Management Research in Emerging Economies

Abstract

s is sponsored by the Indian Council of Social Science Research, New Delhi and is intended to facilitate Indian management research. A B S T R A C T S features summary of articles published in Indian and international journals with special emphasis on India and other emerging markets Financial Management 1. The Phasing of Fiscal Adjustments 2. Outside Directors, Ownership Structure and Firm Profitability in Korea 3. Risks of Sukuk Structures 4. Lending Policies of Informal, Formal and Semiformal Lenders 5. Corporate Governance in Developing Economies 6. Business Incubators in China Marketing Management 7. Do I Trust You Online, and If So, Will I Buy? An Empirical Study of Two Trust-building Strategies 8. Breaking the Myths on Emerging Consumers in Retailing 9. The Impact of Cultural Values on Marketing Ethical Norms 10. Understanding Brand and Dealer Retention in the New Car Market 11. Segmenting Food Markets: The Role of Ethnocentrism and Lifestyle in Understanding Purchasing Intentions 12. A Content Analysis of Advertising n a Global Magazine Across Seven Countries Organizational Behaviour 13. Participative Leadership by American and Chinese Managers in China 14. Leadership, Individual Differences, and Work-related Attitudes 15. Entrepreneurial, Market, and Learning Orientations and International Entrepreneurial Business Venture Performance in South African Firms 16. Employees’ Well-being in Greater China 17. Increasing Organizational Citizenship Behaviours of Turkish Academicians Human Resource Management 18. Leader-Member ExchangeSubordinate Outcomes Relationship 19. Articulating Appraisal System Effectiveness based on Managerial Cognitions 20. Can High Performance Work Systems Really Lead to Better Performance 21. Training Evaluation based on Cases of Taiwanese Benchmarked High-tech Companies 22. The Psychological Contract in Employment in Vietnam Operations Management 23. TQM Principles’ Application on Information Systems for Empirical Goals 24. Manufacturing Strategies and Innovation Performance in Newly Industrialized Countries 25. Virtual Integration Theory of Improved Supply-Chain Performance 26. The Impact of Supply Chain Management Practices on Performance of SMEs 27. Implementation of Enterprise Resource Planning in China 28. A Comparative Study on the Use of Third Party Logistics Services by Singaporean and Malaysian Firms Information Systems Management 29. A Strategic Modeling Technique for Information Security Risk Assessment, 30. Initial Trust and Online Buyer Behaviour 31. ERP Misfit 32. Information Technologies for Business Continuity 33. Resource-based Approach to IT Shared Services in a Manufacturing Firm 34. Bridging the Digital Divide in Malaysia Strategic Management 35. The Influence of Liability of Foreignness on Market Entry Strategies 36. From Foreign Investors to Strategic Insiders 37. Successful Social Entrepreneurial Business Models in the Context of Developing Economies 38. An Ex-post Comparative Analysis of SME Formation in Brazil and Mexico 39. How Transition Paths Differ Economics 40. Foreign Direct Investment, Regional Market Conditions and Regional Development 41. Just How Low are China’s Labour Costs? 42. Fear of China 43. African Countries and the WTO’s Dispute Settlement Mechanism 44. Trade Liberalization and Export Variety 45. The Manufacturing Wage Inequality in Latin America and East Asia Agriculture and Rural Development 46. Bias from Farmer Self-selection in Genetically Modified Crop Productivity Estimates 47. Escaping Poverty and Becoming Poor in 36 Villages of Central and Western Uganda 48. Risk and Household Grain Management in Developing Countries 49. The Chilean Agrarian Transformation 50. Does Poverty Constrain Deforestation? Econometric Evidence from Peru VIKALPA • VOLUME 32 • NO 2 • APRIL JUNE 2007 125 Financial Management 1. Baldacci, Emanuele; Clements, Benedict; Gupta, Sanjeev and Mulas-Granados, Carlos (2006), “The Phasing of Fiscal Adjustments: What Works in Emerging Market Economies?” Review of Development Economics, 10(4), 612-631. High levels of public debt have been a recurring problem in many emerging market economies, contributing to economic instability and financial vulnerability. Although many emerging countries undertook episodes of fiscal adjustment, they did not lead to a durable fiscal position consistent with a nonincreasing debt-to-GDP ratio. This paper investigates the fiscal adjustment episodes experienced in 25 emerging market economies between 1980 and 2001 to see (a) whether strategies— where the fiscal adjustment takes place upfront—or more gradual approaches, which may be politically and socially more acceptable; (b) whether consolidations based on trimming expenditures are more likely to succeed than those based on a strengthening of the revenue effort and (c) what role the political and institutional factors play in explaining the success or failure of fiscal adjustments in these countries. The results reveal that large adjustments increase the likelihood of success, back-loaded adjustments being more successful in reaching sustainability though not suitable for maintaining it. Expenditure cuts increase the probability of approaching and reaching the threshold, but are insufficient for maintaining that state for more than two years. Adjustment episodes are likely to succeed in countries where the government has a majority in the Parliament and when elections are not imminent. Finally, consolidations undertaken during IMF-supported programmes tend to preserve a country’s fiscal sustainability over a longer period of time. 2. Cho, Dong-Sung and Kim, Jootae (2007), “Outside Directors, Ownership Structure and Firm Profitability in Korea,” Corporate Governance: An International Review, 15(2), 239-250. There have been conflicting views on the effectiveness of outside directors as a governance mechanism. In Korea, corporate governance failure has been identified as a cause of the 1997 financial crisis—low profitability of Korean companies and decline in the price of their stock which occurred during the crisis. As a part of the governance reform, the Korean government therefore introduced outside directors in 1998, making it mandatory for them to account for at least 25 per cent of the members of the board of any firm listed on the Korea Stock Exchange. This paper develops and tests a research model to analyse the relationship between outside directors, ownership concentration, and firm profitability in the aftermath of the financial crisis in Korea. According to the agency theory, an outside director is a monitoring system intended to strengthen the control capability of the board and to reduce the agency cost associated with management. The empirical analysis showed a weak impact of outside directors which was moderated in a negative fashion by a large shareholder ownership rate and a block shareholder ownership rate. The managerial ownership rate did not show any significant moderating effects. The authors consider it too early to assess the impact of outside directors on corporate governance. In conclusion, the Korean companies exhibit an owner-controlled governance structure, the managers being either ownermanagers or dependent on controlling shareholders. Like other emerging markets undergoing governance reform, Korea faces the problem of delayed separation of ownership and control and the need for professional managers. The authors stress upon the need to develop minority shareholder groups for monitoring the controlling shareholders. 3. Tariq, Ali Arsalan and Dar, Humayon (2007), “Risks of Sukuk Structures: Implications for Resource Mobilization,” Thunderbird International Review, 49(2), 203-223. The Islamic law (Shariah) prohibits the charging and paying of interest thus necessitating the development of acceptable alternatives to traditional debt markets by governments as well as corporate entities. Thus has evolved sukuk, the asset-backed, stable income, tradeable, and Shariah-compatible trust certificates as an important vehicle for resource mobilization. This paper assesses the evolution, growing markets, and various risks underlying the Islamic sovereign and corporate sukuk structures in comparison with the traditional fixedincome instruments. It also suggests Shariah-compatible frameworks that can replicate the functions of interest-rate swaps and derivatives in managing the risks of sukuk. Fundamentally, there are three parties to a sukuk arrangement: the originator (obligor), the special purpose vehicle (issuer of certificates), and the investor that buy these certificates. It is expected that sukuk will encourage Muslims across the world to participate in the financial markets and thus will be instrumental in deepening these markets, particularly in emerging countries. The different kinds of market and financial risks related to liquidity, default, Shariah-compliance, etc., are discussed. Certain risk management mechanisms are suggested that replicate the functions of conventional instruments in a way compliant with Islamic law. 4. Pham, Thi Thu Tra and Lensink, Robert (2007), “Lending Policies of Informal, Formal and Semiformal Lenders,” Economics of Transition, 15(2), 181-209. In the context of lending in developing countries, formal, informal, and semiformal financial sector coexists, even in situations where interest rates in the three sectors differ greatly. While private and state commercial banks constitute the formal sector, private money lenders, relatives, revolving credit associations, etc., form the informal sector. The sources of semiformal credit, on the other hand, are various national and international credit programmes in charge of providing microfinance to a selective range of borrowers.. This paper compares the lending policies of these three types of lenders with respect to household lending in Vietnam which has witnessed an increasing relevance of household lending in recent years. Two stages of the