Emerald | Competitiveness Review: An International Business Journal incorporating Journal of Global Competitiveness

The indeterminacy of a flexible exchange rate system when financial markets are dormant

Sandra McPherson, Osman Suliman, Osama Sweidan — 2012-01-20 00:00:00.0

Abstract

Purpose – The purpose of this paper is to examine the extent to which a flexible exchange rate system is able to function given a least developed economy where financial markets are inactive and economic growth is low. Design/methodology/approach – A theoretical general equilibrium model is developed to examine the determinacy of a flexible exchange rate system on a small open market economy on the verge of subsistence. Using data from Sudan, an empirical analysis is conducted to find support for the theoretical results. Findings – The theoretical analysis finds that in economies on the verge of subsistence with inactive financial markets, a flexible exchange rate system is indeterminate and thus will not work. In support of the theoretical results, the empirical analysis indicates that the financial deepening of an economy has a significant positive impact on the determinacy of the exchange rate. Research limitations/implications – The robustness of the empirical results would be strengthened by examining the significance of financial deepening on exchange rates for additional economies with a large subsistence sector beyond Sudan. Practical implications – A policy recommendation for economies on the verge of subsistence such as Sudan is to develop their financial institutions in order to increase their competitiveness in the exchange rate market. Moreover, future empirical studies on the impact of exchange rate changes should include monetary variables in order to reflect the degree of an economy's financial market advancement. Originality/value – The paper illustrates that under conditions of subsistence, general equilibrium models of devaluation are determinant only when supply functions are based on absolute prices and not relative prices.

Toward a learning-based view of innovation

Zong Dai — 2012-01-20 00:00:00.0

Abstract

Purpose – The purpose of this paper is to identify learning-based management innovation that is essential to the firm's competitive advantage, and to develop a conceptual model of learning-enabled innovation and research propositions for future research. Design/methodology/approach – This paper examines how four business firms develop their enterprise learning-based innovation as a solution for a business crisis they face. The research methodology employs a fact-based principle that combines quantitative and qualitative methods. Data were collected and analyzed at the corporate level of the subject organizations. Findings – The cases in this study exemplify that in business crises a firm can be successful by developing a learning-based innovation that is different from the classical paradigm of technology-enabled innovation. Research limitations/implications – The cases in this study are successful stories from the best practice in organizational learning. Even if learning-enabled innovation successes were repeated in large numbers of cases, they would still be tentative research propositions for scientific exploration in the future. Practical implications – The conceptual model of learning-enabled innovation developed by this study would be practical and useful for business firms that seek a competitive solution for succeeding in a business crisis. A business or organizational transformation through learning-based innovation would be much less painful than an ordinary organizational changing process and would more likely be successful. Originality/value – This paper has tentatively developed a conceptual framework and a research proposition for future research in the learning-based view of innovation.

K-economy in the SAARC integration: a comparative study among the member countries

Amzad Hossain — 2012-01-20 00:00:00.0

Abstract

Purpose – The purpose of this paper is to examine and compare the indicators of k-economy to assess whether their status of development helps to improve such indicators in the SAARC. Furthermore, the study also aims to create linkage among the indicators of k-economy, economic integration process in the SAARC, and the knowledge conversion model. Design/methodology/approach – The paper adopts comparative analyses of the indicators of k-economy. Indicators are considered under three tracks such as: socio-economic, economic and ICT infrastructure. Socio-economic indicators – poverty index, literacy rate, public expenditure on education, R&D expenditure, enrolment of tertiary education, number of researchers in R&D, participation in international agency. Economic indicators – per-capita real GDP, real GDP growth rate, share of GDP by sector, structure of trade, inflation and unemployment rate. ICT infrastructure indicators – telephone main lines per 100 people, cellular users per 100 people, broadband per 100 people, and internet users per 100 people. The data are obtained from publications, existing reports and web sites of international organizations. Findings – The indicators of k-economy demonstrate deprived developmental status with increasing trends in the SAARC member countries. As a result, SAARC demonstrates poor growth in terms of knowledge development as compared to other economic integrations in Asia such as APT. There is a considerable variation in most of the indicators among the member states as measured by CV (coefficient of variation) although they lay in low-income county status. The people of the SAARC countries like to adopt with the ICT easily if the opportunity is provided. The study revealed that the countries in the SAARC should carefully follow the knowledge creation, conversion, implementation and reverse follow-up process to meet specific indicator based needs of the specific sector of particular members considering their social and financial affordability in the local context. Research limitations/implications – The study does not use the same year's data for all the indicators applied in this paper due to lack of data availability. Practical implications – The findings of this paper will be useful to formulate effective policies to improve the indicators of k-economy in the SAARC. This will be influential for the SAARC to be a competitive integration. Originality/value – This study provides comparative empirical evidence of variation in the indicators of k-economy among the SAARC member countries contribute to improve such indicators. The paper also creates linkage among the indicators of k-economy, economic integration process in the SAARC, and the knowledge conversion model.

An empirical model of marketing strategy and shareholder value: A value-based marketing perspective

Mamoun N. Akroush — 2012-01-20 00:00:00.0

Abstract

Purpose – The purpose of this research is to examine an empirical model of marketing strategy and shareholder value through customer satisfaction and financial performance by using a value-based marketing approach on organisations listed in Amman Stock Exchange Market operating in Jordan. Design/methodology/approach – A quantitative methodology was employed through conducting two surveys targeting Jordanian organisations' marketing managers and their customers as well as utilising hard measures for financial performance and shareholder value data analysis. A total of 218 marketing managers were involved in the managers' survey and 1,200 customers were involved in the customers' satisfaction survey. A series of exploratory and confirmatory factor analyses were used to assess the research constructs dimensions, unidimensionality, validity and composite reliability. Structural path model analysis was also used to test the hypothesised research model. Findings – The empirical results indicate that external and internal marketing orientations (IMOs) exerted a positive and significant effect on marketing strategy components, namely: product, price, promotion and distribution strategies. Marketing strategy components exerted a positive and significant effect on customer satisfaction. The findings also indicate that product and price strategies are the strongest drivers of customer satisfaction. Customer satisfaction has a positive and significant effect on financial performance. More importantly, financial performance has a strong positive contribution to shareholder value measured by market value added and earning per share. Originality/value – This is the first empirical research paper that has investigated a model of marketing strategy and shareholder value through customer satisfaction and financial performance especially in developing countries, e.g. Jordan. This research offered executives and marketing directors empirical evidence on drivers of shareholder value maximisation and how to enhance marketing's strategic influence on strategic decisions which were not available to them before.

Revealing the role of privilege in free markets, equality-under-law and sustainability

Teresa M. Twomey, Drew L. Harris — 2012-01-20 00:00:00.0

Abstract

Purpose – The purpose of this article is to provide techniques for distinguishing and analyzing privileges. With privileges revealed and categorized, the article provides an analysis of the impact different kinds of privileges have on free markets, equality-under-the-law, and environmental sustainability. From this analysis arise recommendations for public policy aimed at improving efficiency and equality-of-opportunity in markets while encouraging more environmentally sustainable corporate behavior. Design/methodology/approach – The article calls upon a technique from sociology (“unpacking a knapsack”) to begin this exploration of privilege. It then uses the Harris-Twomey typology to categorize various kinds of privilege and analyze their impact on free markets, equality-under-the-law, and sustainability. The article uses examples to illustrate the importance of understanding the impact of privileges in developing effective public policy. Findings – It is difficult to distinguish otherwise “invisible” privileges; having methods for identifying and categorizing privileges make them more visible. Second, the illustrative examples and accompanying analysis suggest that reducing the number of privileges granted by the state, especially those that are economically inefficient, will improve performance and equity across an economy. Where privileges are necessary for efficient resource use or market development, the state would improve efficiency and equality by charging fees equal to the opportunity costs borne by others or the cost imposed on others by the privilege-holder. Practical implications – Using the techniques of analysis and following guidelines for public policies consistent with the principles explored here would be likely to improve access to and efficiency of free markets (making them more “free”), create a more level playing field (greater equality under the law) and diminish the negative environmental impacts of corporate activity by changing the incentive systems that currently encourage monopolistic tendencies in markets, concentration of power, and transference of environmental costs from corporations to the public. Originality/value – This paper combines analytic techniques from Sociology, Economics, and Management to gain a fresh perspective on the existence and impact of privileges on markets, society, and the environment. This fresh perspective reconciles tensions between equality and efficiency and provides guidelines for effective public policies.

Preserving democracy, investing in the future!

2012-01-20 00:00:00.0

2011 Awards for Excellence

2012-01-20 00:00:00.0