Managing Global Transitions

Volume 7 · Number 1 · Spring 2009 · ISSN 1581-6311 (printed) 1854-6935 (online)

The Editor's Corner
Boštjan Antončič
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What Drives Innovation? Causes of and Consequences for Nanotechnologies
Ingrid Ott, Christian Papilloud, and Torben Zülsdorf

Nanotechnologies are expected to be the dominant general purpose technology of the next decades. Their market potential is immense and not only supply-side but especially demand-side arguments will have far reaching consequences for innovations. The latter may occur as increased miniaturization or via building completely new products, processes or services. Innovations in the field of nanotechnologies do not only affect productivity in downstream sectors but these feed back to nanotechnologies thereby inducing circles of continuing innovation. Demand for nano-components mainly arises from firms while private demand is assigned to final products, processes or services that are augmented by nanotechnologies. Due to the technology’s controversial character, the consumer’s attitude towards risk and technology affects private demand and this may either spur or hamper innovation. The paper aims to unravel how these complex interdependencies and feedback mechanisms affect overall innovation in downstream sectors that is induced by nanotechnologies and how this for its part affects further improvements of nanotechnologies.

Key Words: general purpose technologies, controversial technologies, determinants of innovation
JEL Classification: O33, Z13
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A Model for Making Foreign Direct Investment Decisions Using Real Variables for Political and Economic Risk Analysis
Carl B.McGowan, Jr. and Susan E. Moeller

The Foreign Investment Risk Matrix (FIRM) developed by Bhalla (1983) uses political and economic risk measures for foreign direct investment decision making. FIRM may be used to develop a matrix that categorizes countries based on political risk and economic risk as acceptable, unacceptable, or uncertain for investment.We demonstrate using political and economic risk variables that are available on the internet in an expanded model using three measures of political risk and three measures of economic risk. After determining the group of countries that would be acceptable for FDI, the multinational companies can focus on further analysis of acceptable countries.

Key Words: political risk analysis, economic risk analysis, foreign direct investment, multinational corporation
JEL Classification: G2, F2
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The Influence of Outsourcing and Information and Communication Technology on Virtualization of the Company
Massimo Manzin and Borut Kodrič

In the article we investigate the field of virtual organizations, which in the definition of many authors consists of two components: outsourcing and information and communication technology. In the study we have tried to determine which of the two, in the opinion of employees working in the area of Slovene tourism, contributes to a greater degree to virtualization of the company. We determine that outsourcing influences the virtualization of the company more strongly than does information and communication technology, since it enables the company to acquire new knowledge and know-how and increase its competitiveness in the marketplace.

Key Words: virtual organization, outsourcing, information and communication technology
JEL Classification: L22, D23
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The Relationship between Working Capital Management Efficiency and EBIT
Azhagaiah Ramachandran and Muralidharan Janakiraman

This paper is aimed at analyzing the relationship between Working Capital Management Efficiency (WCME) and Earnings before Interest&Taxes (EBIT) of the Paper Industry in India during 1997–1998 to 2005–2006. Tomeasure the WCME three index values viz., Performance Index (PI), Utilization Index (UI), and Efficiency Index (EI) are computed, and are associated with explanatory variables, viz., Cash Conversion Cycle (CCC), Accounts Payable Days (APDAYS), Accounts Receivables Days (ARDAYS), Inventory Days (INVDAYS). Further, Fixed Financial Assets Ratio (FIXDFARA), Financial Debt Ratio (FINDBTRA) and Size (Natural log of Sales) are considered as control variables in the analysis, and are associated with the EBIT. The study reveals that the Paper Industry has managed the WC satisfactorily. The APDAYS has a significant (–)ve relationship with EBIT, which indicates that by deploying payment to suppliers they improve the EBIT. The Paper Industry in India performs remarkably well during the period, however, less profitable firms wait longer to pay their bills, and pursue a decrease in CCC.

Key Words:Working Capital Management Efficiency, Earnings before Interest and Taxes, Current Assets, Current Liabilities, Performance Index, Utilization Index, Efficiency Index
JEL Classification: G30, G32
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A Strategic Household Purchase: Consumer House Buying Behavior
Mateja Kos Koklič and Irena Vida

The aim of this study is to examine consumer house-buying behavior from the consumers’ perspective. In view of the existing literature exploring consumer decision making, the purpose of this research was threefold: (a) to propose a conceptual model of consumer decision making within the frame of consumer behavior; (b) to gain knowledge of factors impacting this process from the empirical standpoint with the focus on prefabricated house purchases; and (c) to offer implications for beneficial purchases of prefabricated houses. The results of our in-depth interviews with recent owners and potential buyers of a custom-made prefabricated house suggest that cognitive and rational factors do not offer sufficient explanation of consumer behavior in the case of a high-involvement product such as a house. In addition to the idiosyncratic characteristics of the customer, his/her personal situation and environmental factors, the role of feelings, experience, subconscious factors, needs and goals should to be taken into account to better understand this kind of decision making.

Key Words: consumer decision-making, strategic purchase, prefabricated house, qualitative research
JEL Classification: M30, M31
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