International Business Faculty Publications

Tax reform is an important component of China's overall economic reform because taxation raises government revenue and influences enterprise decisions, without subjugating enterprises to direct government control. This paper presents an overview of China's tax reform since 1983. The main feature of this tax reform was that state enterprises began paying industrial and commercial taxes instead of remitting profits, referred to as li gai shui (changing profit to tax). In principle, this tax reform contained many desirable characteristics, but problems with other aspects of economic reform have diluted the positive incentive effects implicit within the new tax system.

China’s Currency Reforms from a Banker’s Perspective: A Conversation with Henry Yu, Managing Director of Fifth Third Bank, Atlanta, Georgia.

This article analyzes how the execution of business strategy for global enterprises is shaped by the dual challenges of communicating in a different national culture and working in a changing economic environment. The article develops a framework from the UPS case in China to illustrate the key components of strategy for US companies operating businesses in China. The article proposes that Chinese-American communication effectiveness can be achieved through overcoming fi ve obstacles: cultural multiplicity, relationship/ task orientation, time concept, business style difference, and language use, while utilizing fi ve facilitators: pragmatism, gender equality, English, American pop culture, and a “big country mentality.”

China saves, the U.S. consumes-or so the headlines say. Many analysts (including this author) have written about China’s high savings rates and therefore low consumption, which reinforces China’s dependence on exports for its growth.

On 27 February 2007, Chinese equity markets fell almost 9%. Hours later other global markets plunged far and fast, including those in Europe and the U.S. Such a link between China’s equity markets and others was unprecedented. Analysis conducted in the aftermath confirmed that capital flows between China and other markets are highly controlled, and therefore were not the main cause of changing stock prices. Subsequent volatility in the Chinese markets has not spilled over to other markets. Nonetheless, global investors are now watching China’s markets closely.

The purpose of this article is to provide background on the development of the Chinese equity markets in order to underscore the point that the recent volatility of China’s stock values was a result of domestic capital and an array of domestic decisions.

Entrepreneurship has been recognized as one of the most effective engines for sustainable economic growth and development. To be an entrepreneur requires certain individual attributes that go beyond mastering the managerial and financial tools necessary for running a business. Unfortunately, whether as a stand-alone course or as a complete program of study, entrepreneurship has in general been placed under the management or business programs at many leading educational institutions in the U.S. and other countries. Furthermore, the structure and content of entrepreneurship programs have in general been transposed into other regions including the MENA countries without any significant adaptation to the local sociocultural and economic environment.

In this paper, it is argued that liberal arts institutions are uniquely positioned to develop and implement a holistic, multifunctional approach in teaching entrepreneurship, and in developing and implementing context-specific entrepreneurship programs that build on student motivation, community engagement, as well as local and global institutional networks.

We survey the structure of entrepreneurship programs in a number of U.S. and Middle Eastern countries, and propose ways in which liberal arts institutions in the region can leverage their unique mission and roles in developing human capital for the purpose of furthering entrepreneurship education and subsequently entrepreneurship-driven socio-economic development.

Extensive literature on labor markets has supported the proposition that gender is one of the most common attributes that explains disparity in wages, benefits, promotion, and other organizational achievement indicators. According to several scholars, work organizations can be treated as arenas on which social conflicts between different groups of employees take place. Many acknowledge that women in the GCC area have made great strides in achieving near-equality when it comes to educational attainment. In fact, recent studies by the World Bank and other regional and international agencies have shown that women in a number of GCC countries now constitute a significant percentage of university graduates. The increase in the number of private universities in the Gulf has further allowed women to claim a larger share of the region’s labor market. However, such successes may not have extended from the educational to the labor domain.

Much of the existing literature exploring barriers and facilitators to women’s career advancement has focused on identifying the personal qualities and characteristics that are associated with career success. In this paper, we focus on educational attainment as the main predictor of career success. We argue that in the case of the GCC region, little research has looked at the different impacts of educational attainment on career advancement for men and women. This is especially disconcerting considering the monumental changes in the role of women as participants in educational and labor spheres in the region. We employ survey methodology to collect data on educational and career attainments in the GCC countries for both men and women, and discuss the implications of our analysis and results for higher education professionals and policy makers.

In continuation of our previous work, “The Impact of Ethical Concerns on Fashion Consumerism: A Review,” we present here empirically based reports to support our argument that ethical concerns in the fashion industry affect consumer behavior. In line with Paper I, the initial paper of this series, we address the concept of ethical marketing, with a focus on the two dimensions of sustainable environmental practices and societally appropriate messaging. The linkages of ethical concerns in fashion with corporate image and financial performance are explored, using a set of 15 real-life cases and anecdotes. We identify challenges in this area, offer guidance to practitioners in the field, and identify venues for further scholarly inquiry. We hope to contribute in this important and growing area of concern by presenting prior controversies and highlighting best practices, thus facilitating the process of learning through others’ failures and successes.

In this study we investigate parasocial relationships in media; more specifically we explore why audience members fashion attachments with television personalities. The study aligns with previous research in the area by Cole and Leets (1999) that looked at attachments formed with media figures and the correlation to level of attachments in real-life relationships. In their study, Cole and Leets (1999) used a three-dimensional attachment scale that included anxious-ambivalent, avoidant, and secure, and found those with higher insecurity or unstable real-life relationships have stronger parasocial relationships. We surveyed university age respondents and we used the same scales as Cole and Leets (1999) to examine whether in Kuwait, where dating violates social norms and looser bonds are found outside of the home, that stronger parasocial relationships with media personalities will be found because of the need to fulfill relationship needs outside of family. Our hypotheses in this chapter is that higher levels of anxious-ambivalents and avoidants both will be found due to the strict collectivist nature of the society forcing many to compensate for lack of real world relationships by forming mediated bonds. Moreover, we posited and discovered that that these two groups also showed the highest levels of parasocial relationships in our sample.

Ethical and sustainable business practices have become some of the most significant concerns in the highly globalized fashion industry. Firms in this multi-billion dollar industry are taking these concerns seriously, and are carefully monitoring and responding to consumers’ actions that can range from expressing displeasure via social media to holding protests or even calling for boycotts of certain brands and firms. In this paper, the first output from a larger project on ethics of fashion, we review the extant literature on the ethical aspects of the global fashion system; and set the stage for further empirical and conceptual work.

The last few decades have witnessed a proliferation of preferential trade agreements and regional trading blocks. Yet little research has been done to integrate trading block considerations into country attractiveness and foreign direct investment decisions. In this paper, we show how network analysis can be used to study, track, and forecast the structural changes among countries in regional trade agreements. Using intra-regional trade data, we analyze the overall trade structure and the relative positions of countries belonging to the European Union. The results show that certain countries offer better opportunities for within-EU market penetration than do others. Our approach provides managers with additional criteria for evaluating country attractiveness, therefore, allowing for more comprehensive and informed FDI decisions to be made.

An American specialist on the economy of China assesses the options and obstacles the country's new leadership will face as it attempts to sustain the current economic growth trajectory in the future. Putting the current situation in historical context, the author first reviews the reforms leading up to the agenda advanced by the previous leadership team (led by Hu Jintao) and then examines the health of China's economy in late 2012 (a situation she argues is characterized by the exhaustion of three key drivers of growth). The paper advances the thesis that further reforms and improvements in technology will be essential to sustained growth, and that additional reforms will be necessary before sustained innovation can take root. As signs of successful further reform going forward, readers are advised to look to increased private-sector legitimacy, a decline in state-sector monopoly power, and strengthening of legal foundations for reform policies.

Using a large survey sample of manufacturing firms between 2003 and 2006, the majority of them not listed on either stock exchange, we studied financing behavior in China and tested a series of hypotheses about the determinants of firm leverage as derived from the pecking-order theory. Overall our results show that the theory well explains private firm financing where the amount of leverage is negatively related to profits, liquidity, and age, and positively related to firm size and average leverage ratio. However, different ownership types and firms located in different market environments do not have the same determinants of leverage, and their financing behavior is not well explained by the pecking-order theory. This suggests that China's economic and financial reforms have not yet been completed.

Given their growth records, large markets, and reformed economic systems, both China and India appear to be equally likely candidates for foreign direct investment (FDI). Yet, China has received substantially more FDI. The literature comparing FDI in these two countries is small, and does not provide conclusive evidence to explain this puzzle. Applying the Porterian framework of the competitiveness of nations to compare China and India, we garner evidence that differences in demand, factor conditions and firm strategy, structure and rivalry are not sufficient to explain the differential in the two countries’ FDI flows. Differences in related and supporting industries, as well as Porter’s other two factors—government and chance factors—are more compelling. We identify China’s early entry into East Asian production networks in the 1980s as a key factor pushing China ahead of India in terms of FDI. We argue that this coincidental mix of timing and geography (Porter’s ‘chance’ factor), pushed forward in China by establishing special economic zones, gave China a sustainable competitive advantage for the following two decades. What is implied from these findings is that China’s FDI sources have been much larger and heavily slanted towards East Asia and manufacturing, while India, having missed this particular historical phase, needed to find an alternate route to development and global competitiveness.

An American economist specializing in the economic and business development of China as well as India presents the results of a focused comparison of their emergence as global economic powers in the late 20th and early 21st centuries. More specifically, she selectively reviews the body of published research comparing China and India, with emphasis on the literature covering the two countries’ economic achievements, the nature of reforms and institutions, as well as the overall social contexts within which development and growth are occurring. The author addresses such major questions as the importance of timing and location in the two countries’ development trajectories as well as the implications of different modes of guidance (market versus state direction) for those trajectories. A concluding section identifies several possible directions for future research.

A country of five million people in 710 square kilometers, Singapore has built itself into an integral part of global markets with living standards that are among the highest in the world. The purpose of this article is to apply a capabilities-based approach to understand how a small, resource-scarce country dependent on global markets has done so well. The core of Singapore’s success has been the continuous updating and expanding of domestic social capabilities to meet the needs of foreign companies. Government policies were hyper-sensitive to providing conditions for foreign firms to be successful. Foreign firms investing in Singapore by now have helped close the income gap with advanced economies and are on the way to closing the innovation gap. Singapore demonstrates that with deliberate attention to building skills, institutions and infrastructure, it is possible for a small country to upgrade skills and to move up the production-value chain with primary reliance on FDI. Cultivation of private Singaporean firms has been secondary but may be the next step needed to sustain progress, both to respond to increased competition from China and others, and to build a knowledge-based economy.

Not long ago, Georgia students had to look far afield to get to China for short study courses. No more. Georgia’s state and private universities now have numerous programs with a wealth of subject choices for students. This past spring and summer at least seven different programs took over 100 students to China, Hong Kong, Taiwan and other destinations in Asia.

Chinaexhibits above average savings and below average consumption as shares of total economic activity when compared with other countries. At the same time, to create more balanced growth at home and rebalance key bilateral trade and capital flow relationships, China’s leadership is trying to increase domestic demand. To complement studies that investigate the high rate of savings in China, this study focuses on the variation in consumption as a share of GDP across provinces between 1979 and 2004. Drawing on well-established consumption theories and work done on savings behavior in China, this paper develops an empirical investigation of the variables hypothesized to influence the pattern of consumption across regions.

We find that the normal, economic variables have a small explanatory power if significant at all, while the key variables influencing the macro consumption share are structural, and mostly related to government behavior. For example, local government expenditure on health and education is significant and has a relatively large effect on consumption. Consistent with this we also find a positive relationship between consumption shares and the size of the state sector and the share of tax revenue in GDP. We also find some evidence that financial development has a positive effect on consumption shares. Our results suggest that in order for domestic consumption to be increased in the future, new public and private options to replace the declining security and responsibility of the prior state-dominated system will be needed.