firm performance.  In a sample of public U.S. firms from 1996-2005 Dikolli (2011) showed that the likelihood of CEO turnover increased amidst negative financial performance.  They also computed the probability of CEO turnover to be between 18 and 36 percent after a negative quarter, and a CEO with four consecutive negative quarters was two to three times more likely to be replaced.  Additionally, negative quarterly reports were about five times more disastrous for new CEOs than for experienced ones.  CEO pay has also been a hotly contested subject, especially given the extremely high salaries some receive but don’t seem to truly merit. Complicating matters further, a large portion of their pay is often tied into incentives such as stock options.  Additionally the measures of performance are not always observable to outsiders.  According to Hayes & Schaefer (2000), there is a positive relationship between CEO pay and the future returns for the firm, while Kadiyala & Rau (2004) found a positive relationship between CEO incentives and future stock price performance.  While pay cannot cause performance, what has been shown is that firms that pay their CEOs the highest tend to be firms that have recently experienced high operating performance relative to their competitors (Core, 1999).  As a result of the implosion of several large corporations in the last decade, there has been much scrutiny on the factors that impact the performance of a company.  A logical assumption is that some of these factors lead to effective performance of the company.  For instance, it is often assumed that good CEO performance can have a positive effect on company performance.  There is also much to be said about the role of the Board of Directors.  One of the responsibilities of the Board is to review the performance of the CEO.  Naturally, one can conclude that good company performance equals good CEO performance so the question becomes what leads to good CEO performance.  There are several factors that can be examined to determine if they have influence on the CEO’s ability to deliver great performance for his organization.  The intent of this study is to examine the impact of CEO tenure on the company’s performance. The effectiveness of a CEO has previously been studied with respect to several factors.  Starting with Barnard in 1938 there has been a number of articles written to determine the role of executive leadership in corporate effectiveness. 


Employee Engagement: Lessons learned from the U.S. 2013 Glassdoor Best Places to Work Employee Choice Award Leaders

Dr. Arthur H. Johnson, Palm Beach Atlantic University, FL



While leaders and managers wish to attain the best performance from their employees, maintaining and sustaining high levels of employee performance has proven elusive in spite of implementing intentional motivational practices such as rewards, incentives, consequences, performance management systems, and various drivers of performance. Because of the lack of effectiveness of traditional motivational strategies, or a lack of understanding by leaders and managers of how to apply this knowledge of motivation theory, a shift away from traditional motivational strategies has occurred (Herzberg, 2003) and moved toward employee engagement strategies (Marciano, 2010). Clearly there is a disconnect between research-based knowledge of best practices in employee engagement and what is actually practiced at most business organizations in the United States. The purpose of this study was to perform a content analysis of the Glassdoor Top 20 Best Places to Work in 2013 Employee Choice Award Leaders based on the employee engagement RESPECT model (Marciano, 2010) to determine the practices, policies, and actions those organizations have implemented to engage employees successfully, and determine how the RESPECT model of employee engagement fits employee perceptions of what makes an engaging organizational environment. A content analysis using the RESPECT model (Marciano, 2010) components (recognition, empowerment, supportive feedback, partnering, expectations, consideration, and trust) was conducted by examining all employee review statements of from Glassdoor’s Top 20 Best Places to Work in 2013 (N = 956). This qualitative review of extant data was conducted to determine the relevant issues, variables, and perceptions of employees regarding important factors in choosing to work for an organization, choosing to stay with the organization, and being engaged in the work of the organization through their performance. Also captured were issues and variables that emerged from the data that did not fit the RESPECT model (Marciano, 2010), but that employees found important in engagement with their respective organization. The findings suggested support for the RESPECT model (Marciano, 2010) of employee engagement, however, employees also found other issues and variables important in their perceptions of an engaging environment. Researchers have explored employee motivation for many years. Historically, this research has produced many theories to help practitioners understand drivers of behavior and performance (Latham, 2007). These theories include motivation theory, need hierarchy theory, theory X and theory Y, equity theory, expectancy theory, behavior modification theory, goal setting theory, and two factor theory (motivation-hygiene theory and dual-factor theory). Unfortunately, even with a multitude of research on employee motivation and subsequent theories produced and tested, putting effective motivational strategies and practices into place in organizational settings has proven challenging at best and too often elusive in its effectiveness. Further compounding this problem is seen in Dowden’s (2011) research that showed over 50% of employees are not engaged and 20% are actively disengaged in the United States workforce, with an estimated cost of $300 billion annually in lost productivity. Research by Rice (2008, November) indicated that fewer than one in three workers are engaged at work. While traditional motivational theory has in part driven professional practice, many leaders, managers, and supervisors who attempt strategies to motivate employees effectively have failed in their efforts. Because of the ineffectiveness of traditional motivational strategies, or a lack of understanding by leaders, managers, and supervisors of how to put motivation theory into practice, traditional motivational strategies (Herzberg, 2003) have come into question regarding their effectiveness, hence there has been a paradigm shift toward understanding employee engagement strategies (Marciano, 2010) to effectively improve organizational performance. Conrad (2012, May 7) indicated that organizations with higher levels of employee engagement improved their financial results from 2% to 4%, but organizations with low employee engagement had declines in financial results from 1.5% to 2%. Employee engagement has been shown to be related to increased productivity, increased profitability, improved customer service, less safety problems, higher levels of organizational pride, and greater employee retention (Dowden, 2011; Little & Little, 2006; Pritchard, 2008), but there is still a need for a stronger linkage between research based knowledge of best practices in employee engagement and what is actually practiced at most business organizations in the United States. Research by Simon (2011, January-March) has also indicated that employee engagement is linked to reduced employee attrition, increased productivity, and increased profitability. Thomas and MacDiamid (2004, June/July) stated that engaged workplaces have higher productivity, earnings, and customer loyalty, whereas workplaces of low employee engagement experience higher employee turnover.


The Three Types of Workers: A Comparison Study Among United States, Chilean, and Japanese Employees

Dr. Leopoldo Arias-Bolzmann, Professor of Marketing,

CENTRUM, Graduate Business School, Pontifícia Universidad Catolica del Peru

Dr. Emiko Magoshi, J. F. Oberlin University, Tokyo



As noted in previous work (Kim & Sikula, 2005; Kim & Sikula, 2006; Kim, Sikula & Smith, 2006; Kim, Cho & Sikula, 2007; Kim, Arias-Bolzmann, 2008), there are three types of people in the workplace: “Necessities,” “Commoners,” and “Parasites.”  A person is a Necessity if they are irreplaceable and crucial to the functioning of an organization.  A Commoner is a person of normal ability and talent who has no significant impact on organizational success.  Parasites are detrimental freeloaders who damage the functioning of an organization. Unlike previous studies which compared data sets from two countries, there were three data sets from three different countries compared for this study:  32 students in an MBA Organizational Behavior class in the U.S.; 47 students in an MBA Marketing class in Chile; and 46 undergraduate Management students in Japan.  These students were asked for their views on the leading traits and behaviors of Necessities, Commoners, and Parasites.  The method of collecting the three sets of data was identical from previous studies, but the process of analyzing the data was different.  Contrary to the previous studies, the characteristics of all three categories are dissimilar, and the characteristics of Commoner from the Japanese data set were very positive. Potential explanations for these findings may be due to the low inter-rater reliability and the differences in the respondents’ cultural backgrounds. Human beings, by nature, are relational creatures.  At any given time all people, regardless of their individual differences (e.g., age, gender, religion, ethnic background), assume multiple roles in society, such as that of spouse, parent, employee, friend, club member, and citizen of a city, town, or country. Within each of these roles, there is always more than one person involved, from a very small number of members in an institution like a nuclear family, to a very large number of members comprising the citizenship of a nation.  No matter what type of role a person plays in a group at any given time however, that person falls into one of three categories:  Necessity, Commoner, or Parasite. The most desirable type of person is that of a Necessity.  Without colleagues (or partners) who are Necessities, the group as a whole cannot conduct successful activities.  The person of Necessity focuses his/her efforts on achieving the group’s goals, and thus consistently makes valuable contributions to ensure collective success.  From the group’s perspective, such a person is an invaluable asset.  Conversely, the loss felt within the group by the departure of such an individual is very impactful.  The characteristics that comprise a Necessity in group relations are, to some extent, role-specific.  In other words, the traits and behaviors that characterize a person of Necessity in one particular role may be different from the traits and behaviors that characterize a person of Necessity in a different role.  For example, to be a Necessity as a spouse one must display patience, a loving and caring attitude, and the ability to compromise.  To be a Necessity as an academic administrator, however, one should demonstrate self-confidence, intelligence, responsibility, dedication to work, and an ability to supervise. Comments made in the workplace about a person of Necessity include, “It would be hard to fill his shoes” or “She is an excellent person, it’s a shame to lose her.”  Also a person of Necessity may also be someone who works diligently without receiving much visibility or recognition within an organization (e.g., the faithful janitor who immaculately cleans the offices; the sports team member who sacrifices his/her individual statistics to do what is needed to help the team win).  Either way, a person of Necessity occupies an important position.  They provide the social “glue” that holds an organization together and enables it to function and thrive as a cohesive whole. Commoners have no significant impact on the success of the group.  They do not contribute much to the accomplishment of group goals, but neither do they harm the overall group performance in any significant way.  A Commoner is not a self-starter and tends to focus on “just getting by.”  They do not provide significant input into group activities and show little willingness to participate in improving the function of the group.  The Commoner does only what they are told or what is absolutely required but nothing extra like volunteering their own time or effort.  Employees in this category are the “deadwood” of an organization, going through the motions and often just waiting for retirement.  They are easily replaceable and not missed much when they leave. The third and least productive type of person is that of a Parasite.  This individual not only fails to contribute to group performance, but also harms the organization by acting as a leech and a drain on others.  The Parasite is a loafer who desires a free ride, complains about everything, blames mistakes on others, and exudes pessimism in the workplace.  They are not loyal to the organization and cannot be trusted to contribute productively to attaining the group’s goals.  Such a worker is like the proverbial bad apple in the bunch corrupting much of what they touch.  Many group members wish the Parasite would leave as soon as possible, since the organization would be better off not having such a person around.


Productivity. The Engine of Progress in Business Organizations

Prof. Piero Mella, Department of Economics and Business, University of Pavia, Italy



This study aims to show that in a capitalistic economic world the trends in productivity and quality represent the fundamental economic variable. The search for ever greater levels of productivity is due in general to man’s natural tendency to maximize labor efficiency, which by definition represents a necessary though “unpleasant” and strenuous activity to be minimized.  This phenomenon is general in nature, as observation reveals, and can be translated in two general observational postulates: (1) Postulate of industriousness: man develops economic behavior aimed at the production, exchange and final consumption of wealth; in particular, he is willing to supply his own labor to produce and consume those goods necessary to satisfy his economic needs, which is equivalent to saying that man is industrious.  (2) Postulate of efficiency: industrious man maximizes the efficiency of his labor, thereby maximizing the ratio between the benefits of «working» and the sacrifice involved, searching for the maximum quality given the sacrifice needed to produce; that is, he maximizes the value of the obtained production. These postulates lie behind the hypothesis that productivity and quality are destined to continually increase.  I propose the following “Hypothesis of increasing productivity”: the search for the highest levels of Return On Equity necessary to produce value for the shareholders and meet the expectations of the firms’ stakeholders gives rise to a improvement process whose macro effect is increasing levels of productivity and quality.  This paper will try demonstrate that productivity is the basis of all productive systems, which are viewed as transformers of utility and value, since the search for maximum productive efficiency is necessary to reduce production costs and thus to produce value. After presenting a coherent frame of reference we shall examine the drivers of productivity and then move on to discuss the consequences of the continual growth in productivity. The paper concludes with a simple but significant model that seeks to illustrate the relationship between productivity and employment. All goods – individual or collective, material or services – that man uses to satisfy his needs and aspiration must be viewed as products obtained by some productive process carried out by a productive system activated by business organizations which bear the risk of production and marketing. In fact, every productive process carries out a productive transformation through which inputs of given quantities of productive factors (cement and steel reinforcing rods, wheat and milling machines, corn flour with water and salt, aluminum plates and press brakes, etc.) are transformed into outputs of volumes of production at the end of the process (columns of reinforced cement, wheat and bran, cornmeal, computer chassis, etc.). The transformation follows a production function, which specifies the parameters, the duration and the time sequences of the operations that allow the outputs to be obtained from the inputs at the end of the transformation cycle. In particular, the production function indicates the unit requirements [q], that is, the units of each factor – labor (L), materials (M) and plants&machinery (P&M) – needed for one unit of a specific product [P]. The productive process that allows us to obtain a production [P] by means of specific productive transformations can be represented by the model in figure 1. The inputs are the total volumes [Q] of the four factor categories [QL, QM, QP&M].The outputs are the volumes of products [QP] for the period in question. The previous model shown in figure 1 could easily be extended to include the hypothesis of a productive system that carries out multiple processes to obtain different products. In this case we would also have to specify the productive mix (or productive combination) that defines the volumes to obtain from the various products that represent the outputs of this productive system. Generalizing, with the help of figure 1, we can easily see that, given the production function (determined by the product planners and the process technicians), it is always possible to determine the overall requirements [QL, QM, QP&M], represented as the inputs in figure 1, needed to achieve the desired productive mix, represented as the output. The productive system is the organization that in a long-lasting manner carries out over time the processes that provide the productive transformations to obtain and sell [QP] with defined levels of quality (e. g. accumulate and manage stocks, sell the output, pay suppliers, receive payments from customers, etc.). As shown in figure 1, production systems interface with input (supply) markets, where they purchase the factors of production from workers as well as from other organizations, called suppliers, in short, and with output (or end markets), where they sell their production to other organizations, called customers.  The purchase prices (pL, pM, pP&M) allow costs to be quantified as factor values ([C], inputs); the selling prices (pP) quantify the revenues [R] as values of the production [P] (output). Through the valorization of the inputs and outputs through prices, the productive transformation becomes a value transformation, as shown in figure 2, which is derived from figure 1 after we have valorized the factors and the production by means of prices.


Lifelong Professional Education for Lawyers: A Collaborative Model

Dr. Barbara J. Durkin, SUNY Oneonta, Oneonta, NY

Dr. Deborah Schwartz, Iona College, New Rochelle, NY

Dr. Theodore M. Schwartz, Iona College, New Rochelle, NY



In response to client requirements and market conditions, law firms are abandoning their traditional apprenticeship practice of developing new lawyers, which resulted in a pyramid-shaped organizational structure. Fewer new law school graduates are hired and trained by law firms; instead, law firms are using experienced, lateral hires or subcontracted legal expertise resulting in a diamond-shaped organizational structure. In the long term, this jeopardizes the pipeline for legal talent because fewer new law school graduates are being hired and trained by individual law firms. This paper suggests a new collaborative model among law schools, law firms, private interest groups, Continuing Legal Education (CLE) providers, and regulatory agencies. Its function would be to provide for long-term, sustainable development of legal talent through standardized training of lawyers and by a system of tracking legal expertise. The legal services industry, of which law firms are a part, generates billions of dollars in revenue and accounts for 1.12 million jobs (Bureau of Labor Statistics, 2013). Like their corporate counterparts, large law firms have multiple offices and clients domestically and internationally. Many law firms have evolved, merged, and grown into mega-firms (often called “BigLaw”) employing thousands of lawyers and non-lawyers. In contrast, more than three-fourths of all lawyers employed in private practice work in law firms with less than 20 partners; almost one-half are in solo practice (American Bar Association [ABA] in 2009 Trotter, 2009). In a survey of law firms’ managing partners, one of the major issues identified was the challenge of recruiting and retaining qualified lawyers (Clay & Seeger, 2012). The changing competitive environment and its impact on the recruitment and professional development of lawyers have been discussed in many recent venues,  including the ALI-ABA Critical Issues Summit (Bingaman, 2009) and the New York State Bar Association Task Force on the Future of the Legal Profession (Addison, 2011). Their recommendations called for proposals to aid in the assessment of learning of those who have worked in the legal profession and the development of training strategies for lawyers. Much of the focus was on the knowledge and skills of new lawyers (i.e., core competencies) and how the lifelong process of learning must be addressed by both law firms and individual lawyers. The concerns of managing partners of law firms mirror those of corporate chief executive officers: slowed market growth, increased competition from global forces, retention and training of qualified personnel, and maintenance of profitability (Clay & Seeger, 2012). Law firms rely on human capital for their competitive advantage. As such, they, too, have begun to look at core competencies, knowledge management, and identifying specific skills necessary for long- term success. Although 45,000 new lawyers are entering the labor market each year, many remain unemployed or underemployed for extended lengths of time. Law firms are facing the same dilemma experienced by other organizations. With so many new candidates available in the work force, how can law firms identify and select the best people with the correct knowledge and skills for their firm? It is projected that the market for legal services will have slow growth, competitive pressures will intensify and there will be slimmer profit margins industry-wide (Henderson & Zahorsky, 2011). These trends are independent of the size of the firm, affecting everyone from BigLaw to boutique specialty firms to solo practices. For some time, law firms have been addressing such complex and challenging factors as globalization, technological development, and increasingly rapid infusion of technology, as well as the development and use of knowledge (Hitt, Keats & DeMarie, 1998). Moreover, clients’ resistance to the prevailing billable hour model and the recent scandals involving overcharging have led to the use of performance-based review systems such as that employed by DLA Piper (Harper, 2013).  Recent economic conditions have forced law firms to reevaluate their business models (Garner, 2012; Ribstein, 2010,; Susskind, 2008). Following in the footsteps of business corporations, law firms have had to determine client requirements and how to efficiently and effectively fill client needs. Clients are exploring cost reductions in a variety of areas, including services for outside counsel (Addison & Brown, 2011). They are looking for increased value from law firms and are carefully evaluating delivered outcomes, cost of comparable services, and law firm margins. In a recent survey of law firm leaders, 98% of the respondents said a greater focus on improved practice efficiency will be a permanent trend (Clay & Seeger, 2012). Like corporations, law firms are looking for greater efficiency in the delivery of services to clients and are embarking on proactive initiatives to boost productivity (Clay & Seeger, 2012).  Unlike their corporate counterparts, the training and development of new law school graduates has been traditionally paid for by clients. As part of the costs charged to the client, firms would directly bill the time spent by the associate on the assigned matter. New associates might research an issue or draft a document, even performing tasks that had been done similarly by others in the firm and for which documentation and information already existed. The associate was learning something new that an experienced lawyer would not have had to research. All this time was billed to clients. In contrast, business corporations typically consider new employee training a cost of doing business and charge training to an overhead account rather than directly billing customers for training employees.


Successors and the Family Business: Novel Propositions and a New Guiding Model for Effective Succession

Markus Baur, University of Latvia, Riga



This paper summarizes the results of a doctoral study which aimed to identify success factors for succession in the family business by exploring the perspective of outperforming successors. Based on the framework of systems theory and a qualitative research approach, 13 successful cases of medium-sized family firms in the close-to-boarder-area of Austria, Germany, and Switzerland have been studied. For this purpose, problem-centered interviews with the successors have been conducted. The results of the research are relevant to both scientific and business practice inasmuch as diverse propositions emerged or confirm existing theories. On the basis of 17 propositions, the paper offers a new guiding model for effective succession and outlines the resulting novel notions to successful succession.  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. Research that focuses particularly on successors has been concerned primarily with the development of successors (Sardeshmukh, 2008), conflict reasons within after-succession environment (Harvey & Evans, 1995), motives and traits of successors (Halter et al., 2007), attributes of successors (Chrisman, Chua, & Sharma, 1998; Sharma & Rao, 2000), career orientation (Zellweger et. al., 2010), and leadership qualities of successors (Cater, 2006). Latest publications have further explored the development of successors with intent to rethink education and empowerment concepts. Such investigations provided propositions for further research concerning parent-child relationships, knowledge acquisition, long-term orientation, cooperation, successor roles, and risk orientation (Cater & Justis, 2009). Halter et al. (2007) investigated whether the challenges linked with founding a firm attract the same type of person as does the succession in an existing business in order to identify traits and motives of next generation managers. When it comes to career choice of students with family business background, Zellweger et al. (2010) found that students with family business background are pessimistic about being in control but optimistic about their efficacy to pursue an entrepreneurial career. Particularly, studies concerned with succession tend to analyze reasons for failure (e.g., Applegate, 1994; Beckhard & Dyer, 1983; File & Prince, 1996). Even family business studies devoted to success stories are limited, as they typically cover big, famous, and professionally managed companies that are admittedly well-known but do not constitute the majority of family business population (e.g. Braun, 2009, exploring on BOSCH, LIEBHERR, HILTI, etc.). They are only the tip of the iceberg. The overwhelming majority of family firms, however, are small to medium sized firms (i.a. Bjuggren & Sund, 2001; Goldberg, 1996; Wallau, 2008). This study builds on the previous work done and tries to find out indicators that might be responsible for effective succession of the successor. The purpose of this study was to contribute to the deeper understanding of the family business with special regard to identifying potential factors that might support effective succession from the perspective of the successor. This was done by studying 13 outperforming successors of medium-sized family businesses in the “close-to-the-boarder-areas” of Austria, Germany, and Switzerland by applying problem-centered interviews (e.g. Scheuch, 1967; Witzel, 1989) based on a qualitative research approach. In a first phase, the author therefore searched for literature relevant to the topic and gained a broader understanding of the concept of the family business and particularly of succession. The elaboration on existing literature lead to the development of a sensitive model (Mayer, 2004) that shaped the framework of the empirical part of the study. The strategy of inquiry was accordingly qualitative, inductive, and interpretative applying problem-centered interview techniques. The central research question of the study was:  What are good individual, family, and ownership preconditions that support successors in effectively succeeding the family business?  the study explored on the perspective of the successor and tried to find key success factors that are potentially responsible for effective succession. The general hypothesis was: Successors are outperforming with their business, as they have experienced an effective succession due to a set of good preconditions associated with the personality, family, and ownership system. Qualitative research focuses mainly on the understanding and principles of openness, explication, reflection, and flexibility (Lamnek, 2005). Data analysis was executed by following Mayring’s qualitative content analysis (2002) and using mind-mapping as a tool for organizing the data (aggregation, explication and structuring). Concerning the time horizon, the study was conducted as a cross sectional (multiple case study) rather than a holistic study (longitudinal). Outperformance was assessed by comparing the company’s’ performance against its competition since successor inauguration – using six key indicators proposed by Malik (2008) – with the intention to exclude sector dependent developments (industry life cycle) and macro-economic effects. The study is the result of a process that incorporated information from personal experiences (from the authors own family business), books, journals, (coming from practical and academic direction), magazines, stories from newspapers, and 13 interviews with outperforming successors.


On the Housing Market and U.S. Economic Recovery

Dr. Sahar Bahmani, The University of Wisconsin at Parkside, Kenosha, WI



The head of the Federal Reserve, Chairman Ben Bernanke, in March 2012, gave a lecture series about the financial crisis of 2007, where he discussed the root causes of the most recent financial crisis as well as the policy responses to these significant issues.  With his area of expertise being the Great Depression, it is important to thoroughly analyze what causes financial crisis and how to better prevent them.  In this paper, we look at the specific policy responses to these root causes of the financial crisis of 2007 in order to evaluate how the current actions of the Federal Reserve are in fact helping the U.S. in its recovery process.  This recovery process is directly linked to the conditions and outlook of the housing market, therefore we discuss the state of the sluggish housing market in the U.S. as well as how and why it is slowing down the recovery process in the U.S.  Currently, many are optimistic because the housing market has begun to see positive signs, which will have a positive impact on the economy.  By looking at the current data on the housing market, through prices, sales, the difficulty of obtaining a loan through competitive requirements as a result of the banking crisis, and the average credit scores needed, we will be able to compare and contrast the requirements to obtain a home mortgage loan after the financial crisis of 2007 compared to the requirements before the collapsing of the housing market and its impact on recovery in the U.S.  A major issue that will be focused upon is how financial crisis occur the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2009 promoting financial stability in the U.S. and protected consumers, yet there is still more that needs to be done for economic stability in the U.S.  With each financial crisis, since the economic conditions are different during each one and its originations are different, it is important to recognize that there are major lessons to be learned from each unique experience.  The head of the Federal Reserve, Chairman Ben Bernanke, in March 2012, gave a lecture series about the financial crisis of 2007, where he discussed the root causes of the recent financial crisis.  Bernanke, who joined the Federal Reserve in 2002, has a very cautious view on the U.S. economy at this time.  Every report made by the head of the Federal Reserve impacts the public, consumers, investment and consumer confidence on the outlook of the economy.  Therefore, creating optimism rather than pessimism is ideal in order to increase consumer confidence and investment.  It makes a lot of sense to delve deep into these root causes in order to really learn about what went wrong so that we can avoid making those same mistakes yet again.  Clearly, one of the biggest mistakes made was relaxing the requirement to obtain a home mortgage loan.  As a result of making it easier for consumers to obtain a home mortgage loan, many of those consumers were not necessarily credit worthy and many of them spread themselves too thin.  The loans put buyers in homes that they could not otherwise afford, which is a bad combination.  When consumers see the ease at which they are able to obtain a loan, they also tend to take out a larger loan for a better home without thinking about what if they lose their job during this 15 or 30 year mortgage, many forgot to ask themselves how they will keep up with these mortgage payments.  This is exactly what happened, when the unemployment rate started to sky rocket, many people were not able to keep up with their mortgage payments which lead to a record amout of foreclosures and short sales on homes.  Foreclosures rose at a very rapid rate as prices on homes fell because owners found that they owed more on their home than the house is actually worth.  Now, credit is so tight amongst banks that you are in need of nearly a perfect credit score to be approved for a home mortgage loan.  The housing market bubble bursting led to the financial collapse, and this is how our economy found itself in the worst recession it had ever seen before.  Our economy is trying its best to recover from past mistakes, by using both fiscal and monetary policy in an inefficient manner and checking back in to see how things are moving along.  This way they can see and carefully monitor which areas need to be improved and make those changes appropriately.  With the economy, however, the results are rarely seen right away so it can be difficult to measure what is and is not working.  This is where the challenge lies and this is also why the economy has not recovered as fast as one would have liked, that and the very slow housing market that has not yet recovered.  Recently, housing prices and confidence have been on an upward trend, which will have a positive impact on economic recovery.  This paper focuses on the monetary aspect of pushing the economy back towards equilibrium, but fiscal policy, the President’s job of spending taxation revenue and allocating those funds to different places, plays just as big of a role, as does consumer confidence.  This is the challenge at hand in economics, once one variable is focused on and improved, it causes another variable to be negatively impacted and this is where opportunity cost comes into play.  Since there are different variables at hand, the government cannot necessarily predict with perfect accuracy the behavior of consumers, because there are so many other factors that play a role.


21st Century Brazil

Dr. Kip Pirkle, University of Georgia, Athens, GA



Brazil in 2013 is the world's seventh largest economy and it is estimated that by 2017 it will be the fourth largest. Brazil is rising as a global player with its new-found political and economic stability.  Brazil’s government policies have played a significant role in its growth. Government is taking considerable growth-oriented measures such as infrastructure projects to include hydro-electric plants and stadiums for the 2014 World Cup soccer and the 2016 Olympics.  With its economic growth, regional power, and increasing influence, Brazil has the potential to become a base of power for the developing world in the coming decades. Much of that story will unfold in the next few years, and Brazil will have the opportunity to take a prominent seat at the global table. In 1500, the Portuguese were the first European settlers to arrive in Brazil led by Pedro Cabral claiming Brazil for Portugal. (1) Other Portuguese pioneers followed seeking valuable goods for trade and unclaimed land in order to flee their lives of poverty. (2) At this time, the only item of value the explorers discovered was the pau do Brazil (Brazil wood tree) from which they made red dye. The Portuguese in Brazil were much less focused at first on conquering, controlling, and developing the country. Most were penniless sailors drawn to a world of profitable trade and abundant agriculture rather than territorial expansion. Their new discovery was concentrated on the exterior of Brazil as the country's interior remained unexplored. Eventually sugar was brought to Brazil by the Portuguese. (3) Harvesting sugar was very labor intensive and slaves were imported from Africa to harvest the crops. One third of all slaves transported to the Americas were brought to Brazil to work in the sugar fields in the 17th century. The first coffee bush was planted in Brazil in 1727. (4) The planting of this coffee bush, which produced coffee seeds, changed the historical path of the country. Originally the Brazilian economy was largely based on the production of sugar in the States of the Northeast, using slave labor. Slavery continued, but the production shifted to coffee in the States of the South, where the seeds would adapt better. Advantageous natural conditions and an inexpensive labor force helped Brazil become the largest exporter of coffee in the world throughout the 19th and 20th centuries.  Brazil was a nearly monopolist of the international coffee market. Thus Brazil’s economy and coffee farmers became almost entirely dependent upon coffee. The result of harvesting sugar fields and coffee plantations, slavery in Brazil, to a degree, unequaled that in most of the American colonies. (5) The Portuguese settlers frequently intermarried with both the Indians and the African slaves, and there were also mixed marriages between the Africans and Indians. As a result, Brazil's population is intermingled to a degree that is unseen elsewhere. Most Brazilians possess some combination of European, African, Amerindian, Asian, and Middle Eastern lineage.  This multiplicity of cultural legacies is a notable feature of current Brazilian culture. Slavery was abolished in 1888 by the Princess Regent Isabel. (6) Migration to open Brazil’s interior land corresponded with the discovery in the 1690s of gold in the south-central part of the country. (7) Eventually Brazil realized its gold deposits were not as plentiful as originally thought. By the close of the 18th century, the country's focus had returned to the coastal agricultural regions.  “From 1875 until 1960, about five million Europeans immigrated to Brazil, settling mainly in the four southern states of Sao Paulo, Parana, Santa Catarina, and Rio Grande do Sul. Immigrants came mainly from Italy, Germany, Spain, Japan, Poland, and the Middle East. The largest Japanese community outside Japan is in Sao Paulo. Brazil is the only Portuguese-speaking nation in the Americas. Six major groups make up the Brazilian population: the Portuguese, who colonized Brazil in the 16th century; Africans brought to Brazil as slaves; various other European, Middle Eastern, and Japanese and other Asian immigrant groups who settled in Brazil since the mid-19th century; and indigenous peoples of Tupi and Guarani language stock.” (8) Known officially as the Federative Republic of Brazil, Brazil is the largest country in South America and in the Latin American region. Brazil is the fifth largest country in the world, not only by its geographical area but also by its population of over 193 million people. (9) Brazil has an economic freedom score of 57.7 which makes it the 100th freest economy in the 2013 Index. The economic score is 0.2 points worse than the past year with gains in fiscal freedom, as well as freedom from corruption offset by declines in monetary and labor freedoms. Brazil ranks 19 out of 29 countries in South and Central America as well as the Caribbean region, with an overall score below the world average. Due to the absence of efficiently functioning legal and regulatory framework, the foundation for long-term economic development remain compromised. The state continues to maintain a strong presence in many sectors, and the decades of planning are considered an excuse for tolerating the state meddling in economic activity. Despite small measures of progress, corruption continues to be a dominant force.  Progress of market-oriented reforms has been unstable. The troublesome regulatory environment discourages private-sector growth and hinders the realization of the economy's full potential. Increasing the country’s inflationary pressure poses a risk to the overall macroeconomics of the country. Subsequently, business confidence has wavered, with a decline in foreign investments of about 40 percent during the first half of 2012. (10) Brazil’s government is a federal republic that consists of 26 states. Each state in Brazil has its own elected governor and legislature.


Comparative Business, Economic and Cultural Analysis of the Impact of Olympics on Host Nations

Dr. Michael Ba Banutu-Gomez, Professor, Management and Entrepreneurship,

William G. Rohrer College of Business, Rowan University, NJ



Hosting an Olympic event presents many opportunities and daunting challenges for host cities. It is also a very costly undertaking that carries a high degree of financial risk. This paper analyzes the Olympic legacy of five host cities from both a business, economic and cultural perspective. In today’s world of fleeting attention spans, very rarely does a situation arise in which much of the world’s focus is directed on one place. The Olympics are one of those events that captivate the world and, as a result, provide a virtually unparalleled moment of possibility for the host city to present themselves to the global community. The business of the Olympics has a far greater impact on the world than the athletic events ever will. Lobbyists from dozens of cities formulate complex, detailed plans in an effort to have the International Olympic Committee (I.O.C.) select their city to host the Games. These plans are put into motion as long as a decade before the I.O.C. makes their choice. Masses of people typically flood the selected cities’ streets in celebration when the announcement is made. Since it can be reasonably deduced that no country is full of riotous sports fans, it is only logical to question what it is about hosting the Olympics that sends people into such pandemonium. The answer is the hope of a better future for which playing Olympic host can serve as a springboard. Olympic cities can benefit in a vast array of areas, from the economy to urban redevelopment. Hosting the Olympics automatically creates thousands of jobs and revenues from the Games themselves. Furthermore, they also provide cities with an opportunity to showcase them to the business world as a viable location to both work and live. A city’s Olympic legacy can be seen decades after the Games have ended.  Unfortunately, that legacy is not always positive. As with any massive financial undertaking, there is a high degree of risk involved in committing so much of a city’s resources to any one enterprise. There are cities who have hosted the Olympics as far back as 40 years ago who still have not recovered from the economic damage they suffered.  In this paper, we will examine the Olympic legacy of five cities from a business perspective. In order to present a fair picture, the cities to be scrutinized are located in countries from all over the world, have entirely different cultures and have hosted the Olympics in varying global economic periods.  The first city to be analyzed is Montreal, which hosted in the summer of 1976. Perhaps more than any other host, Montreal serves a warning to the types of damage that can be done if sound fiscal planning and sustainable strategic action is not a fundamental aspect of a city’s presentation to the I.O.C.  Next, we will look at the 1988 Summer Olympics held in Seoul, South Korea. These Games were tremendously successful for Seoul from both an economic and geo-political perspective. The city was also able to use the event to portray itself to the world as being ready to join other industrialized nations on the global economic playing field.  The 1996 Summer Olympics in Atlanta will then be examined. The first Games to be convened without any financial government support, Atlanta’s experience was a fiscal victory but ultimately disappointed some because of their failure to direct the windfall toward the city’s disadvantaged. Sydney, Australia’s 2000 Summer Olympics are then analyzed. It is widely believed that no city in modern times has ever had a more fruitful experience than Australia’s largest city. The Games provided a tremendous economic boost to the city and still stand alone as the most environmentally friendly Olympic Games on record. Next, we take a look at the most recent Summer Olympics held in Beijing, China, in 2008. While only preliminary financial data exists regarding the long term economic impact, the early readings are very promising. Perhaps more than any other host city, though, the Beijing Games served as China’s opportunity to present Chinese culture to the world, and show that the world’s largest Communist nation is a modern place that is rapidly becoming a global force, both culturally and economically. This process was based on reviewing the literature. Hosting the Olympic Games is a very expensive endeavor, but it may positively affect the host city for years to come if planned & executed correctly.  The long term goal for the Games is to act as a catalyst to start important infrastructure projects that may have once been deemed low priority.  The largest costs surround the necessary construction for Olympics infrastructure, such as the Olympic village, stadiums, media center and transport facilities.  These costs will test the host country’s economy as well as determine the economic weight of the host city onto the host country.  To help illustrate this weight, a ratio can be calculated between the Olympic investment and the host country’s GDP.


CSR, Quality of Work Life, and Employee Job-related Outcomes: A survey of Employees in Thai workplaces

Dr. Kalayanee Senasu, National Institute of Development Administration, Bangkok, Thailand

Dr. Anusorn Singhapakdi, Old Dominion University, Norfolk, VA



This research investigates the relationships between corporate social responsibility (CSR), quality of work life (QWL), and employee job-related outcomes (i.e. job satisfaction and organizational commitment).  The data were collected via self-administered questionnaires completed by employees of six companies selected from different sectors in Thai workplaces, with a 73% response rate. The main research findings include: (a) the positive relationships between CSR, QWL, and job-related outcomes; (b) CSR has a significant impact on organizational commitment but not on job satisfaction; and (c) the lower-order QWL appears to play the most important role in both job satisfaction and organizational commitment. Some managerial implications and recommendations are also included based on our research findings. Corporate social responsibility (CSR) has become vital for competitive advantage in today's business world. CSR is not only good for society but can also be good for business. For example, CSR is positively associated with firm reputation and financial performance (Lantos, 2001; Peloza, 2009). Socially responsible companies attract more investment capital and tend to build greater customer loyalty than less responsible firms (Stengel, 2009). According to Stengel, the most progressive companies realize that CSR is essentially about "triple bottom line — profit, planet and people". Socially responsible organizations are not only paying attention to the well-being of society, but also to the well-being of their employees. Singhapakdi, Sirgy, Lee, & Vitell (2010) suggest that companies are paying more attention to the well-being of their employees. It is likely that socially responsible organizations treat their employees better than their counterparts. In other words, people who work in a socially responsible organization are more likely to experience a higher level of job-related psycho-social wellness than people who work in less socially responsible organizations.  In parallel to the importance of CSR, quality of work life (QWL) and job-related outcomes including job satisfaction and organizational commitment have been important topics since the beginning of 1960s (Cummings & Worley, 2005; Leopold, 2005). Academic writings and research in management and human resources often link QWL and job-related outcomes to corporate social responsibility, ethics, productivity, and organizational performance (Lau & May, 1998; May & Lau, 1999; Cummings & Worley, 2005; Dess, Lumpkin, & Eisner, 2007).  Although there are a number of studies on CSR, QWL, and job-related outcomes, research on these topics in Thai business organizations are limited.  This research, therefore, is intended to further our knowledge about such issues by examining the relationships between CSR, QWL, job satisfaction, and organizational commitment in the Thai workplaces. Specifically, the objective of this research is to investigate the effects of CSR and two QWL dimensions (lower- and higher-order QWL) on job satisfaction and organizational commitment of employees in Thailand.  Virakul, Koonmee, and McLean (2009, p. 179) define CSR as “the set of philosophy, policy, motivations, commitment, and activities of business companies that consider balancing requirements of financial profits with the benefits of all involved stakeholders”. While Aguinis (2011) concisely captured several key elements of CSR when he defined it as ‘‘context-specific organizational actions and policies that take into account stakeholders’ expectations and the triple bottom line of economic, social, and environmental performance’’ (p. 855). According to Weiss (2003), socially responsible corporations gained competitive advantage in terms of reputation, successful social investment portfolios, and ability to attract quality employees. Based on resource-based perspective, Branco and Rodriguez (2006) identified different internal benefits from CSR activities including (a) improved employee motivation, morale, commitment and loyalty to the company; (b) reduced turnover, recruitment, and training costs; (c) employees’ positive attitudes regarding workplace quality; (d) competitive advantages due to employees’ positive workplace attitudes; and (e) improved general management and enhanced operational efficiency through the CSR environmental component. Consistently, Upham (2006) reported that being a socially responsible company can have a powerful positive effect on employees by increasing employee retention, boosting identification with the company, and raising helping behavior.  Cetindamar and Husoy (2007) reported that companies that had participated in CSR activities for many years with UN GC obtained network opportunities and improved corporate image that positively influenced their market performance. In this study, CSR were measured by a six-item measure. Two of the items assess the degree to which a company helps communities and supports beneficial causes (adopted from Valentine & Fleischman, 2008), and the remaining 4 items assess the degree to which a company rewards or allocates resource to social responsibility causes (adapted from Singhapakdi and Vitell, 2007).  QWL is the degree of an employee's satisfaction with a variety of needs through resources, activities, and outcomes stemming from participation in the workplace (Sirgy, Efraty, Siegel, & Lee, 2001).


A Workflow Performer-Activity Affiliation Networking Knowledge Discovery System

Dr. Kwanghoon Pio Kim (1), Kyonggi University, South Korea



In this paper (2), we implement an organizational knowledge discovery system, which is able to explore “workflow performer-activity affiliation networking knowledge,” in particular, from a workflow-supported organization. That is, we try to theoretically define a knowledge exploration framework for amalgamating workflow affiliating knowledge with social networking knowledge, and practically implement a knowledge discovery system based upon the framework. The implemented system not only copes with the algorithms discovering workflow performer-activity affiliation networking knowledge from an XPDL-based workflow package\footnote (3), which represents involvement and participation relationships, after all, between a group of performers and a group of activities, but also deals with visualizing the discovered knowledge. Conclusively, we describe the implications of workflow performer-activity affiliation networking knowledge in workflow-supported organizations. In general, a workflow management system consists of two components¾modeling component and enacting component. The modeling component allows a modeler to define, analyze and maintain workflow models by using all of the workflow entities that are necessary to describe work procedures, and the enacting component supports users to play essential roles of invoking, executing and monitoring instances of the workflow model defined by the modeling component. Especially, from the organizational intelligence point of view, the modeling component deals with the planned (or workflow build-time aspect) knowledge of organizational resources allocations for workflow-supported operations, while on the other the enacting component concerns about the executed (or workflow run-time aspect) knowledge of organizational resources allotments for the workflow-supported operations. With being connected to these view-points, there might be two issues, such as discovery issue (Song, J., et al. 2010) and rediscovery issues\cite{wil}, in terms of the organizational knowledge discovery activities. In other words, the workflow knowledge discovery issue has something to do with exploring the planned knowledge from workflow models defined by the modeling component, and the workflow knowledge rediscovery issue is to explore the executed knowledge from the execution logs (Park, M. and Kim, K. 2008, and Park, M. and Kim, K. 2010) of the workflow models. Naturally, this workflow performer-activity affiliation networking knowledge can be not only discovered from a workflow model defined by the modeling component, but also rediscovered from its execution event logs stored by the enacting component. In this paper, we focus on the discovering issue of the workflow performer-activity affiliation networking knowledge from a workflow model, which implies to discover the planned knowledge of performer-activity affiliations. Ultimately, the planned knowledge of workflow performer-activity affiliations is to visualize how performers and activities are simultaneously interrelated in the corresponding workflow model. Consequently, the paper is directly addressing the workflow affiliation network discovery issue (Kim, H., et al. 2011), which means that it gives a series of algorithms and their implementations, from discovering the planned knowledge of workflow affiliations embedded in an ICN-based workflow model (Kim, K., and Ellis, C. A. 2009) to analyzing the discovered knowledge of workflow performer-activity affiliations. In terms of making up the paper, the next section gives the technological backgrounds, mainly focusing on the workflow meta-model and the conceptual idea for discovering workflow affiliation networking knowledge. And the next consecutive two sections describe the details of the conceptual algorithm and its implementations for discovering the planned knowledge of workflow performer-activity affiliations. Finally, we give a summary with a brief description of its related works and conclusions including future works. This section shortly introduces the basic concept of workflow affiliation networking knowledge that can be possibly discovered from an ICN-based workflow model (Kim, K., and Ellis, C. A. 2009) as a conceptual background. In describing the workflow affiliation networking knowledge, we start from defining a workflow meta-model that is the theoretical basis of workflow affiliation networking knowledge, and finalize with the scope of the paper. An ICN-based workflow model is instantiated from the workflow meta-model (Kim, K., and Ellis, C. A. 2009) that can be defined by the following basic conceptual components¾activity, relevant data/repository, role, actor/performer, and invoked application including web services. These essential components and their relationships become the primitive entity types to form workflow affiliation knowledge. Thus, an ICN-based workflow model instantiated from the workflow meta-model can be defined by capturing the affiliated relationships among the primitive entity types, like activities and their control precedence, invoked applications, roles, actors, and input/output repositories. In this section, we define the basic associations or affiliations embedded in an ICN-based workflow model.


The Dawn of Radical Change: A Case for Leadership

Dr. Janice M. Spangenburg, Capella University



With the changes and the forces that drive change and challenges for everyone and every organization---The time for leadership is now. The changing dynamics of organizations requires leaders that are trained, ready and up for the challenge and committed to starting and finishing a project or endeavor. A case for leadership crystallizes and indemnifies the need and also the gaps that exist in every industry in the world. We need to be serious now because the future will not wait for us to think about it anymore. We need action and perseverance.  There is no end to the studies of leadership and while we discover new theories and new ways of leading we are still ever interested in this topic and want to learn more about it in every way possible. For eons we have studied leadership and strive to be able to bring it to a place where it can be effective and efficient. Leadership is tested every day in some manner and on various levels. In these tests, we find the fit of the fittest and the strongest of the pack. This individual seems to have the textbook description and characteristics. This individual is larger than life to us and we are looking at the leader almost in a surreal fashion because we don’t truly believe what we see. However, we deem that individual as the one who can make it happen for us and the one who can lead us fearlessly into the future without hesitation. This person is the inspiration that we have looked for and the one who makes the journey worth every painstaking step. This individual is transformative and infuses us with the strength and the verve to go forward and jump higher and leap into troubled and often rocky waters. While this person seems like a modern day superhero, it is someone that comes into our lives at various points and we do get to enjoy this breath of fresh air 2 or 3 times and perhaps a few more if we are lucky. For me, I have had the opportunity to have this kind of leader 3 times in my whole working career that spans decades. I found this a blessing and a true amazement. While I wish I had the leader emerge sooner it is important that I did get to experience this because it did have an impact on me at the time while enjoying the decision making and streamlined and seamless days of little to no stress in my work. Even when I was not in the midst of this kind of leadership I took valuable lessons that helped me to survive even in the darkest times of leadership that did not have anything to give except hard luck and bad decisions. The biggest take away from this example is the lessons learned and to use these to make sure this kind of experience does not happen again. While we may be able to make sure this does not happen we cannot do anything but project what may lie ahead and that comes with speculation of what can be and a lot of questions to answer that we may not be able to fully address.  This is very much a world of uncertainty and high expectations yet we don’t even know what the various expectations are. We can’t even plan because we have to be ready for action without any planned script. We must move fast and furious to insure that we do what is required and needed. Every day we must undertake new challenges and directions in our lives; and also be ever preparing for the unexpected in life and in our professional lives. This is most true in the case of leadership. None of us is new to or unscathed where it comes to change. It is a normal for us in this time of uncertainty and tumultuousness. Change is something we face every day in some form or fashion. It is ubiquitous and affects us in many ways from large to small scale but it is something we have to adapt to daily.  Reilly (2004) discussed critical skills in uncertain times and offered that “leadership has always been important, but it grows in importance in times of uncertainly” In the modern times of change in organizations we have to face deep and constant change which is more severe and creates outcomes we cannot ever prepare for or deal with directly, yet, we are still expected to work within its context as we do small scale change. Leadership is too busy anymore to give us notice about the impact of change. These days we deal more with radical and severe change than small scale, however. Reilly captured it best when he suggested that during stable times leadership may be less daunting in times of major changes. Change at this level requires leaders with vision, the ability to create collaborative, cooperative culture and who show respect for those inside and outside their organizations with strong communication skills (2004).  There are many different kinds of change and levels as well. In the more complex aspects of change we call this radical because it is deep and complicated.  Radical change is major and is occurring in every organization and every industry. It is also the intense bone cutting method that is used to break the organization and its elements down as a decision that is made by leader. This kind of decision making can be perilous and fatal, however. In fact, if it is not done with care and with strategic and purposeful thinking, it can break the organization’s back and create a chaotic outcome that does not work and creates a very dark and unsettling culture that does not propel human capital or the organization forward. It can take the wind out of motivation, job satisfaction and performance.  When the dust clears it seldom resembles anything that was and, what remains is often left in disarray and there is much uncertainty or sense making. This type of change is a daily and seemingly natural part of any given day in an organization.


Project Management in Universities – The Functional Aspect

Dr. Agata Klaus-Rosinska, Wroclaw University of Technology, Poland



Universities implement a growing number of projects. We can indicate here: research projects (as a result of the fulfilment of the core processes of university), investment projects (modernization and expansion of university complexes in Europe is possible, among others, thanks to the funds coming from the European Union), as well as administrative projects (reorganization of the functioning of public universities is currently required by the ministerial regulations). A large number of projects and their diversity requires universities to implement the appropriate project management system, which enables efficient project management, and thus results in the achievement of desired goals within a specified budget and time frame, in accordance with accepted quality standards; it also requires careful planning and control.  In the construction of an appropriate project management system in universities, account should be taken of three fundamental aspects of project management: the functional, the institutional (otherwise known as the organizational), and the personal aspect. The functional aspect is related to the fundamental processes of project management, which include initiation, planning, implementation, closure, and control of projects. The institutional aspects of project management raise concerns regarding the project location within a specified organizational structure. Personal aspects are related to problems regarding the selection and the direction of project personnel [Trocki, Grucza & Ogonek, 2004]. This paper is focused on the functional aspect of project management and has a structure as follows: 1. Functional aspect of the project management of universities, 2. Process approach in universities, 3. Traditional project management methodologies and agile methodologies (comparison of main characteristics), 4. Case study - proposed solutions for project management of university in functional aspect, 5. The next research steps necessary for the construction of project management system for universities. Discussion of the project management in universities in term of institutional aspect has been presented among others in the work: [Klaus-Rosinska, Zablocka-Kluczka, 2012]. It describes the proposed organizational (administrative) solutions in universities, including among others: location of project management department in the organizational structure of university, the list of tasks and responsibilities of it and identification of the processes that should be carried out for project management. The functional aspect of project management is a supplementation to the institutional aspect, because it focuses on project management processes. Proposals for construction of university’s project management system, in the functional aspect, should find answers to the following questions: what processes are executed in universities? which processes at the university will be linked to the projects area?, how should this processes be carried out, both in terms of administrative view (support for the contractors of the project), as well as in the executive terms of the project? should research projects / investment projects/ administrative projects be managed in the same way? what project management methodology should be applied in universities? The following parts of the article are supposed to give answers to these questions.  Currently one of the most popular trends in management is the use of a process approach. Today's universities, as well as commercial companies, should be process-oriented. They should also be flexible, characterized by the ability to adapt to new market conditions, effective, and have the appropriate technology (research equipment) and faculty. Due to the complexity of universities a process approach to them is a very complicated issue. A multitude of entities operating at different levels of the hierarchy, and thus actions (processes) and the links between these activities (processes), force the introduction of some assumptions defining the specific activities of the university. Assumptions set by the author were formulated as a result of the works ​​on the construction of the Activity Based Costing for universities [Klaus, 2007]. Overall, in the universities it is possible to identify three main processes: "The Process of Teaching", "The Process of Scientific Research", "The Provision of Professional Services" [Cox, Downey, Smith, 1999] [Granof, Platt, Vaysman, 2000] [Australian Department of Education, Training and Youth Affairs, Ernst and Young, 2000]. As part of these processes activities are defined, for example the "Teaching process" will consist of activities related strictly to education (such as: preparation of classes, conducting classes, evaluate students), as well as activities related to the recruitment and graduating students. It should be remembered also for administrative actions without which the realization of the fundamental processes of the university would not be possible. In the "Administrative Process" can be isolated activities at the level of departments (like actions of dean's offices, libraries, departmental administration) and the activities at the university level (like actions of central administration, main library). Philosophy of the process approach perceives a university as a series of interlinked processes running across the functional divisions.


Challenges for IFRS Acceptance by the Accounting Profession in the U.S.

Dr. Joseph H. Jurkowski, D’Youville College, Buffalo, New York

Dr. Arup K. Sen, D’Youville College, Buffalo, New York

Dr. Sylwia E. Starnawska, D’Youville College, Buffalo, New York



In order to ascertain the acceptability in adopting International Financial Reporting Standards  (IFRS) throughout the entire world-wide business community a survey has been developed and was completed by mid-size CPA firms who have multi-national clientele.  Since 2002 the International Accounting Standards Board (IASB), in concert with the  Financial Accounting Standards Board (FASB) in the US, have been undergoing a convergence process and attempting to reach agreement on what standards are utilized.  There is a very diverse mixture of Accounting systems in use in the world today and the goal is to move from a Rules- based system to a Principles based world Accounting System, thus improving the comparability of basic Financial Statements among companies, regardless of national origin.  The Securities and Exchange commission in the United States has committed to working on this project  but has not yet mandated the  usage of IFRS for publicly traded companies since there are a number of important issues remaining to be resolved. The survey will indicate how CPAs and their clients view this change and if adoption of IFRS will increase reported earnings or to what extent it is beneficial to other reporting issues.  Since the IASC was established in 1973 the financial world has been discussing and working toward a world-wide standard accounting system with standardized financial statement presentation.  Based in London, the IASB (successor to IASC) is an independent, privately funded and the main global body for setting internationally recognized, acceptable and harmonized accounting standards that will promote transparent, consistent, reliable and comparable accounting information around the world (Smith, 2008).  This effort picked up steam in 2002 with the signing of the Norwalk agreement and much progress in convergence has been achieved where the main objective is the development of common, high-quality Accounting and reporting standards.  The transition to IFRS appears to be a done deal according to many stakeholders. The IASB has published its accounting standard called International Financial Reporting Standards (IFRS) together with all other International Accounting Standards (IAS).  IASB does not have authority to enforce IFRS or IAS and therefore compliance with these standards is voluntary.  The International Organization of Securities Commission (IOSCO) has approved allowing members to use IFRS for crossed offering and listings on international stock exchanges.  The adopting of IFRS has been accelerated rapidly with its endorsement by IOSCO. The growing acceptance and use of IFRS in major capital markets throughout the world over the past several years is very remarkable achievement.  Approximately 130 countries currently require or permit IFRS reporting for domestic and listed companies.  Foreign jurisdictions have chosen to require or allow IFRS for diverse reasons.  For example, in the European Union the IFRS adoption aids in eliminating the many differences in accounting standards among E.U. member states and provide a common set of accounting principles under which all foreign and domestic listings in E.U. could use. Generally Accepted Accounting Principles, (GAAP) is primarily rules-based while IFRS is principles-based making it considerably more flexible in use.  Professional judgment is routinely applied in asset valuation and preparing financial statements.  In fact, there is great pressure on the US to consider adoption of fair value financial reporting.  The IRS has apparently not weighed in on IFRS adoption and it is anticipated that there are going to be major differences between financial and tax reporting.  IFRS tax liability may be significantly different from GAAP as exists today.  This paper is not only a study regarding an analysis of acceptance of International Financial Reporting Standards in accounting  in today’s global world, but also reports on a survey conducted of the perceptions and opinions of over 1,000 CPAs towards IFRS and the convergence of US GAAP and IFRS.  We used 40 returned, and only complete individual responses to the survey sent to accounting firms in the U.S. – members of the AICPA. We received 63 responses but 23 had to be excluded from the analysis due to incompleteness. The survey was distributed via e-mail through the country with Survey Builder to randomly selected 1000 CPA firms out of the 1300 listed in the directory of the AICPA. The responses were collected over the period of February 13th 2012 to April 27th 2012.  The two-tailed T-test of the hypotheses with 95% confidence level was used for the study.  The summary of the results of hypothesis testing was compiled by Dr. Starnawska. We tested following hypotheses in our research to supplement available results of studies presented.


Toward Using a Roadmap for Strategy Selection for Market Segments: Some New Insights

Dr. Chaim M. Ehrman, Jerusalem College of Technology, Israel



Many Marketing Decision Makers face a unique problem in the area of Marketing Segmentation. Given that there are different market segments to target for a given product or service, how should one define the best segment for one’s product or service? Clearly, the marketer will utilize the 4 P’s of marketing to maximize want satisfaction of the consumer in  that given segment, known as the target market.  In this paper, a systematic step-by-step approach  is presented to show the decision maker how one can find the ideal target market. A case study is  presented to illustrate implementation of the “Roadmap” approach is selecting the ideal market segment. There are 4 significant parts to the “Roadmap” approach.  There is a wide literature on consumer preference for product attributes. Clearly, the best strategy would be to optimize Brand Performance on the key attributes that consumers consider important. The term “Compositional Models” identifies models that measure attribute importance by the consumer. The typical method for collecting data for compositional models is to write a survey and ask the consumer to rate the importance of each attribute for a given product. The data collected is rating data or interval data, which lend them to significant analysis. Wilkie and Pessimier (1972) present an extensive review of Compositional models. An important reference is the pioneering work by Lavidge and Steiner (1961) on New Product adoption, and Green and Wind (1975) on Conjoint Analysis. In this paper, a compositional model to measure brand  satisfaction will be used. It  is called the Linear Compensatory Model (Fishbein, 1975) or LCM . Each brand can be evaluated on a performance score or belief score (b) for that brand on that attribute (i.e., how well is that brand performing on that attribute), as well as an importance score (I) on that attribute (how important is that attribute for a given consumer). We sum the product of Belief Scores multiplied by Importance Scores for each brand, and divide by the total of Importance Scores. The formula used to compute LCM is the following: LCM = Importance Score for each attribute) ( Belief Score for that attribute Importance Scores Mathematically, LCM equation, represented by  is presented by as follows: Given there are L Customers, I Attributes and K Brands. is the LCM score for each consumer for each brand. = The importance weight given to attribute i by the  customer.  Since  importance weights change for each consumer for each attribute, i.e., the respondent’s belief as to the extent to which attribute i is at a satisfactory level  offered by the choice alternative k. the brand that has the highest LCM score offers to the consumer the highest want satisfaction and has the highest likelihood of purchase. this paper, a case study is presented, in which  LCM scores are compared for 3 types of wines. The wine with the lowest LCM score indicates that consumers are not very satisfied with this type of wine. A lack of consumer satisfaction indicates that there is a market potential here to increase want satisfaction among those who use this wine type. LCM is a Compositional Model because one “Composes” an attitude score based on belief and importance rating data provided by the consumer.  There are several drawbacks with compositional models. First, the scores provided by the consumer may not reflect actual choice behavior. The consumer may use other inputs in brand choice selection, such as the opinion of one’s significant other. Balance Theory incorporates the opinion of the Significant Other in predicting brand choice behavior. Another problem with Compositional Models is a potential lack of validity. Validity is defined as follows: Do you measure what you purport to measure? A questionnaire may measure consumer preferences, but preferences do not necessarily indicate buyer behavior. Another problem is potential lack of reliability. A reliable instrument will generate the same results for a given consumer when there are repeated measurements. In using survey data, the consumer may respond differently, depending on the mood he is in or if his assets have increased significantly between the first questionnaire and the second questionnaire. Therefore, there is a lack of reliability when using compositional models. Another problem with compositional models is known as “Non-Separability” of attributes. Consumers look at the entire package offered by each brand, not at separate attributes. For instance, assume that a consumer has to purchase a ticket for an international flight. Airline Company A has the lowest price; Airline Company B has the best food and airline C is always on time. The consumer will clearly not buy 3 tickets from Company A and B and C in order to realize the benefit of these 3 attributes. The consumer will purchase only one airline ticket. The compositional model, however, evaluates brands, separately on each attribute. This drawback is known the non-separability of attributes.  We need a model that incorporates performance on all attributes concurrently.


Business Travel and Visa Application: Where Are the Gaps?

Dr. Julie Jie Wen, University of Western Sydney, Australia



Statistics have shown a decline of business visa application from China to Australia. Although increasing number of outbound visitors from China has attracted significant research interest globally, very little research has concentrated on business travelers from China visiting Australia for a combination of training and sightseeing purposes. They are group travelers with unique characteristics but have not been analyzed to reasonable depth. This paper presents analysis between what is really happening in China related business travelers and what statistics published in Australia about visa application reveals. A gap between the increasing number of business travelers who visit Australia on private passport and tourist visa, and the declining number of business travelers recorded officially, has been identified. The Chinese outbound travel market has been recognized as the greatest potential force in global tourism. It was estimated that Chinese outbound tourists reached 22 million, with an additional 50 million travelers to Hong Kong and Macau (Li et al, 2010). Business travel in the study refers to official travel in the form of delegation and business group travel. Visitors of this type of travel mostly come from public service sector and state-owned enterprises, with increasing numbers from the private sector in recent years. They come to Australia in the group for the purpose of study tour, combining sightseeing with training sessions in their itinerary. These visitors are normally organized by a travel agency in China, who normally provides an invitation letter from a receiving company in Australia to facilitate a business visa for entry to Australia, although an increasing number of business travelers arrive on a private tourist visa. Australian Immigration indicated a slight decrease of business visa applications from China since 1999. This seems to be contradictory to the growing visitation of Chinese to Australia. Is it because Chinese visiting on private holiday purpose? Alternatively, is there any potential gap between the number of business visa application and what is really happening in tourism sectors? This paper makes use of official statistics and author’s primary research to compare trends for Chinese business travel to Australia. The study involved interviewing people who were part of the business travel from China to Australia. Interviews were semi-structured, addressing personal history, training program arrangement, evaluation of the training, reflection on their travel experience, and comparison with other training trips. It seems that official statistics on visa application may have been skewed towards an expanded base of private trips. With increasing ease of obtaining a private visa, some business travelers have used private visas although their trips to Australia were business in nature. Business travel from China is still alive and growing. The research reminds policy makers and tourism industry that there appears to be a significant gap between the official statistics and reality. Chinese outbound tourism has attracted the attention of increasing number of researchers, institutions, and practitioners. China is currently the biggest outbound market in Asia. It has overtaken France as the world’s fourth biggest spender in outbound travel, and will become world’s top four origin countries by 2020, hitting 100 million travelers in 2020 (UNWTO, 2010).  Outbound travel was not encouraged by Chinese government until mid 1990s (Tse and Hobson, 2008). The development of Chinese outbound market experienced a few stages regarding government policy, market growth rate, destination choice, and tourist behavior. The first stage from 1983 to 1996 was characterized by border area travel and VFR (visiting friends and relatives) (Xie and Li, 2010). Mainland Chinese were allowed to visit Hong Kong and Macao under special arrangement. The second stage from 1997 is the so called growth stage, with significant growth in visitor numbers and expenditure. The Chinese government revised its tourism policy in 1997 to allow Chinese citizens to travel abroad for private trips (Arlt, 2006). Most short haul trips are conducted in the Asia Pacific region. Europe is the most popular long-haul Over 100 countries have been granted Approved Destination Status (ADS), which means Chinese citizens can travel to most of the major tourist destinations on the globe (King, Dwyer and Prideaux, 2006).destination for Chinese travelers, while Oceania accounts for only one percent of China’s outbound travel flow (Xie and Li, 2009) but presents significant potential. Not surprisingly, China is Australia’s most valuable inbound tourism market, contributing $3.26 billion to the Australian economy in 2010(Tourism Australia, 2011). By 2020, this market has the potential to contribute $7 to $9 billion annually. Australia has experienced faster arrivals growth from China than any other market. Chinese visitor arrivals reached 454,000 in 2010, 24 per cent higher than 2009 (Tourism Australia, 2011). Strong growth was apparent in 2011, with total Chinese arrivals reaching 542,046, representing an increase of 19.4% over 2010 (Tourism Australia, 2012a). A snapshot of data on Chinese visitor arrivals to Australia is indicated in Table 1:


Developing Supply Chain Strategies Model for Taiwanese Manufacturing Companies

Chao-Shun Wang, National Cheng Kung University, Taiwan

and Lecturer, Dahan Institute of Technology, Taiwan

Chia-Yon Chen, Professor, National Cheng Kung University, Taiwan



With the development of globalization and information technology, product life cycles have shortened significantly, and information transfer and the demands on market reactions have become increasingly faster, thereby resulting in enormous changes of enterprise supply chain systems. This study investigates Taiwanese manufacturing businesses with experience of the complete supply chain, which includes upstream suppliers and downstream customers, and established a supply chain strategy model using the structural equation modeling (SEM). It further validated the causality relationships and interactive impact weights of the manufacturers’ state of the environment, impact, and response. According to the empirical results, market resource environmental competition has a positive impact on supply chain information sharing, and supply chain information sharing has a positive impact on supply chain coordination and supply chain restructuring. Lastly, supply chain coordination has a positive impact on supply chain restructuring. The empirical findings can help manufacturers to review the impact of market source environment uncertainties on individual manufacturers, and further develop supply chain strategic directions.  The external market resource environment will affect the changes in the internal environment of a company. If the external environment has become more dynamic and complex, the organization will face more uncertainties and must be able to rapidly respond to changes in the demand of the consumer market. Many enterprises have realized the limitations of their own resources and the competition with the external environment in resource allocation, realizing that independent operation is no longer feasible, while only through cooperation with other enterprises could then acquire important resources, thus achieving their strategic objectives. In addition, with the rapid advancement of information technology, consumers can easily capture market product information and cooperate with alternative suppliers. Therefore, how supply chain manufacturers quickly respond to the market for information sharing, coordination and restructuring in response to the environment, and how to allocate market resources, have become important issues in the cooperation between manufacturers. There are two ways for manufacturers to reflect market dynamics. One is to strengthen their price competitiveness and reduce all possible overhead from production to transportation (Womack & Jones, 2003); the other one is to strengthen the coordination capacity between the supply chain suppliers to reflect the dynamic nature of the market (Mason-Jones, et al., 2000). For unexpected demand changes and the demand for rapid responses of organizations, a flexible supply chain organization that can quickly respond to the market must be constructed (Lee, 2002).  In view of this, to allow the supply chain to have flexibility and adaptability, it is necessary to construct an information sharing system. Agility, meaning information sharing and a quick reaction capability, is one of the characteristics of a supply chain system. Agility is also a source of supply chain competitive advantage (Lee, 2004). As businesses enter into the era of information technology and chain business, upstream manufacturers, logistics intermediaries, and retailers that have access to customer information are all facing the challenges of speed. A high degree of market sensitivity and a rapid response capability are some of the competitive conditions that companies must possess. In the past, business operators often had only a passive response to market demands, and they often lost the opportunity to make profit. At present, numerous management information systems have been developed, and supply chain suppliers can self-develop or select appropriate information software or information systems to enhance their business management capabilities. Therefore, advances in technology also highlight the importance of information sharing in supply chain management.  In addition to coordination, supply chain system integration is also a very important issue. In view of the industry in the past, supply chain management expanded the resource utilization to achieve economies of scale or scope economies by the horizontal division of labor. However, in recent years, due to rapid changes in the environment, the sagging economy has resulted in cracks in the transaction chain of the supply chain, and the cost of the supply chain has increased tremendously. Therefore, supply chain integration is becoming increasingly important, and as literature has pointed out, supplier integration will receive more benefits (Frohlich & Westbrook, 2001), which will also reduce the incidence of transaction costs.  In supply chain management, encouraging cooperative enterprises to become partners in the service system is the best approach. If an enterprise cannot use cooperative enterprises as potential partners with multiple roles, it will lose its competitive edge. Coordination and integration of market sources through the supply chain is a decision-making process. Past studies regarded supply chain integration as a single construct to discuss the integration of a variety of different forms (Swink et al., 2007), as adjusting supply chain integration forms in response to market resource changes are a necessary measure. Hence, this study explored the relationships among market resource environmental competition, supplies chain information sharing, and supply chain coordination, and further discussed the impact of supply chain restructuring.


An Equity Security Selection Using Annual Information

Dr. Raja R. Vatti, St. Johns University, Jamaica, NY



Investment analysts use mainly macro, fundamental, and technical analyses for selecting companies with high potential returns. The expectations to macro environments are an important part of the research because markets react promptly to the changing global economic trends. The stock prices of individual firms tend to follow the markets even if their future is on solid footing. Empirical research confirms it. Technical analysis concentrates on observing repeated past price and trade volume behavior of stocks, industries and markets to identify companies with upward price movements.  Despite the controversy of its value, technical research is still widely used. The fundamental analysis would like to look at the efficiencies and deficiencies of individual firms and industries to pinpoint firms with bright prospects. The current investigation utilizes a fundamental approach to analyze all the information reported in the most recent annual reports to select companies for including in the following year’s portfolio. The proposal here is to select an industry first, and then to select companies from the industry.  The companies considered for investment in the industry would be classified into several similar groups by using important financial measures of performance. A few undervalued companies from some quality groups would be selected for the portfolio. The usefulness of the proposed method is tested by comparing actual investment returns. In the process of selecting a few companies with high potential returns, investment analysts should patiently seek and analyze all the relevant past, current and anticipated information on many individual companies.  The inherent assumption in this pursuit is that all the information is easily accessible for everyone.  There are two main approaches for the analysis.  One is the technical analysis which focuses on historical patterns in the price behavior and trade volumes of companies and markets.  The second approach is the evaluation of all the financial and economic fundamentals in order to predict future performance of the companies.  The current investigation is concerned with the fundamental analysis.  In dealing with the financial information, we are assuming that it is possible to achieve superior returns by choosing portfolio using sophisticated statistical and mathematical analysis of relevant information.  This thinking may be contradictory to the theories of market efficiency, random walk and market model.  According to the market model, most of the stock prices move in tandem with the general market which in turn moves with the economic news.  Recently, daily news on the euro crisis has significant impact on the world stock markets.  The prices of sound companies are also negatively impacted by the declining markets and negative news.  Market efficiency theory believes that current stock prices reflect already the available public information, and it is very difficult to find companies with attractive returns by using the available information.  There are three levels of efficient market hypotheses.  One is the “weak” or “random walk” hypothesis.  According to this, it is hard to beat the market by the analysis of patterns in historical prices and trade volumes.  Weak hypothesis suggests that every price behavior is a random walk.  Therefore, an attempt to find patterns in the price fluctuations with the intention of predicting short term future price is a futile exercise.  An implication of this theory is that technical analysis has no relevance.  However, technical analysis still is a popular tool of the investors. The second one is “semi strong” market efficiency hypothesis which states that current prices reflect all the available public information.  In its “strong” form, market efficiency hypothesis proposes that the current security prices reflect not only the currently available information but also the predicted future information.  It is difficult to accept this strong version of the efficiency hypothesis because all investors cannot have access to all predictions and analyses of all securities. Moreover, different analysts can interpret the accessible information differently, and as a consequence, inferences and predictions for future returns could be different.  The assumption that all information is freely available to all investors is questionable.  Also, different analysts have different approaches to analysis and selection which we want to show in the current research.  The conditions for market efficiency hypothesis may not be easily satisfied in many cases.  Security valuation is another approach that is actively utilized in stock selection.  The present worth of the future earnings or dividends of an individual company is calculated by discounting the income flow at a chosen interest rate.  This concept also has its difficulties.  One problem is the Petersburg Paradox. The paradox arises when a company’s present value becomes infinite if the expected rate of growth in income is more than the selected discounted rate of earnings.  In reality, this is hard to accept and consider.  Another problem with the method is in determining the discount rate. 


The Effectiveness of the Contrarian and Momentum Strategies in the Global Financial Crisis Period in Asia Pacific Stock Markets

Dr. Yu-Nan Tai, Alliant International University



This study explored the effectiveness of the contrarian and momentum strategies in the Chinese stock markets of Taiwan, Hong Kong, & Singapore both during the 2008 financial crisis and during the pre-crisis period. The sample period was from May 2003 to October 2012, providing both long-term and short-term analysis and including a non-crisis financial period and a crisis period. This study used an empirical research design and was non-experimental in nature. Results showed that in the short-term, the momentum strategy is significant in Taiwan, Hong Kong, and Singapore. However, in the long-term, the momentum strategy is not significant in the Asian financial crisis period. The contrarian strategy is significant in the long-term but is not significant in the short-term crisis period. De Bondt and Thaler (1985) were the first researches to combine behavior and cognitive psychology with economics and finance to help explain stock return anomalies. This became known as behavior finance and provided researchers an alternative method to the traditional CAPM to explain stock market behavior. Behavior finance emphasizes the importance of investor psychological factors such as overreaction and underreaaction and relies on the contrarian and momentum trading strategies to explain how investors can obtain abnormal returns in different holding periods based on these psychological factors. Overreaction and underreaction are extremely important concepts in behavioral finance field and create the biggest challenges to the efficient market hypothesis. Barberis, Shleifer, and Vishny (1998) explained that investors’ conservatism causes short-term momentum effect and representativeness heuristic, which can cause overreaction and have long–term reserve on stock price. Daniel, Hirshleifer, and Subrahmanyam (1998) believed investors’ overconfidence and self-attribution bias explained the overreaction. Hong and Stein (1999) believed that the attitude of different investors to judge the information causes the effect. Odean (1998a, 1998b, 1999) and Barber and Odean (1999, 2000a, 2000b, 2001) conducted in-depth research concluding overconfidence explains the phenomena. Odean (1998a) introduced that investor’s overconfidence can affect investor’s decisions. He extended the research by Shefrin and Statman (1985) that discussed another anomaly in behavior finance called the disposition effect, which states that investors tend to sell stocks quickly when the price has increased and try to keep their security while the price has dropped. Odean found that investors are reluctant to realize their losses and tend to hold losing investments too long and sell winning investments too soon, supporting the disposition effect. Overall, there is significant research and evidence from behavior finance articles supporting the role of investor overreaction on stock prices in short-term momentum and long-term reserve.  De Bondt and Thaler (1985) first developed the contrarian strategy and Jegadeesh and Titman (1993) developed momentum strategy. Contrarian strategy is to buy loser stocks (stocks with bad performance in the past) and sell winner stocks (stocks with good performance in the past). Momentum is simply the opposite strategy: buying winner stocks and selling loser stocks. Investor overreaction and underreaction creates these two trading strategies: When investors underreact to current events, they continue creating a momentum effect, and when they realize and adjust their decisions, they are using the contrarian strategy to readjust the security price. There is a variety of research evaluating the role of momentum and contrarian trading strategies in various Asian Pacific markets, although many do not include a financial crisis period and none includes the 2008 financial crisis period.  Chui, Titman, and Wei (2000) examined eight Asian markets including Hong Kong, Indonesia, Japan, Korea, Malaysia, Singapore, Taiwan, and Thailand with data from 1980-2000 (including a financial crisis period) and found contrarian strategies provide profit as a result of long-term reversal nine months to five years after the portfolio formation. Fung (1999) tested the contrarian strategy in the Hong Kong stock market from 1982 to 1993 hoping to provide overreaction evidence, and showed that loser portfolios outperformed the winner portfolios by almost 10% a year in a one-year testing period. Kang, Liu, & Ni (2002) studied the Chinese market from 1993 to 2000 and showed that short-term contrarian has positive profits. However, Otchere and Chan (2003) compared the contrarian strategy in the Hong Kong stock market both pre and post the 1997 Asian financial crisis, and they were not able to provide a significant result regarding the post-financial crisis period.


Energy Efficient Management in the Classroom and Their Fiscal Implications in Spain

Dr. Maria Luisa Fernandez de Soto Blass, University CEU San Pablo, Madrid, Spain



The European Union approved the Directive 2012/27/EU on energy efficiency and the Directive 2010/31/EU on the energy performance of buildings. Buildings account for 40 % of total energy consumption in the Union.  Spanish Action Plan 2011-2020 is a strategic, comprehensive plan that affects all the consuming end-use sectors as well as the Energy Transformation Sector. On September 14, 2012, the Spanish Government approved the submission to Parliament of the Bill on tax measures for energy sustainability. A brief description of certain tax incentives that have not been created specifically for the renewable energies sector. These fiscal incentives could be applied to the building of the classrooms; 1.Tax-Free depreciation 2.Reduction of income from certain intangible assets. 3.Capital duty exemption. 4.Tax allowances on local taxes.  The Saving Energy Classroom Tables help Professors, lectures, teachers and students help them  to learn about heat, light, electricity, natural gas, and ways to make simple changes that can save valuable natural resources and money on their utility bills. This paper is the result of the researches that the author is carrying out about “Taxation and Climate Change”, that is a National Investigation and Development Research (DER2010-14799) and the other research about “Study on the desirability and the possibility of extending the freedom of choice in education at the Community of Madrid through the implementation of private funding sources (EDUCACEU)REF USPBS-PI02/2011-UNESCO 5309-5802-5909. The Treaty of Lisbon places energy at the heart of European activity. It effectively gives it a new legal basis which it lacked in the previous treaties (Article 194 of the Treaty on the Functioning of the European Union (TFEU)).The aims of the policy are supported by market-based tools (mainly taxes, subsidies and the CO2 emissions trading scheme), by developing energy technologies (especially technologies for energy efficiency and renewable or low-carbon energy) and by Community financial instruments. Furthermore, in December 2008 the EU adopted a series of measures with the objective of reducing the EU’s contribution to global warming and guaranteeing energy supply (EUROPA, 2013). The European Union approved  the Directive 2012/27/EU of the European Parliament and of the Council  of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC. The European Union is facing unprecedented challenges resulting from increased dependence on energy imports and scarce energy resources, and the need to limit climate change and to overcome the economic crisis. Energy efficiency is a valuable means to address these challenges. It improves the Union’s security of supply by reducing primary energy consumption and decreasing energy imports. For the purposes of this Directive, the following definitions shall apply: 1.‘Energy’ means all forms of energy products, combustible fuels, heat, renewable energy, electricity, or any other form of energy, as defined in Article 2(d) of Regulation (EC) No 1099/2008 of the European Parliament and of the Council of 22 October 2008 on energy statistics);2.‘Primary energy consumption’ means gross inland consumption, excluding non-energy uses; 3.‘Final energy consumption’ means all energy supplied to industry, transport, households, services and agriculture. It excludes deliveries to the energy transformation sector and the energy industries themselves; 4.‘Energy efficiency’ means the ratio of output of performance, service, goods or energy, to input of energy; 5.‘Energy savings’ means an amount of saved energy determined by measuring and/or estimating consumption before and after implementation of an energy efficiency improvement measure, whilst ensuring normalisation for external conditions that affect energy consumption; 6.‘Energy efficiency improvement’ means an increase in energy efficiency as a result of technological, behavioural and/or economic changes; The Directive 2010/31/EU of the European Parliament and of the Council of 19 may 2010 on the energy performance of buildings established that An efficient, prudent, rational and sustainable utilisation of energy applies, inter alia, to oil products, natural gas and solid fuels, which are essential sources of energy, but also the leading sources of carbon dioxide emissions.  Buildings account for 40 % of total energy consumption in the Union. The sector is expanding, which is bound to increase its energy consumption. Therefore, reduction of energy consumption and the use of energy from renewable sources in the buildings sector constitute important measures needed to reduce the Union’s energy dependency and greenhouse gas emissions.


Introducing the Communicational Adhesion Lifetime Index Model: A New Communication Approach for the Hotel Industry

Sandra Heiden, University of Latvia



A profound understanding of customers’ needs and preferences is essential in all industries, and especially in the hotel industry. Understanding guests’ needs and having a clear picture about guests in mind will be a prerequisite for hoteliers in the future; this understanding will make it possible for hotels to survive and prosper (Yavas and Babakus, 2005, p. 359). Hence, hotel marketing of the future should choose <emphasize?> customers’ perspectives. The focus should be on the added value that customers receive due to their service relationship with a company. One central aim is to listen to customers, care about their expectations and respect their fears and uncertainties (Wiesner and Sponholz, 2007, p. 18f.). Since traditional marketing communication approaches are no longer appropriate due to these fundamental changes, new ways are required to cope with these new challenges. Hotel companies require more sophisticated guest segmentation and communication strategies than ever before, due to the highly competitive markets, experienced and demanding customers and the specifications of the service industry. An increase in customer retention is usually regarded as a strategic corporate goal, but a differentiation in terms of changing customers’ expectations is seldom accomplished, and the customer’s perspective is ignored. The intention of this paper is to introduce a new conceptual model for marketing communications in the hotel industry, which takes the customer perspective into account and proposes a new approach for more effective and dynamic communications in the future. This paper introduces a new model for customer retention in the hospitality industry. The model asserts that customer retention will be increased through a more efficient and effective marketing communication strategy that takes the dynamics of the customer relationship lifecycle into consideration. For this reason, the customer communication lifecycle is introduced to offer a more integrated and appropriate model for marketing communication in the hotel industry. The invention of this lifecycle takes the dynamics in communications into consideration, which are otherwise ignored by the usual communication methods. The Communicational Adhesion Lifetime Index (CALI) has been created as an indicator for the communication lifecycle compared to the relationship lifecycle. This index has been developed to illustrate the different communication needs during the different lifecycle phases, corresponding to relationship intensity in the relationship lifecycle model. The main goal of using the customer relationship lifecycle model is the efficient realization of customer retention in different phases of the relationship of the customer with the firm. The phase of the relationship determines the measures that should be used for successful retention. The rationale is that the phase of the relationship is the basis for deriving the most appropriate method to retain customer (Georgi, 2005, p. 237). Within the lifetime of the customer relationship, characteristic phases can be identified that represent different states of the relationship from a customer’s perspective. Due to the different phases, the management tasks differ for customer retention (Stauss, 2011, p. 320). Furthermore, the aim is not only to present customers with certain buying opportunities in a way that satisfies their needs but also to present and communicate purchase possibilities in an enjoyable way. This is a main task (Tsai, 2005). The lifecycle idea should be integrated in the strategic planning and implementation process of Integrated Marketing Communications (IMC). Especially in a competitive environment, it is crucial that companies have detailed information about their customers. Furthermore, modern integrated marketing requires the integration of information about customer needs, motivations, attitudes and actions. Additionally, the main purpose of modern marketing is not to persuade people but to satisfy the customer, which is the essence of customer orientation (Mihart, 2012). New strategic and tactical perspectives are also required due to the changed nature of marketing communications in the Internet era (Ivanov, 2012). One main aspect of the analysis of communication characteristics is to identify in which special phase a relationship is in the customer lifecycle. The development of the strength of relationship can be used to identify the stages, operationalised, for instance, by the customer turnover as well as the duration of relationship (Georgi, 2005, p. 231 f.). Thus, the customer lifecycle of relationships can be regarded as an analogy to the product lifecycle model in terms of the customer-provider relationship. The customer lifecycle model was developed correspondingly to show the ideal-typical temporal process of a customer relationship (Stauss 2000, p. 15, Stauss, 2011, p. 322, Bruhn, 2009, p. 59 ff.). The goal is to examine how the relationship lifecycle can be used to create a corresponding cycle for marketing communication purposes and how this customer communication lifecycle can lead to more successful and efficient customer retention in the hospitality industry. In service marketing, three main aspects can be communicated with the help of marketing campaigns: emotions, offers and information. First, communication is informative in nature and can close information gaps. This may be the case, for instance, with new offers or detailed information about facilities. Information can reduce uncertainty at the beginning of the customer-provider relationship. Second, information is necessary not only to reduce risks before the hotel stay but also after the purchase decision to inform customers about hotel services in particular, sport facilities, restaurants and all other facts that increase the pleasure of the hotel stay. Third, communication can transfer emotions, which are especially important if the customer-provider relationship is at the peak of the lifecycle curve. Emotion transfer should help to create and support loyalty and customer retention. Only if communication meets customer expectations will it be able to push further purchase decisions. Offers include all special prices, packages or last minute deals, for instance, that are communicated to customers. Since the intensity of the relationship changes over time, the need for these three different aspects should also change. Hence, marketing efforts should adapt their communications based on the different needs in the different phases of the customer-service provider relationship.


A Study on the Effect of Sequential Extended Brand Elasticity on Brand Equity

Dr. Min-Cheng Lai, National Taipei College of Business, Taiwan

Dr. Shu-Cheng Lin, ChunYu Institute of Technology, Taiwan



Brand extension has been the basis for growth strategies of many enterprises globally. How brand extension strategies affect brand equity has become a popular strategic issue. At present, enterprises mainly adopt diversification strategies to expand business territory. Therefore, the product categories that are completely different from main brand image will be the greatest challenge faced by enterprises. However, when consumers face product categories different from master brand image promoted by enterprises, will brand extension strategies urge them to accept product categories of product extension? This study investigated the correlation among brand elasticity, brand extension evaluation, and brand equity, and conducted a questionnaire survey. A total of 260 questionnaires were distributed, and 237 valid questionnaires were returned. This study found that: 1) under atypical sequential brand extension of reputable master brand, the brand elasticity of subsequent extension will be superior to that of intervening extension; 2) brand elasticity has a positive effect on brand equity; 3) brand extension evaluation has a positive effect on brand equity; 4) brand extension evaluation plays an intervening role between brand elasticity and brand equity. Based on the aforementioned findings, this study proposed specific suggestions on the management of practical operation as reference for practical application and follow-up studies. In recent years, as the product life cycle shortens, the launch of a new product requires high cost. Brand extension is the basis for domestic and international growth strategies for many enterprises; hence, the influence of brand extension on brand equity has become a popular strategic topic. The prevalence of brand extension strategy is because enterprises believe that the strategy can trigger consumers’ willingness of accepting the new brand due to the brand familiarity and brand association (brand image), thus creating influence on brand equity (Keller, 2003).  Brand extension strategies have been used to promote many successful products every year, such as Apple i series and Godiva coffee. However, not all of the brand extension is meant to be successful. Enterprises have to bear the risk that the failure of brand extension may do damages to master brand image (Martı´nez & Pina, 2003). The success of brand extension is mainly subject to brand extension fit (Völckner & Sattler, 2006). For the product category similar to master brand, the perceived fit is usually higher (Boush & Loken, 1991). Master brand can provide brand extension for product category with the property of attractiveness (Broniarczyk & Alba, 1994), and other categories of products can be marketed though brand extension (Aaker & Keller, 1990). Monga & John (2010) found that many brands do not follow these rules. However, they could also achieve successful brand extension. These brands are described as brands of better “elasticity” because they can promote different product categories through brand extension, share several common properties or features of existing products, and attract different customer markets. However, why do these brands possess better brand elasticity than others do? Monga & John (2010) suggested that the common explanation is that the characteristics of master brand determine brand elasticity. Brand elasticity is a new issue in brand extension-related studies. Although scholars have proposed similar concepts (Ahluwalia 2008; Monga & John 2007), such as brand ductility, brand elasticity still has not been well defined. Moreover, the relationship between brand elasticity and brand equity has not been fully studied. Therefore, this study intended to probe into this aspect. To reduce the risk of failure, enterprises usually will choose the product category similar to that of master brand when they use brand extension strategies because customers will associate the quality of reputable master brand with newly promoted products. Moreover, consumers will further believe in the new brand concept (Kim, 2008). Loken & Ward (1990) indicated that product property is closely related to product category of master brand and is the typical property of a certain product category. The determinants of typical property include the product similarity or frequency related to product category. In other words, enterprises’ adoption of brand extension related to the product category of master brand is Typical Brand Extension. However, the observation on the successful brand extension of several famous brands, such as agnès b. CAFÈ, showed that the product category extended from these brands are completely different from that of master brand. Therefore, such brand extension is called Atypical Brand Extension. Current enterprises mainly adopt diversification strategies to expand business territory. Therefore, the marketing of a product category completely different from the brand image of master brand will be the greatest challenge and opportunity faced by enterprises. If enterprise intend to market different product category, besides developing a new brand, they may also have to choose “atypical” brand extension to reduce the risk of high cost and high failure rate of new brand. However, can consumers accept new product of the product category completely different from master brand through “atypical” brand extension strategy? According to the review on relevant studies, consumers’ brand extension evaluation of “atypical” and “typical” brand extension has not been investigated. Therefore, this study investigated the issue concerning “atypical” and “typical” brand extension.


Causality Relationship for Selection Variables of Brand Creation and Brand Acquisition as Expansion Strategies: Evidence from Egypt

Dr. Mansour S. M. Abdel-Maguid Lotayif, Business Department, Beni Suef University, Egypt



The current study aims at identifying the factors behind the selection of both brand creation and acquisition besides figuring out the of causality relationships in this perspective. The experiences of 173 Egyptian executives were utilized to achieve these objectives. Throughout multivariate analytical technique (e.g. multiple regression) bivariate analytical techniques (e.g. correlations), and univariate analytical (i.e. descriptive analysis such as percentages) significant causality relationships between brand creation and acquisition and study's demographics were found. Moreover, the variables affecting the selection of brand creation and acquisition were figured out.  Brand name (as an intangible asset) has become one of the most critical assets of the firm nowadays (Kuzmina, 2009), as intangible assets are key driver of innovation and corporate value in the 21st century (Bounfour 2003; Del Canto and Gonzalez 1999; and Coombs and Deeds 1996). Moreover, the appropriate allocation of these intangible resources has become an important strategic decision for organizations (Halliday et al., 1997). That intangible asset has different definitions in different disciplines; in consumer, in finance, in legal, and in marketing disciplines (Kuzmina, 2009). More specifically, brand is a set of mental associations in consumer research discipline; brand is an intangible and conditional asset in finance discipline; brand is a tool in differentiating a company’s offering from that of its competitors in legal research, discipline; and brand is a name with considerable power to influence buyers in marketing. How to get that intangible asset? Is it throughout creation? or acquisition? These two key strategic questions every single organization ought to answer whenever expand. Literally, brand creation takes time and effort to build bridges of trust via long lasting relationship with customers. Brand acquisition requires enough financial resources to be acquired. The current research explores these variables behind each selection with evidence from a Middle East country (Egypt).  The use of internal brand creation or external brand acquisition as an option in brand portfolio expansion, has received far less research attention, even though they are common in practice and their use varies within industries. Few conceptual papers have addressed this topic (e.g. Damoiseau et al., 2011, and Kuzmina, 2009) and very limited empirical research has been completed with any kind of representative sample in a Middle East context which the current study aims at.  By way or another, brand creation or brand acquisition options is related to make-or-buy decision in the strategic management literature (e.g. Baker and Hubbard, 2003; 2004; Brouthers and Brouthers, 2000; D’Aveni and Ravenscraft, 1994; Hennart and Park, 1993; and Walker and Weber, 1984) as well as to brand portfolio literature from marketing. Brand expansion portfolio can itself be divided into three approaches: brand extension, brand creation, and brand acquisition (Kuzmina, 2009).  More specifically, brand extension is as any effort to extend a successful brand name through new or modified products or product lines. It is regarded as the most common strategy for adding new products to a brand portfolio (Kuzmina, 2009 and Kotler, 1991). In this perspective, Aaker (2004) have been estimated that almost 90 percent of brand portfolio expansion activity involves brand extensions. Lower risk and resources are the main two advantages of this option, as it depends on utilizing the existed facilities, customer groups, skills, and distribution systems (Kuzmina, 2009).  Reduction of the brand's value in the long run might be the disadvantage of using this option (Kapferer, 2004 and Farquhar and Ijiri, 1993).  It worth mentioning that brand portfolio expansion via brand extension has received far more research efforts in literature (e.g., Czellar, 2003; Bottomley and Holden, 2001; Bottomley and Doyle, 1996; and Aaker and Keller, 1990). However, brand portfolio expansion via internal brand creation or external brand acquisition has received far less research attention as previously mentioned.  In this perspective, it worth clearly determining the exact meaning of both creation and acquisition. First, brand creation is an introduction of a brand that is new to a firm and the market, it is a process embedded in market and consumers, driven by marketing strategy as opposed to technological innovation, with benefits that are deferred and difficult to quantify. Brand creation may be based on a new or existing product of the firm, but always has a distinct name, one that is not a part of a firm’s existing brand portfolio and is not used on the market at the time of introduction (Kuzmina 2009, p. 9). New product development and brand creation are similar in their objectives (i.e. the introduction of something new to the market) they differ substantially with regard to at least three aspects: degree of control, locus of activities, and the evaluation of return on investment (Kuzmina 2009; Park and Srinivasan, 1994; and Keller, 1993).


Investigating Intention to Use Mobile Instant Messenger: The Influence of Sociability, Self-Expressiveness, and Enjoyment

Dr. Ahmed Soliman, COBA, King Saud University, Riyadh, Saudi Arabia

Mohammed Saleh Salem, COBA, King Saud University, Riyadh, Saudi Arabia



Rapid developments in telecommunications enabled users to perform tasks quickly and easily. Mobile instant messenger is one of the most successful technologies that significantly improved the performance of users. Many people use instant messaging such as Blackberry Messenger and WhatsApp Messenger as a way of communicating with their friends and family members while they are roaming. Others enjoy using instant messenger in sending and receiving jokes and funny stuff. This study reveals that in addition of perceived usefulness and perceived ease of use of mobile instant messenger, sociability, perceived self-expressiveness, and perceived enjoyment are strong motivational factors in using mobile instant messenger. Practical implications and suggestions for future research are offered. Mobile text messaging service has been one of the most successful mobile services in recent years (Nysveen, Pederson and Thorbjørnsen 2005b). Moreover, instant messaging has grown tremendously as the rate of acceleration in the development of information technology, internet, and mobile communication is unprecedented. In a nutshell, Mobile Instant Messenger and WhatsApp Messenger are becoming popular media for both social and work-related communications. Instant Messaging (IM) is often described as a “near-synchronous” communication medium, placing it between synchronous communication medium such as speech and asynchronous communication medium such as email (Avrahami and Hudson 2006). This study investigates some factors that influence the use and acceptance of instant messaging services such as Mobile Instant Messenger and WhatsApp Messenger among university students who use them more frequently than other consumer groups. Despite the success of technology in helping people do business quickly and easily, the extensive use of technology has some negative aspects. It might lead to addiction of technology, work overload, and technology-family/work-family conflict (Turel, Serenko, and Bontis, 2008). The extensive use of technological peripherals such as smart mobile phones is clearly observed among young generations. This might result from the usefulness and ease of use of this type of phones. One of the questions that this situation raises is whether such variables as sociability, self-expressiveness, and enjoyment play a role in the extensive use of Mobile Instant Messenger and WhatsApp messenger among university students. Davis’ (1989) technology acceptance model (TAM) deals with the relationships between the ease of technology use and its usefulness, on one hand, and individuals’ attitudes toward technology and their intention to use it, on the other hand. TAM is used to interpret the adoption of technological products. Kwon and Chidambaram (2000) and Lee et al. (2002) have employed TAM to test the factors affecting the adoption of mobile services. The model sheds light on the attitudinal interpretations of the intention to use a specific technology or service. Moreover, TAM has proven to be a useful theoretical model in helping to understand the factors influencing the use and adoption of any information technology or information systems (Legris, Ingham, and Collerette, 2003). TAM was primarily developed based on works related to the theory of reasoned action (TRA) developed by Ajzen and Fishbein (1980). TRA postulated that behavior is based on attitude, social influence, and intention. Ajzen and Fishbein defined attitude as an individual’s positive or negative feelings associated with performing a specific behavior. As to TAM, it postulates that perceived usefulness (PU) and perceived ease of use (PEOU) are crucial to the attitude and anticipation regarding the use of technological tools (Davis, 1989; Davis, Bagozzi, and Warshaw, 1989; Venkatesh, 2000; Venkatesh and Davis, 2000).  Besides, Davis (1989) stipulated that the behavior must be voluntary. Perceived usefulness (PU) is defined as the extent to which a person believes that using a particular technology will enhance his/her job performance (Davis, 1989; Pederson and Nysveen, 2003). Furthermore, Igbaria, Parasuraman, and Baroudi (1996) propose that perceived usefulness is positively related to microcomputer usage. Perceived ease of use (PEOU), on the other hand, is defined as the degree to which a person believes that using a technology will be free from effort (Davis, 1989; Venkatesh and Davis, 2000).  There are many factors that influence consumers’ perception of the use and usefulness of technological tools. In particular, sociability, self-expressiveness, and enjoyment are three influential factors that affect consumers' perception in this regrad. Sociability is defined as using information/communication systems as a means to feel closer to family and friends and to improve family relationships, to carry out family responsibility while at work, to care for others, and to make yourself available to your children. (Baumeister and Leary 1995; Campbell and Russo 2003; Leung and Wei 2000; Venkatesh and Davis 2000). Sociability was proposed by Baumeister and Leary (1995) to include two main features; first, people need frequent, positive, and pleasant contacts with others that are, in general, free from conflict, and second, people need to perceive that there is an interpersonal bond or relationship marked by stability, affection concern, and continuation into the foreseeable future.


Influence of Six Sigma Practices on Internal Quality Management of Thai Private Hospitals entering the ASEAN Economic Community (AEC)

Pareeyawadee Ponanake, King Mongkut’s Institute of Technology, Ladkrabang, Thailand

Dr. Sunpasit Limnararat, King Mongkut’s Institute of Technology, Ladkrabang, Thailand

Dr. Manat Pithuncharurnlap, King Mongkut’s Institute of Technology, Ladkrabang, Thailand

Dr. Woranat Sangmanee, King Mongkut’s Institute of Technology, Ladkrabang, Thailand



This research aimed to study 1) the internal quality management of a Thai private hospital entering the ASEAN Economic Community (AEC), and 2) the influence of Six Sigma practices on this internal quality management.  The sample group for the research comprised 337 HA officers. The research was conducted from December 2012 to June 2013, and the research method used was purposive sampling through questionnaires. Statistical data analysis was performed using percentages, means, standard deviations, multiple linear regressions, and the forward selection technique.  The research found that 1) the internal quality management of Thai private hospitals entering the ASEAN Economic Community was at a high level, and 2) that the Six Sigma practices regarding supplier relations influenced this internal quality management at the 0.05 level of significance, while the Six Sigma practices customer relations, quality data, service design and process management influenced it at the 0.01 significance level. Quality management is essential to strategic management to increase an organization’s competitive advantage and efficiency.  The qualitative ideas that have been applied in management for many years include statistical quality control, statistical process control, zero defects and total quality management.  Recently, Six Sigma has become a popular approach to quality management and has been accepted by various industries around the world (Hendry & Nonthaleerak, 2005). The Six Sigma approach emphasizes methods (or systems) that improve the efficiency of businesses’ statistical tools and methods and reduce production process, leading to reduced defects of those process and increased quality of products and services, as well as increased profits (Russell & Taylor, 2011). Product quality improvement is the basic success factor for businesses.  To improve quality, a company should provide a number of continuous quality improvement programs, especially total quality management (TQM).  Presently, many companies apply Six Sigma practices, including Motorola, General Electric, Honeywell, Sony, Caterpillar, and Johnson Controls, all of which experience positive returns on their Six Sigma investment.  Six Sigma is the quality management approach popular among several industries (Desai, 2006).  It is an efficient and successful tool in the production industry to reduce the variation in process and increase production.  However, the service industry is different from the production industry, and the application of Six Sigma has been limited to specific services (i.e., healthcare businesses and banks) (Abdolshah et al., 2009). Quality has been identified as the most important factor in consumers’ selection decision of goods or services that various agencies (factories, retailers, banks and financial institutions, etc.) provide to their customers.  Thus, understanding customers’ demand and quality improvement of goods and services are important success factors to enable businesses to compete sustainably in the market.   Various companies have realized the importance of products and services quality, which can be seen in their strategic plans (Montgomery, 2009).  Services occur when consumers use them, so service quality is important.  Services are designed for each customer, so both service design and delivery are important.  Therefore, we should increase the value of the quality of customers’ service, quality of service design and quality of service delivery (Ramasamy, 2009).   Although Six Sigma was developed for the production industry, nowadays service businesses function within nearly all sections in which Six Sigma practices can be applied to increase profits and work efficiency.  These service businesses have developed Six Sigma applications for marketing, finance, data information systems, laws and human resources management to solve problems.  Quality and safety are expected by society, and even though they are continuously improvement, dissatisfaction, conflict, risk and waste situations still sometimes occur.  Thus, it is necessary to have effective and flexible mechanical methods to promote and motivate the quality development of hospitals and health services (The Healthcare Accreditation Institue, 2013).  Therefore, Six Sigma is important role for situational problems and to solve problems that occur in customers’ service perception (Sousa & Voss, 2002) due to Six Sigma’s focus on the understanding of requirements, customer satisfaction, and information management, focusing on root causes early to avoid the first occurrence of problems (Verma & Boyer, 2009)  Achieving and maintaining a competitive advantage is a goal of every business (Woolf, 2008). It is recommended that the effect of Six Sigma practices of private hospitals on internal quality management should be studied in order for them to gain competitive advantages over their competitors.


Relationship Marketing Orientation and Differentiation Strategy Affecting Banking Performance Effectiveness

Jedsada Wongsansukcharoen, Dr. Jirasek Trimetsoontorn and Dr. Wanno Fongsuwan,

King Mongkut's Institute of Technology Ladkrabang (KMITL),

Administration and Management College (AMC), Bangkok, Thailand



This paper aims to develop structural equation modelling of variables that affect the banking performance effectiveness of commercial bank branches (Thailand) in the banking sector by gathering quantitative data. The population of the study covers all 2,068 Thai commercial bank branches in Bangkok, Thailand (as of 31 July 2012). This research defined the Thai banks for data collection using stratified sampling (first step) and simple sampling (second step). Primary data were collected using a self-administered survey of 65 managers and 185 marketing officers. The responses to the questions capturing focal constructs used a seven-point Likert scale. Data were analysed using confirmatory factor analysis (CFA) and structural equation modelling (SEM). It was found that significant relationships existed between relationship marketing orientation (RMO), and differentiation strategy, and banking performance effectiveness. The key success factors of relationship marketing orientation were found to have direct influence on banking performance effectiveness (p < 0.001), and indirect influence on banking performance effectiveness through the mediation of differentiation strategy (p < 0.001). These results enhance performance effectiveness, customer insight and building long-term relationships with businesses and customers to the factors needed to respond to the highly competitive situation at present.  In the present, the banking industry challenged with the most uncertain situation in its history. Until this time, the banking industry had been characterized as a free flow of trades and exchanges between one entity and another, with meaning placed on having a participative relationship. In the present highly uncertain economic crisis period, the banking industry must pay more attention to evaluating the extent of the results of the macro-economy and avoid ineffective strategic planning. However, the proactive action would be to help make the banking industry more agile and alert. This will not only help businesses to sail through the crisis but also create innovative opportunities (Carbonara and Caiazza, 2010). The Bank of Thailand has estimated that financial economics and investments will see an increase in competition. Therefore, it is important to adapt to the increasing risk. The banking industry must be able to develop within the more challenging and severe environment. Every sector involved should co-operate and synergize to build a more effective and sustainable system, rather than focusing on short-term gain (Wongsansukcharoen et al., 2013).  This research scopes the research area to look for a concept that could lead to creating a more effective banking industry by using relationship marketing orientation (RMO) and differentiation strategy. We also search for strategies used in various parts of the world to set organizations’ directions, particularly in the banking sectors. This research based on Porter’s (1980; 1985; 1996) differentiation strategy as a core element, purpose to achieve new knowledge by integrating RMO and differentiation strategy with research into the Thai banking industry. This being the case, it follows that there are gaps in our knowledge and understanding about the key success factors of relationship marketing orientation, and differentiation strategy, and how to measure the effectiveness of the factors that affect banking performance effectiveness. Based on past related literature (Callaghan et al., 1995; Chattananon and Trimetsoontorn, 2009; Gordon et al., 2008; Kucukkancabas et al., 2009; Morgan and Hunt, 1994; Olotu et al., 2011; Sin et al., 2002; Tse et al., 2004; Wilson, 1995; Yau et al., 2000; Sirdeshmukh et al., 2002; Dibb and Meadows, 2004) has hypothesized that relationship marketing orientation (RMO) is a multi-dimensional construct consisting of six components. According to Chattananon and Trimetsoontorn (2009); Gordon et al., (2008); Olotu et al., (2011); Sin et al., (2002); Tse et al., (2004) were found the relationship marketing orientation variable had a positive impact on business performance. Based on the above, the hypotheses relative to banking performance effectiveness are: H1. Relationship marketing orientation will have a positive impact on banking performance effectiveness. H2. Relationship marketing orientation will have a positive impact on differentiation strategy. According to Porter’s (1980) framework, a business can also pursue superior performance by differentiating its products and services from those of its rivals (Parnell, 2011; Parnell and Hershey, 2005). A differentiation strategy involves the firm creating a product or service that is considered to be unique in some aspect that the customer values (Spencer et al., 2009). Additionally, the differentiation strategy is effectively implemented when the business provides unique or superior value to the customer through product quality; product features or after-sales support (Allen et al., 2007; Hahn and Powers, 2010). Based on Wongsansukcharoen et al., (2013) was found the differentiation strategy variable had a positive impact on banking performance. Therefore, the essence of this strategy is choosing to perform activities differently than rivals do (Porter, 1996).


Taylor, HRM, Strategic HRM with Jobs, Employee Performance, Business Performance Relationship: HR Governance through 100 Years

Dr. Gurhan Uysal, Ondokuz Mayıs University, Samsun, Turkey



This study discusses theory of SHRM, and it puts a SHRM model. SHRM can be described with employee/firm performance relationship. In this relation, employee performance increases performance of business departments; and, performance of business departments increases firm performance. Business departments are stock, supply, marketing, production, logistics, finance and others. Secondly, it is assumed that relationship between employee/firm performance is trigonometric in SHRM function. In trigonometry, there are dependent variable, independent variable, and moderators. Dependent variable is firm performance; independent variable is employee performance, and moderator is business departments. It is expected that relationship is triangular in this trigonometry. Thirdly, there are some functional differences between HRM and SHRM. Major difference between is, HRM practices are individual and separate in HRM. However, HRM practices are interrelated in SHRM.  SHRM aims to achieve firm performance. SHRM achieves firm performance through employee performance. HRM practices has an impact on individual performance. and individual performance increases performance of business departments. Departments are stock, supply, marketing, production, finance etc. It is expected that individual performance increases performance of stock department, performance of supply department, performance of marketing department and so on. It is believed that performance of business departments has an impact on firm performance. Firm performance is described with market share, earnings, employee satisfaction, customer satisfaction, product quality. Therefore, performance of business departments increases its impact on those variables of firm performance through employee performance in SHRM. Therefore, SHRM can be described with employee/firm performance relationship. Moderator between employee performance and firm performance is business departments. It is expected that relationship in this SHRM definition is triangular or trigonometric. Dependent variable of trigonometry is firm performance; independent variable is individual performance; and moderator is business departments. In this triangular relation, individual performance has an impact on firm performance through business departments. Furthermore, there are two arguments in SHRM literatuıre. First argument is how HRM has an impact on firm performance; and second arguments is how SHRM can be put into practice? This study answers those two debates and questions. This study aims to argue theory of SHRM for academics, and it aims to draw a SHRM model. In addition, this paper also discusses American model of SHRM. Frederick W.Taylor determined organizational principles for firms. It is job analysis and HRM principles. Taylor is interested with and focused on “job”. He observed organizational turmoil in American firms, and he advised to do job analysis and human resource management (HRM) so that employees effectively do their jobs.  This is definition of HRM: employees effectively do their jobs.  There are two dimensions to increase employee effectiveness at job: one is organizational, and the other is employee side. Taylor developed job analysis technics in organization side; and he developed HRM principles in employee side to increase employee effectiveness at job. Taylor’s focus was employee effectiveness. He aims to increase employee effectiveness to increase firm performance (this sentence is identified as definition of SHRM in this study). Taylor aimed to increase employee efficiency at job via HRM practices above (This is the definition of human resource management at this study). Major purpose of HRM is to increase employee performance. HRM apply of several practices to increase individual performance. Secondly, HRM aims to achieve expected organizational attitude and behaviours in organizations. Those behaviours are such as motivation, satisfaction, commitment, citizenship, trust. Thirdly, HRM establish relationship between firm and employees. HRM practices enable firm management to establish employee relations such as career planning, training activities, compensation programs. HRM is to increase employee performance so that employees effectively do their jobs. Because this is efficiency of production factors. There are 4 production factors in business activities. They are, raw materials, human resources, capital and knowledge. Firm management aim to increase efficiency of four; however, HRM aim to increase efficiency of one: human resources. HRM apply HRM practices to increase employee efficiency and individual performance.


Politics and Economic Growth: Regional and Income Level Classification

Dr. Hussein Zeaiter, Lebanese American University

Dr. Raed El-khalil, Lebanese American University

Issam Nassar, Lebanese American University



Is politics an important determinant of Economic growth? Political economists have long been arguing whether and to what extent democracy, bureaucracy, government stability, affect economic growth. This paper focuses on the relationship between political risks, like democracy, government stability, military and religion involvement in politics, and ethnic tensions on economic growth controlling for the regions and the income level. Using cross section-time series data for more than 140 countries over the period 1984-2009, this paper shows that government stability is the most important political factor for all countries as well as different income level countries. The growth in Sub-Saharan African countries are mainly affected by the lack of democracy and ethnic tension.  The relationship between political risks and economic growth has long been studied. Democracy is considered the main political risk factor of all political risks. It seems to be an engine for growth; however, many non-democratic countries have high growth, at the same time, some democratic countries have slow and sometimes depressed economies. The main question remains to what extent democracy triggers growth in developing as well as developed economies. This study discusses whether democracy and other political indices can be common factors among countries with common geographical areas as well as income levels. Many questions have arisen of the relationship between democracy and economic growth. Sometimes the relationship is direct as in Western Europe where democracy is accompanied by solid economic structures and high growth. In many sub-Sahara African countries, economies perform very poorly and democracies as well. These examples show that democracy and growth are positively related, that if we discard other countries in which democracy and economic growth are indirectly related. Comparing the two largest countries in the world, China and India, we see that India, representing the largest democracy in the world, lack the same economic growth that China has, considered a non-democratic country. Moreover, some high income countries, rich with natural resources, have no democracy, while others do have democracy. The other argument that this paper discusses is whether democracy has different effects on growth in different income levels. In general, high income countries are characterized by free markets and neutral democracy. On the other hand, lower income countries show relatively lower democracy. This paper examines the effect of democracy and other important political indices on economic growth in different regions and throughout different income levels. This study is divided into several parts: part one introduces the paper. Part two lists and discusses the previous studies. Part three explains the methodology. Part four analyzes the empirical study. Part six concludes.  Many economists studied the effect of political risk on economic growth and development. Democracy is the most political factor that showed importance by most of these studies. However, some studies show that there is a powerful relation between the two factors, while others show that they are unrelated. Jamali, Wandschneider and Wunnava (2007), Rodrik (1997), and Pourgerami (1998) show a highly significant effect of democracy on growth. On the other hand, Baum and Lake (2003) stated that democracy is effective in the long run through life expectancy. Drury (2006) proved that corruption is effective only in non-democratic countries and not in democratic ones. Younis (2008) found that socio-political factors are the most important determinants of economic growth. Jamali et al. (2007) investigated many economic and political variables and their effect on economic growth. The authors state that democracies grew faster than autocracies during 1990 and democracies promote economic growth better through the stability brought to the economy. However, Baum et al. (2003) found that human capital is the main bridge that makes democracy effective to economic growth. The authors conclude that democracy has no direct effect on the economy. Rather, the effect of democracy is indirect and mainly through life expectancy in low-income countries and increased secondary education in high-income countries. Baum et al. added that a five-year lag of democracy appears to have an effect on life expectancy and one-year lag life expectancy positively and significantly affects economic growth. Alesina et al. (1994) focuses on the effect of income distribution on economic growth. The authors state that the more unequal the distribution of resources is in the economy, the lower is the rate of economic growth in both democratic as well as non-democratic countries. The authors show that the inequality in land ownership has decreased for the countries that have experienced land reform after the World War II and increased for the countries with no reform. They conclude that the redistribution of the resources in the societies is essential for greater growth of the economy. Chong et al. (2004) focused on the institutional quality in the country as a major factor affecting economic growth.


The Relationship of Service Quality, Customer Satisfaction and Customer Loyalty in Private Nursing Homes in the Bangkok Metropolitan Region

Lanchakorn Satsanguan, King Mongkut’s Institute of Technology Ladkrabang, Thailand

Dr. Wanno Fongsuwan, King Mongkut’s Institute of Technology Ladkrabang, Thailand

Dr. Jirasek Trimetsoontorn, King Mongkut’s Institute of Technology Ladkrabang, Thailand



The effect of population aging, the socio-economic transformation and the inadequacy of health and social services for older people with health problems has led to a considerable focus on long-term care for them. Some carers in long-term care institutions, particularly nursing homes, are unable to help older persons with chronic diseases and instead can only care for the activities of daily living for the elderly. This leads to a lack of confidence in the service quality of nursing homes, including decreased customer satisfaction and customer loyalty. The overall objective of this study is to examine the relationship of the above three variables with customers of private nursing homes in the Bangkok metropolitan region of Thailand. Authors use an accidental sampling method and regression analysis to collect and analyze data. Regression results are consistent with our research objective. Some items of the service quality construct correlate with customer satisfaction. “Safe facilities for the elderly” has the greatest relation with customer satisfaction. Some items of the customer satisfaction construct correlate with customer loyalty. “Good experience of the service” has the highest relation with customer loyalty. Furthermore, some items of the service quality construct correlate with customer loyalty. “Care of personnel that is similar to relatives of elderly” has the second highest relation with customer loyalty.  There were 810 million people aged 60 years or older around the globe in 2012. Population aging – that is, the rising proportion of older people in the population, is a global incident due to the fast decrease in fertility rates combined with declining in mortality and increasing longevity (United Nations, 2012). This phenomenon is taking place in many developing countries in Asia including Thailand. Population aging in Thailand is occurring more quickly than in developed countries in the West. The growth rate of older persons in Thailand exceeds that of the total population (Kespichayawattana & Jitapunkul, 2009). The majority of Thai women are single and employed full-time, resulting in a considerable decline in the total fertility rate (Srithamrongsawat et al., 2009). This decrease in the total fertility rate has an impact on population structures in terms of children aged 0-14 years and the workforce aged 15-59 years (Office of the National Economic and Social Development Board, 2012). The potential support ratio in 2010 was 6 workforce-age individuals to every 1 older individual. This ratio is expected to reduce to 2 to 1 by 2030, indicating that the workforce-age population will have a substantial burden for taking care of the elderly (Foundation of Thai Gerontology Research and Development Institute, 2012).  the challenges that result from population aging include socio-economic changes and insufficient health and social services for older people with chronic diseases, weakness and disabilities; these issues lead to an increased focus on long-term care for older persons (Srithamrongsawat et al., 2009). In particular, authors consider the nursing home, which is one of largest types of institutional long-term care (Sasat et al., 2009a) and offers a good representation of long-term care institutions. Some carers in nursing homes have not been trained to support elderly people with chronic illnesses, but rather have only been trained to support the daily activities of older persons (Sasat & Pukdeeprom, 2009). This leads to unstable confidence in the service quality of nursing homes, which is the core problem addressed by research in this area. This problem affects customer satisfaction with nursing homes. Our literature review revealed that extant studies have examined service quality, customer satisfaction and customer loyalty together. The objectives of this study are 1) to study the relationship between service quality and customer satisfaction and 2) to study the relationship of service quality and customer satisfaction with customer loyalty. Both of these are studied with customers of private nursing homes in the Bangkok metropolitan region. A nursing home is defined as an organization offering long-term care for patients who do not display severe symptoms but require 24-hour care outside the home. Carers in such facilities have nursing skills to ensure that patients take medicine, eat food, and receive help for some activities of daily living when needed by older people who are weak and/or suffer from chronic illness or have physical and/or intellectual disabilities (Sasat et al., 2009a; Sasat et al, 2009b).  In the last few decades, scholars and practitioners have focused on service quality due to its powerful impact on company performance, profitability, customer satisfaction and customer loyalty (Santos, 2003; Santouridis & Trivellas, 2010). Assessment instruments, the most famous of which is SERVQUAL (Santouridis & Trivellas, 2010), were created to examine the dimensions of service quality. Service quality has been categorized into the five dimensions of reliability, responsiveness, assurance, empathy and tangibles (Parasuraman et al., 1988). SERVQUAL was recommended for process-driven service firms such as those in the areas of health care, banking, telecommunication, retailing, and so forth (Santouridis & Trivellas, 2010). Several authors (Yu et al., 2006; Cheng et al., 2008;  Duggirala et al., 2008; Padma et al., 2009; Padma et al., 2010; Santouridis & Trivellas, 2010 and Chahal & Kumari, 2010) stated that service quality has a relation with customer satisfaction. Chahal and Kumari (2010) and Santouridis and Trivellas (2010) specified that service quality has a relation with customer loyalty.


An Assessment of the Effects of Individuality on Organisational Culture in Selected Institutions in Ghana

Rosemary Boateng Coffie, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana

James Kennedy Turkson, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana



Assessment of organisational culture is a valuable analytical tool in its own right as there are many ways to visualise the concept of organisational culture. The research assesses the effects of individuality on organisational culture.  The culture of the individual is assessed to find out its relationship with individuality.  The degree to which individuality affects organisational culture was analyzed and discussed with the support of the Statistical Package for Social Science (SPSS).  Factors such as the individual’s home background, inherited traits and working conditions were analyzed against the organisational culture of the individual. The results revealed that the culture of the individual does not influence his work. This was as a result of the modern demands from employers. Upon entering an organization, individuals attempt to understand what the organization is really like and try to become participating members (Feldman, 1976). Individuals are motivated to ‘make sense’ of their environment and understand why things happen (Heider, 1958). By observing behaviours that are common to the members of the organization, new employees can determine what behaviours are expected and rewarded and what behaviours are frowned upon and attract sanctions. As individuals enter and become participating members of an organization, they are exposed to beliefs and values that begin the initial development of cultural internalization. Once employees become aware of organizational expectations, norms, and values, they will often attempt to adhere to them in order to be embraced as new members of the organization. It is obvious that the acceptance of an individual into an organization will depend on how such an individual conforms to the general behavioural patterns of the organization. As employees attempt to comply with behavioural standards, they will seek for behavioural examples of others and use these examples as behavioural comparatives. This search for reinforcement of appropriate behaviour is the beginning of the individual's internalization of the organization's culture (Home et. al 1981). The internalization process will also lead to a greater degree of organizational commitment. The collective environment, enhanced by organizational culture, tends to create a strong sense of attachment to the organization, as members begin to subordinate their own goals in favour of the organization's (Triandis, 1995). Porter et. al (1974) suggest that a committed individual will strongly believe in the values of the organization. The internalization of organizational values should create a strong belief in these values and also create a perception of individual commitment to the organization. This should have been the normal trend but there is the tendency of deviation from this norm within the organisation. Organizational culture permeates organizational life in such a way as to influence every aspect of the organization (Saffold, 1988).  Central to the culture definition is the idea that culture must be learned and shared (Titiev 1959). This in turn suggests that individuals need to have an awareness of, and be able to get in touch with their own attitudes, values and beliefs - what they are and where they come from which describe individual culture. As the individual joins an organization with a form of culture that determines his individuality, the firm has its culture which can create conflict and could also trigger off tension.  The above situations have warranted this study which attempts to find the effects of individuality on the culture of an organization.  Most of the studies in this area are done for the developed countries. However, a few of such studies have been done for developing countries. In the case of Ghana, the researchers have not sighted any such study in the area.  Individuality has always influenced employees in their field of work.  What determines individuality has no single answer because too many variables contribute to the development of the individual.  The sources of individuality can be traced to a person’s ethnic origin, physique, gender, culture (social and national), personality traits and types, early family life, attitudes, intelligence, abilities and perception. However, our uniqueness stems from the dynamic ways in which these inherited and environmental factors combine and interact with each other (Mullins 2006). According to Jung (1923) personality has two types.  These are extroverts and introverts. .  He categorized extroverts as those who have the following characteristics: sociable, outgoing, talkative, gregarious, active, optimistic and impulsive.  He also referred to introverts as those who are characterized by the following traits: withdrawn, unsociable, prefers to be alone, shy, passive, careful, and thoughtful.  For Jung, each person has both extroverted and introverted characteristics, despite most people tending to have a proclivity towards one another. Kant (1978) in his published “Anthropologie” revises and translates the four basic hippocratic personality types which are the melancholic, the choleric, the sanguine and the phlegmatic.   The melancholic temperament refers to someone who seems to suffer from introspection and withdrawal or heavy, downcast moods, depressive in nature.  The choleric person by contrast is quite cranky, fiery and irritable.  The sanguine person is cheerful hopeful and basically optimistic. The phlegmatic person would appear sluggish or apathetic and listless or laid back.  For Kant, you cannot have combinations of the basic temperaments, so somebody could not be possibly both sanguine and choleric.


Environmental Purchasing: From the Perspective of Claims, Involvement, and Societal Structure

Dr. Kokku Randheer, King Saud University, Saudi Arabia

Dr. Abdulrahaman Al-Aali, King Saud University, Saudi Arabia

Ruwaida Al-Ibrahim, King Saud University, Saudi Arabia



One of the major issues in marketing today is green marketing, or environmental consumption. This study examined whether environmental claims, societal structure, and consumer involvement in environmental issues influence positive consumer attitudes toward the environment and affect purchase decisions. A sample of 460 individuals was included in this study. Data were collected using a multiple-item scale developed to address all of the variables of the study. Data reduction was conducted using factor analysis. Seven factors were identified with alpha values that met the threshold level of 0.7, and total variance explained exceeded 65%. The association between favorable consumer attitudes toward the environment and independent variables was found to be significant. High and low environmental involvement, substantive claims, associative claims, message framing, collectivism, individualism, and favorable consumer attitudes were found to be significant predictors of willingness to perform an environmental purchase decision. Managerial implications highlight the importance of directing environmental issues toward the young and creating platforms that inform, educate, and convert markets into green consumption. An enormous opportunity exists for green consumption, and practitioners should translate this knowledge into a profitable model.  Today’s marketing field involves numerous environmental issues, such as the popular green revolution. As a result, marketers are focusing on finding ways to make their offerings appear environmentally friendly or green, and they are attempting to reach consumers in the strongest way possible. Industries are investing effort in helping consumers understand and accept this new philosophy. Environmental purchasing is primarily influenced by three factors. The first is claims, which provides information on how a product improves or degrades the environment (Ricky et al., 2006). This information can be provided by advertising the product or by associating the advertised product or its advertiser with positive environmental messages (Polonsky et al., 1997; Ricky et al., 2006). Although environmental claims have been used by practitioners, academics have paid limited attention to the effectiveness of these claims (Ricky et al., 2006). The second factor is consumer involvement (Chan, 2000), which may affect the effectiveness of communication. According to a study by Kim (2005), environmental claims enhance the communication effectiveness of advertisements for both high and low environmentally involved products and services. The third factor is societal structure; each society has a different structure. Structures are built on individualism or collectivism and on person-level tendencies, which appear to influence individuals’ motivation to engage in environmentally conscious behaviors (McCarty and Shrum, 2001). Kim (2205) suggests that collectivism influences green buying behavior. Because collectivistic individuals expect other members to engage in the same behavior, they believe that they can make a difference by engaging in this behavior at the aggregate level even though the action is performed at the individual level (Kim, 2005). Further, if the relationship is strengthened among claims, involvement, and societal structure, influencing consumers’ decisions may result in favorable attitudes toward rebuying (Kim, 2011). Although consumers have environmental concerns, the majority reported that their purchases were not influenced by these concerns (Chase and Smith, 1992). Crane (2000) suggested that managers should establish an environment that creates positive or favorable consumer attitudes for the present and post-purchase consumer behavior context. This study explores the impact of consumer involvement, environmental claims, and societal structure on environmentally favorable purchase decisions.  Conceptual framework: The literature suggests that claims, consumer involvement, and societal structure cause consumers’ decisions toward the environment to be favorable.  The degree to which consumers are involved in the environment affects how they perceive green claims (D’Souza and Taghian, 2005). D’Souza and Taghian (2005) found differences between the two groups (high vs. low environmental involvement) in terms of their attitudes toward green claims. Low-involved customers appear to have a strong disregard for green advertising, whereas highly involved consumers are intrinsically motivated to be alert to the environmental attributes of products (Schuhwerk and Lefkoff-Hagius, 1995). Dardis and Shen’s (2008) study examined the interactive effects of different types of advertising evidence (informational vs. exemplar) and product involvement (high vs. low). The most critical predictor of information-processing strategies was the consumer’s level of involvement (Bao, 2009). Schuhwerk and Lefkoff-Hagius (1995) noted that even though green appeals were not necessarily more effective than non-green appeals for environmentally involved consumers, they were much more influential than non-green appeals for environmentally uninvolved consumers. Lee (2008), referring to the degree of emotional involvement in the issue, noted that green purchasing behavior is influenced by environmental concerns by directing an individual’s response to the environmental protection of green purchasing. Further behavior is activated by emotional involvement more than by rational assessment (Lee, 2008).  Environmental claims are assertions made by firms about the beneficial environmental qualities or characteristics of their goods and services. An environmentally friendly facade can be established by making such claims and tying these claims to positive environmental information (Carlson et al., 1996). Moreover, environmental claims are better received when the information is detailed, relevant, and understandable. Because it is more effective if the environmental benefits of green products are supported with information rather than claims (Ricky et al., 2006), marketers manipulate the specificity of environmental claims in their advertisements (Leonidou et al., 2011).


Nonverbal Immediacy and Teaching Effectiveness of Asian and American Lecturers

Roy Ramos Avecilla, Webster University, Thailand

Dr. Maria Belen Vergara, Webster University, Thailand



Fifty-two Asian students in an international university in Thailand participated in a study which determined their perceptions of nonverbal immediacy and teaching effectiveness of two Asian and two Caucasian American lecturers of business and technology courses. Teacher nonverbal immediacy involves affiliation and animation behaviors (Smythe and Hess, 2005) whereas teaching effectiveness refers to dimensions of teacher behavior (i.e., cognitive, affective, motivational, disciplinary, and innovative) that produce learning outcomes and motivation in the students (Rico, 1971). Results showed that Asian students perceived Asian lecturers as more nonverbally immediate than Caucasian American lecturers. Although Asian and American lecturers were seen as equally effective in teaching, Asian students positively associated nonverbal immediacy behaviors with the affective, motivational, and overall dimensions of teaching effectiveness of Asian lecturers. The findings underscored the value of cultural differences in expectations and perceptions of appropriate teacher behavior in a multicultural classroom context. Implications on managing multicultural college classrooms and future research directions are discussed.  The increasing cultural diversity of students in higher learning institutions has prompted researchers in the field of instructional communication to vigorously explore variables that can promote greater accountability and better instructional quality in a multicultural classroom context.  In recent years, research on instructional communication have shed light on teacher nonverbal immediacy and its application to culturally diverse learning situations. These include teacher behaviors such as gaze, smile, nod, relaxed body posture, forward lean, movement gestures, and vocal variety in relation to student learning which communicate approachability, availability for communication, and interpersonal warmth and closeness (Andersen, 1978).  Teacher nonverbal immediacy has been demonstrated to contribute to university student’s ratings of teaching effectiveness (Babad, Avni-Babad, and Rosenthal, 2004; Feeley, 2002; Harris and Rosenthal, 2005; Kurkul, 2007; Lazaraton and Ishihara, 2005). Body movement, hands/arms gestures, and facial expressions that a teacher performs in the classroom signal openness and warmth which enhance student-teacher relationship (Cobb, 2000; Sanders and Wiseman, 1990; Stock, Righart, de Gelder; 2007), allow segmenting of activity into meaningful events in the process of communication (Zacks, Kumar, Abrams, and Mehta, 2009) which can help students make sense of learning from lectures (Pozzer-Ardenghi and Roth, 2006), and facilitate achievement of learning objectives of courses (Jordon, 2011).  Having vocal variety, a relaxed body position, eye contact, and smiling were specific behaviors which played a major role in the positive teacher evaluation of college students from various cultures such as American (Chamberlin, 200; Darrow and Johnson, 2009; Klinzing, 2009; McCroskey, Richmond, Sallinen, Fayer, and Barraclough,1995; Roach and Byrne, 2001), German (Klinzing, 2009; Roach and Byrne, 2001), Australian, Finnish, and Puerto Rican (McCroskey, Richmond, Sallinen, Fayer, and Barraclough,1995), and encouraged motivation among Japanese students (Pribyl, Sakamoto, and Keaten, 2004). Witt, Wheeless, and Allen’s (2004) meta-analytic review of 81 studies from 1978 to 2001 showed cumulative evidence that teacher nonverbal immediacy has a substantial relationship with student reports of perceived learning and affective learning, and a modest relationship with cognitive learning performance. These findings are consistent with others studies that found teacher nonverbal immediacy to be positively related with cognitive, affective, and behavioral learning of students of various ethnicities such as American (Neuliep, 1997), White, Latino, Asian American (Powell and Harville,1990), African-American (Neuliep, 1995), Chinese (Myers, Zhong, and Guan, 1998; Zhang  and Oetzel, 2006), and Japanese (Khoo, 2010). However, Wang (2000) found contrasting findings which showed no relationship between teachers' nonverbal behaviors and overall ratings of lesson effectiveness by students, teachers, and independent judges. Cultural influences on student perceptions of teacher nonverbal immediacy were brought to light in several studies which showed that Japanese undergraduates in a US distance learning program viewed their American lecturers to be nonverbally immediate (Khoo, 2010); African-American college students perceived their matched-race teachers to be more nonverbally immediate than their Euro-American teachers (Neuliep, 1995; Rucker and Gendrin, 2003); and Chinese students  perceived their Chinese lecturers to be less nonverbally immediate as compared with American students’ view of their American lecturers (Myers, Zhong, and Guan, 1998). Other variables that were associated with nonverbal immediacy and learning outcomes include some personality characteristics of teachers and students. Some of these teacher characteristics include ethnicity (Rucker and Gendrin, 2003), credibility (Pogue and AhYun, 2006), clarity (Powell and Harville, 1990), use of power and seeking affinity (Roach and Byrne, 2001), perception of students’ nonverbal immediacy toward teacher (Baringer and McCroskey, 2000), and nonverbal out-of-classroom communication with students (Clark, Walker, and Keith, 2002).


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