Managing Global Transitions

Volume 6 · Number 1 · Spring 2008 · ISSN 1581-6311 (printed) 1854-6935 (online)

The Editor's Corner
Boštjan Antončič
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Institutional Environment and MNEs’ Strategy in Transitional China
Yongqiang Gao

MNEs face a complex institutional environment when doing business in the international market. As a result, MNEs adopt strategies to deal with the institutional pressures. However, present studies seldom discuss the institutional environment of a given country, specifically China. Therefore, the strategies that MNEs can use to cope with the institutions in China are far from being discussed. This study contributes to making up this gap. In this study, the identified important institutions in China are Chinese culture, governmental system, and non-governmental organizations (NGOs). They exert coercive and normative pressures on the operations of MNEs. Four strategies can be selected by MNEs to deal with the institutional pressures: guanxi strategy, commitment strategy, competitive strategy and leverage strategy. Guanxi strategy and commitment strategy are commonly used to build good guanxi with Chinese governors and NGOs. Competitive strategy is used when MNEs have high bargaining power against Chinese governments, while leverage strategy is used MNEs in setting conflicts between different institutions or parties to resist the unfavorable pressures from institutions in China.

Key Words: China, institutional theory, institutional environment/pressure, multinational enterprise (MNE)
JEL Classification: F23
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Service Recovery in Transition Economies: Russia and China
Wendy K. T. Gubler, Matthew W. McCarter, Kristie K. W. Seawright, and Yuli Zhang

While processes for transition from planned to market economy vary, there is one common outcome from the transition process – more discriminating customers. Growing customer expectations increase the possibility of failing to meet those expectations. In competitive market economies service failures are accompanied by new consequences of lost customer loyalty. These potential losses to service providers that can result from service failures necessitate the implementation of service recovery. In this study researchers investigated the role of service recovery in two major economies that are currently in transition from a planned to a market economy: Russia and China. Four recovery systems were examined within the context of two levels of service failure criticality. Service recovery system design was found to matter in customer recovery in both Russia and China, but Chinese respondents reported higher levels of recovery success. Interaction effects also suggest that the common experience of transition from planned to market economy did not produce exactly the same response to service recovery efforts.

Key Words: economies in transition, cross-cultural customer perceptions, empirical research, service recovery
JEL Classification: F23, L80
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The Modified Diagonalization Method for Analysing Clusters within Economies
Henryk Gurgul and Paweł Majdosz

In this paper a modification of the diagonalization method, originally put forward by Hoen (2002), is suggested which is aimed at uncovering clusters of sectors within an input-output framework. Our interest in this subject was largely motivated by the fact that the preceding method appears to be incapable of providing us with an accurate representation of the real cluster structure that exists in an economy, as a consequence of missing the position at which a given inter-sectoral flow stands in the hierarchy of the purchasing industry and the supplying industry. By making a distinction between an internal and external relationship, when it comes up at the moment of deciding whether each pair of industries is categorized as belonging to the same or different clusters, the proposed alternative, which will be referred to as the modified diagonalization method, seems to be superior to its predecessor. Such a conclusion is supported by the results of comparison of the relative performance of the rival methods (i.e. the original and modified diagonalization method) which show, among other things, that the average value of flows between industries grouped into clusters is higher in the case of the proposed method.

Key Words: internal and external interindustrial relationships, diagonalization method, clusters
JEL Classification: B41
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The Impact of Ad Characteristics on Adolescents’ Attitudes Towards Antismoking Ads
Domen Bajde and Irena Vida

Smoking exerts a considerable burden not only on those who smoke but just as well on society at large. In response, governments and institutions often resort to advertising which aims to discourage smoking. Unfortunately, our knowledge of the workings of antismoking advertising is detrimentally limited. In particular, the literature delving into the impact of antismoking ad characteristics (e. g., ad content, valence, intensity) on the overall effectiveness of antismoking advertising is scarce and contradictory. This empirical study aims to enhance the knowledge of antismoking advertising by presenting results of the survey involving Slovene adolescents. The adolescents were first exposed to advertisements of different antismoking ad contents (for the purpose of this study the term ‘ad content’ refers to types of appeals used in antismoking advertising), ad valence and intensity, and later invited to respond to a number of questions measuring their attitudes toward the ads, their attitudes toward smoking, their intentions to smoke, etc. The results indicate that while the different intensity and valence of ads produce varying attitudes toward the ads, we could not confirm these differences based on ad content. Also, we found that adolescent smokers respond to antismoking ads differently than do their nonsmoking peers. Our findings offer several important implications for antismoking advertisers and the research community interested in the workings of antismoking advertising.

Key Words: smoking and adolescents, antismoking advertising, attitudes toward antismoking ads
JEL Classification: M3, M31
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Online Gambling: Today’s Possibilities and Tomorrow’s Opportunities
Massimo Manzin and Roberto Biloslavo

With the development of new information and communication technologies (ICT), above all computers and the internet, new forms of online commerce have emerged. The gambling industry began using the power of the rapidly developing virtual market by offering its services in online casinos. The phenomenon of online gambling has encouraged researchers to direct their work into various areas, including the characteristics or profile of online gamblers. In light of the data on the growth of the market for online gambling it is evident that, in the relation between the many types of traditional and online gambling, visits to traditional casinos predominate, as do predictions about the development of the internet. We therefore decided to examine the characteristics of gamblers in traditional casinos and to determine what percentage of them also gamble online, as well as to establish their profile. The aim of the research was to determine how their characteristics in respect of the development of the internet and the growth of the market have influenced the subsequent development of traditional and internet casinos. We predict that both types of gambling, each in its own way, will compete for gamblers. For traditional casinos the best solution seems to be opening their own online casinos; online casinos will have to remain abreast of the development of the internet and communication technology.

Key Words: online gambling, online casino, online gambling product
JEL Classification: L10, L83
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