Gadjah Mada International Journal of Business

AN INVESTIGATION INTO FACTORS INFLUENCING INTERNATIONAL STRATEGIC ALLIANCE PROCESS

Sari Wahyuni, Theo J.B.M. Postma — Sun, 12 Jan 2003 00:00:00 +0700

Empirical research indicates that strategic alliances, like other organizational forms, emerge as an adaptive mechanism to market uncertainty, and their developments over time reflect the co-evolution of distinctive firm capabilities and of industry and market activities. Interestingly, most strategic alliances go through similar revolutionary cycles in terms of their motives and capabilities toward the cooperative relationship. Studies in this areas how that alliance failure is an outcome of the co-evolutionary adjustment to changes in the market, the competitive dynamics between partners, and assessment of efficiency of the alliance as an alternative governance structure. It is thus critical to adopt a dynamics perspective and historical observations of cooperative process. This paper attempts to distil, derive and integrate theories across different perspectives into a unified framework that offers a better understanding of alliance process development. Our analysis shows that we can divide strategic alliance development into three phases of development: formation, operation and evaluation. We further endeavor to seek the important factors that should be taken into account in each stage of their life.

BENEFITSEGMENTATION: Case of a National Bank's Customers in Indonesia

Ahnad Yunianto, Catur Sugiyanto — Thu, 29 Aug 2013 00:00:00 +0700

Fierce competition in Indonesian banking industry had forced banks to get closer to their customers in order to maintain their customer base. However, considering the banks limited resources and the market competition, raised question on which customers they should focus to serve. Benefit segmentation as one of the concept of market segmentation, provides a clear picture of which segment or type of customers the bank should focus.

Undertaken in a national bank, this research was aimed to identify benefits desired by the customer in financial service; segments for the bank based on those benefits; and to identify whether there is a relationship between customers' demographics and their desired benefits. Factor analysis with principal component method was used to extract 29 banking attributes to a set of factors that capable to capture the main features of the responses. Cluster analysis was then applied to the dataset to identify whether a bundle of benefit might be sought by a specific customer segment. The last, chi-square test was applied to identify whether there is any correlation between the cluster and the demographic variables.

Five factors (main benefits) sought by the customers were found, namely: safety-convenience; relational; bank's features; cost; and promotional incentives. Based on those factors, the customers could be classified into four segments, service-oriented (38.41%), rate sensitive (16.85%), incentive seekers (13.30%), and safety-convenience (31.44%). A significant correlation between demographic characteristics (gender, age, education, income, monthly spending, occupation, and number of children) and desired customer benefits were found. Therefore, those demographic characteristics could be used to develop the customers' profiles.

THE INTERVENING EFFECTS OF PROCEDURAL FAIRNESS AND INTERPERSONAL TRUST ON THE RELATIONSHIPS BETWEEN MULTIPLE MEASURES-BASED PERFORMANCE EVALUATION AND MANAGERS' JOB SATISFACTION

Mahfud Sholihin, Chong M. Lau — Tue, 12 Aug 2003 00:00:00 +0700

Criticisms directed at the use of financial measures alone for performance evaluation have led to much interest in the use of nonfinancial performance measures to balance the financial measures. Hence, much recent research has been directed to investigate the effectiveness sand behavioral consequences of a mix of financial and nonfinancial measures (e.g. the Balanced Scorecard approach) in contemporary settings. However, there is evidence from prior studies to suggest that the manner or how performance measures are used may affect the subordinates' behavior and work-related attitudes indirectly through the subordinates' perception of the justness of these measures and the interpersonal trust these measures promote. There is also evidence to indicate that it is the extent of the subordinates' agreement with the performance measures used in the evaluation, rather than the measures per se, which affects their behavior and work-related attitudes. Subordinates are more likely to agree with performance measures which they regard as fair and which enhance their trust in their superiors. This study therefore investigates if the effects of a mix of financial and nonfinancial measures (such as those used in the Balanced Scorecard approach) on subordinates' job satisfaction are indirect through the subordinates' perception of the greater extent of fairness (justness) in the evaluation process and the greater extent of trust such a mix of measures promotes. The results, based on a sample of 70 managers, support the expectation that a mix of financial and nonfinancial has no direct effect on subordinates’ job satisfaction. Instead, the effects of such a mix of performance measures on subordinates’ job satisfaction are indirect through the enhancement of the subordinates’ favorable perceptions of procedural fairness and interpersonal trust.

AN INVESTIGATION OF EARNINGS MANAGEMENT IN INDONESIAN MANUFACTURING INITIAL PUBLIC OFFERINGS

Tatang Ary Gumanti — Tue, 12 Aug 2003 00:00:00 +0700

This paper examines whether the issuers of Indonesian manufacturing initial public offerings (IPOs) manage the firm's reported earnings by making income increasing discretionary accruals. The absence of market-determined prices for IPO shares prior to the offering has made issuers and underwriters to use nonprice information. The test was performed on a sample of 45 IPOs that went public during the period of July1991 through December 1994. The model used in this study follows the one developed by Friedlan (1994).

The results show that there is no evidence that earnings management occurs among the sample firms. In other words, this study is unable to reject the null hypothesis that the issuers of Indonesian IPOs exercise accounting discretion that increases the reported earnings in the periods prior to the offering. In contrast, the study finds strong evidence of earnings management in the period after the offering, which could be interpreted as issuers trying to maintain the firm's performance after the offering by making income increasing discretionary accruals.

THE PREDICTIVE CONTENT OF DISAGGREGATED NORMAL INCOME: An Empirical Study in the JSX

Slamet Sugiri — Fri, 12 Sep 2003 00:00:00 +0700

The main objective of this study is to examine a hypothesis that the predictive content of normal income disaggregated into operating income and nonoperating income outperforms that of aggregated normal income in predicting future cash flow. To test the hypothesis, linear regression models are developed. The model parameters are estimated based on fifty-five manufacturing firms listed in the Jakarta Stock Exchange (JSX) up to the end of 1997.This study finds that empirical evidence supports the hypothesis. This evidence supports arguments that, in reporting income from continuing operations, multiple-step approach is preferred to single-step one.

FORMALIZING PRODUCT COST DISTORTION: The Impact of Volume-Related Allocation Bases on Cost Information

Johnny Jermias — Fri, 12 Sep 2003 00:00:00 +0700

The purpose o f this study is to formally analyze product cost distortions resulting from the process of allocating costs to products based on Activity-Based Costing (ABC) and the conventional product costing systems. The model developed in this paper rigorously shows the impact of treating costs that are not volume related as if they are. The model demonstrates that the source of product cost distortion is the difference between the proportion of driver used by each product in ABC and the proportion of the base used by the same product in the conventional costing systems. The difference arises because the conventional costing systems ignore the existence of batch-related and product-related costs.

The model predicts a positive association between volume and size diversity with product cost distortions. When interaction between volume and size diversity exists, the distortion is either mitigated or exacerbated. The magnitude of the distortion is jointly determined by the size of the differences and the size of the total indirect costs.

PRICE ANDVOLUME EFFECTS ASSOCIATED WITH CHANGES IN THE LQ 45 INDEX AND THE MSCI EQUITY INDEX LISTS

A. Harijono — Fri, 12 Sep 2003 00:00:00 +0700

This paper examines price and trading volume behavior surrounding announcements of changes in the composition of the liquidity (LQ) 45 and the Morgan Stanley Capital International (MSCI) Equity Index at the Jakarta Stock Exchange. Unlike listing studies in the developed markets, the announcements of the LQ45 Index changes have no impact on share price and trading volume. This may be due to the small role of Indonesian domestic institutional investors and purely rule-based characteristics of the LQ45 Index. On the contrary, the markets do respond to the changes in Indonesian stocks composition of the MSCI Equity Index. It seems that global portfolio managers, who dominate trading at the Jakarta Stock Exchange, rebalanced their portfolio when the changes in the MSCI Equity Index occurred because their performances are generally benchmarks to the return on the Index.