T M G R A C A GLOBAL BUSINESS AND TECHNOLOGY ASSOCIATION

全文

(1)GLOBAL BUSINESS AND TECHNOLOGY ASSOCIATION. ACHIEVING COMPETITIVE ADVANTAGE THROUGH MANAGING GLOBAL RESOURCES. Editors: Nejdet Delener, Ph.D Leonora Fuxman, Ph.D. F. Victor Lu, Ph.D. Luis Eduardo Rivera-Solis, Ph.D. Che-Jen Su, Ph.D. .

(2) GLOBAL BUSINESS AND TECHNOLOGY ASSOCIATION. NINTH INTERNATIONAL CONFERENCE. READINGS BOOK ACHIEVING COMPETITIVE ADVANTAGE THROUGH MANAGING GLOBAL RESOURCES Editors: Nejdet Delener, Ph.D Leonora Fuxman, Ph.D. F. Victor Lu, Ph.D. Luis Eduardo Rivera-Solis, Ph.D. Che-Jen Su, Ph.D. Taipei, Taiwan July 3 – 7, 2007 ©Copyright 2007 by the Global Business and Technology Association, All Rights Reserved. ii.

(3) PUBLISHED BY THE GLOBAL BUSINESS AND TECHNOLOGY ASSOCIATION ISBN: 1-932917-03-9. The materials published in this Readings Book may be reproduced for instructional and noncommercial use. Any use for commercial purposes must have the prior approval of the president of the Global Business and Technology Association. All full papers submitted to the Global Business and Technology Association Conferences are subject to a peer reviewing process, using subject specialists selected because of their expert knowledge in the areas. Global Business and Technology Association (GBATA) is publishing partner with EBSCO Publishing. This allows researchers from throughout the world to access articles from the Readings Book.. Printed in the United States of America, 2007. The Readings Book was sponsored by the National Science Council, Taiwan. ©Copyright 2007 by the Global Business and Technology Association, All Rights Reserved. iii.

(4) FORWARD The purpose of the conference is to provide a unique international forum to facilitate the exchange of cutting-edge information through multidisciplinary presentations of new challenges in global business and technology: strategies, policies and issues. All full papers submitted to the Global Business and Technology Association Conferences are subject to a peer reviewing process, using subject specialists selected because of their expert knowledge in the areas. Academicians, practitioners, and public policy makers at all levels throughout the world submitted original papers for conference presentation and for publication in this Readings Book. All competitive papers were refereed (subject to a peer review). The result of these efforts produced 253 empirical, conceptual and methodological papers involving all functional areas of business education with a special focus on international aspects. Of the 178 papers accepted for presentation at the conference, 101 papers are published in this Readings Book.. ©Copyright 2007 by the Global Business and Technology Association, All Rights Reserved. iv.

(5) ACKNOWLEDGEMENT Many people and organizations are responsible for the successful outcome of the 2007 International Conference of the Global Business and Technology Association (GBATA). The GBATA extends its many thanks to the financial sponsors of this conference: Fu Jen Catholic University, Taipei, Taiwan; National Science Council, Taiwan; Tshwane University of Technology, Pretoria, South Africa; State University of New York at Old Westbury; State University of Management, Moscow, Russia; and IBM East Europe/Asia Ltd., Moscow, Russia. A successful conference could not be possible without the special cooperation and care of the program committee members. Furthermore, many thanks go to the reviewers for reviewing the many papers that were submitted to this conference. The last but not the least important acknowledgement goes to all these who submitted their work to be considered for presentation at the conference. Also, special thanks to the session chairs and discussants for taking the extra time to make this conference a success.. Nejdet Delener, Ph.D. President, Global Business and Technology Association. ©Copyright 2007 by the Global Business and Technology Association, All Rights Reserved. v.

(6) REVIEWERS Dr. Gerald Acquaah-Gaisie Dr. Shaukat Ali Kingdom Dr. Putnova Anna Dr. Larry Boone Dr. Tatiana A. Burenina Dr. Guy Callender Dr. Natalia Maria Prudencio Rafael Canadas Dr. Chiang-nan Chao Dr. Pawan Chugan Dr. Valiant Clapper Dr. Julio Albert Sillva Coelho Prof. Max Coulthard Dr. Mark Cwiek Dr. Deepak Danak Dr. Johan de Jager Dr. Emma Gutierrez de Mesa D. Leon de Wet Fourie Dr. Nejdet Delener Dr. Upinder Dhar Dr. Santosh Dhar Dr. Abel Diale Dr. Koen Dittrich Dr. Hilmi Elifoglu Dr. L. Erwee Dr. Ronald Farina Dr. Vitor Hugo Santos Ferreira Dr. Nikolay B. Filinov Dr. James Fornaro Dr. Leonora Fuxman Dr. Steven Gold Dr. Emanuel Gomes Dr. Prashant Gupta Dr. Al Halborg Dr. Scott Hoenig Dr. Natasja Holtzhausen Dr. Paul Jackson Dr. Chaman Jain Dr. Basil J. Janavara Dr. Engin Kucukkaya Dr. Dana Lascu Dr. Gerard Ledlow Dr. Keun S. Lee Dr. Mornay Roberts Lombard Dr. F. Victor Lu Dr. Eugenio Pereira Lucas Dr. T. Diana Macedo-Soares Dr. Miguel Martins Dr. Larry Mauer Dr. David Mello. Monash University, Australia University of Wolverhampton, United Brno University of Technology, Czech Republic St. John's University, U.S.A. State University of Management, Russia Curtin Univeristy of Technology, Australia Polytechnic Institute of Leiria, Portugal St. John's University, U.S.A. Nirma Univ. of Science and Technology, India Tshwane Univ. of Technology, South Africa Polytechnic Institute of Leiria, Portugal Monash University, Australia Central Michigan University, U.S.A. Nirma Univ. of Science and Technology, India Tshwane Univ. of Technology, South Africa Inst. for Prospective Tech. Studies, Spain Tshwane Univ. of Technology, South Africa State Univ. of New York, Old Westbury, U.S.A. Nirma Univ.of Science and Technology, India Nirma Univ.of Science and Technology, India Tshwane Univ.of Technology, South Africa Erasmus Univ.Rotterdam, The Netherlands St. John's University, U.S.A. Central Univ.of the Free State, South Africa University of Denver, U.S.A. Polytechnic Institute of Leiria, Portugal State University of Management, Russia State Univ.of New York, Old Westbury, U.S.A. St. John's University, U.S.A. Touro University International, U.S.A. Coventry University, United Kingdom Nirma Univ.of Science and Technology, India Coventry University, United Kingdom Monterey Inst. of International Studies, U.S.A. Tshwane Univ.of Technology, South Africa Coventry University, United Kingdom St. John's University, U.S.A. Minnesota State University, U.S.A. Middle East Technical University, Turkey University of Richmond, U.S.A. Georgia Southern University, U.S.A. Hofstra University, U.S.A. University of Johannesburg, South Africa St. John's University, U.S.A. Polytechnic Institute of Leiria, Portugal Pontifical Catholic Univ. of Rio de J., Brazil Univ.of Wolverhampton, United Kingdom St. John's University, U.S.A. Tshwane Univ.of Technology, South Africa. ©Copyright 2007 by the Global Business and Technology Association, All Rights Reserved. vi.

(7) REVIEWERS Dr. Al Mickens Dr. James Milligan Dr. Doocheol Moon Dr. Samir R. Moussalli Dr. Juergen Muehlbacher Dr. Stanley Mukhola Dr. Pat Obi Dr. Barbara Olsen Dr. Kathleen Park Dr. Seknicka Pavel Dr. Pedro Filipe Pereira Dr. Sonja Petrovic-Lazarevic Dr. Tinus Prinsloo Dr. George Priovolos Dr. Susana Rodrigues Dr. Lukasova Ruzena Dr. Leon Schiffman Dr. Nicos Scordis Dr. Zhihong Shi Dr. Carlos Manuel Gomes Silva Dr. Valentian G. Smirnova Dr. Deepak Srivastava Dr. Che-Jen Su Dr. Madele Tait Dr. Igor Tomic Dr. Harismita Trivedi Dr. Yelena Tsarenko Dr. Gerry Urwin Dr. A. Farok Vakil Dr. Robert Vambery Dr. Hannes van der Walt Dr. Neels van Heerden Dr. Luni Vermeulen Dr. Korab Vojtech Dr. A.N.M. Waheeduzzaman Prof. Larry Wander Dr. Chin-Bin Wang. continued. State Univ.of New York, Old Westbury, U.S.A. University of Derby, United Kingdom State Univ.of New York, Old Westbury, U.S.A. Huntingdon College, U.S.A. Vienna Univ. of Eco. & Busn. Adm., Australia Tshwane Univ.of Technology, South Africa Purdue University Calumet, U.S.A. State Univ.of New York, Old Westbury, U.S.A. Massachusetts Institute of Technology, U.S.A. Brno University of Technology, Czech Republic Polytechnic Institute of Leiria, Portugal Monash University, Australia Tshwane Univ.of Technology, South Africa Iona College, U.S.A. Polytechnic Institute of Leiria, Portugal Brno University of Technology, Czech Republic St. John's University, U.S.A. St. John's University, U.S.A. State Univ.of New York, Old Westbury, U.S.A. Polytechnic Institute of Leiria, Portugal State University of Management, Russia Nirma Univ.of Science and Technology, India Fu Jen Catholic University, Taiwan Nelson Mandela Metropolitan Univ., S. Africa St. John's University, U.S.A. Nirma Univ.of Science and Technology, India Monash University, Australia Coverntry University, United Kingdom St. John's University, U.S.A. Pace University, U.S.A. Central Univ.of the Free State, South Africa University of Pretoria, South Africa Tshwane Univ.of Technology, South Africa Brno University of Technology, Czech Republic Texas A&M University Corpus Christi, U.S.A. St. John's University, U.S.A. Nanhua University, Taiwan. ©Copyright 2007 by the Global Business and Technology Association, All Rights Reserved. vii.

(8) TABLE OF CONTENTS Authors. Title. Page. Farah Ahmed and Shaukat Ali. ¾ Islamic Banking in Kuwait: A Consumer Perspective. 1. Marco Aurelio Fagundes Albernaz and Maria Angela Campelo De Melo. ¾ Construction and Practical Evaluation of a Businessto-Business Holistic Model. 8. Irina V. Alyoshina. ¾ Globalization as a Challenge for Business Education: Are We Ready for Reforms?. 17. Yunbi An and Keith C.K. Cheung. ¾ Another Look at The Project Financing. 24. Aylin Ataay. ¾ Composition of Boards of Directors in Family Owned Business: Independent Board Members and Interlocking Directorates. 32. Ozlem Atalik. ¾ Comparing the Factors Affecting the Choice of Airlines for Frequent Flyers and Non Frequent Flyers: Case of Turkish Air Travellers. 39. Sérgio A. P. Bastos and T. Diana L.V.A. Macedo-Soares. ¾ Relational Perspective Towards a Public Services Concession in Brazil: Focusing on CEG and CEG Rio. 46. Unal Battal. ¾ Build-Operate-Transfer Model as an Airport Privatization Strategy: An Application of the BOT Model at Airport Terminals in Turkey. 57. Larry W. Boone, Angie Onassis Parlionas, and Monica Peborde. ¾ YOYO Lip Gloss: An Early Stage Start-Up. 66. Tatiana Bornovalova, ¾ The Change of Motivation at the Stages of the Organizational Development Valentina Smirnova, and Gennady Latfullin. 79. ¾ Development of a Holistic Wellness Model for Managers in Tertiary Institutions. 87. P.A. Botha. ©Copyright 2007 by the Global Business and Technology Association, All Rights Reserved. viii.

(9) Andre Machado Caldeira, Evandro Duarte de Abreu Oliveira, Reinaldo Castro Souza, Walter Gassenferth, and Maria Augusta Soares Machado. ¾ Arbitrage Via American Depository Receipts (ADRs). 101. Tung-Zong Chang and Su-Jane Chen. ¾ Management-Subordinate Task Relationship and Its Effects on Market Orientation and Service Quality. 111. Chiang-Nan Chao, Robert Mockler, Larry Wander, and Dorothy G. Dologite. ¾ Airline Industry Online Ticketing and Its Global Impact. 119. Kuan-Chou Chen and ¾ The Outsourcing Information Technology Impacts On The United State Economy: A Systems Study Keh-Wen Carin Chuang. 127. Lee Shiu Chen Chen. ¾ A Comparative Study of Business Leadership Style and Gender Amongst Female Chinese Managers in Taiwan and Australia. 134. Namjae Cho, Kiho Park, and Haekyung Lim. ¾ Influential Factors For Media Selection In Banking Transactions: Korean Market. 142. Jeong-Gil Choi. ¾ Developing Restaurant Industry Business Cycle Model and Analyzing Industry Turning Point. 150. Jeong-Gil Choi. ¾ Analyzing Financial Practices of High and Low Performing Firms for the Period of Peaks and Troughs of the Restaurant Industry Cycle. 158. Mona Chung and Chris Nyland. ¾ The Impact of Cultural Differences on International Students in Australia. 166. Max Coulthard. ¾ The Role of Entrepreneurial Orientation on Firm Performance and the Potential Influence of Relational Dynamism. 177. ©Copyright 2007 by the Global Business and Technology Association, All Rights Reserved. ix.

(10) Mark A. Cwiek, Gerald R. Ledlow, Brian Adamski, and Jacob Frankovich. ¾ A Proposal for International Corporations to Improve Employee Reference Sharing Capabilities: The Reciprocal Cooperative Reference-Share Model. 187. You-Yu Dai and NaeWen Kuo. ¾ An Application of the Theory of Planned Behavior to Electronic Saving Behavior of B & B Managers. 193. Soumendra K. Dash. ¾ The Intervention of Information and Communication Technology as an Instrument for the Advancement of Education and Health Care Services in Korea. 200. Bojana Olgic Drazenovic and Vesna Buterin. ¾ The Role of Financial System in the Process of Economic Growth - Case of Croatia. 209. Ivo Druzic, Vladimir Cavrak, and Josip Tica. ¾ Tourism, Welfare and Real Estate Market in a Small Open Economy: The Case of Croatia. 217. Vildan Durmaz. ¾ Importance of Decision Support System for Environmentally Sustainable Airport Management. 226. Amira Eleuch. ¾ Patient Satisfaction With Health Care Services: What We Know and What We Still Need to Know. 232. Nikolay Filinov. ¾ General Decision Theory and Its Implication for Ethical Decision-Making & Problem-solving Processes. 240. Leon De W Fourie, Stanley Mukhola and Edward Rankhumise. ¾ The Challenges Facing Affirmative Action Appointees: Views on Training Interventions. 249. Vania C. Goulart, Walter Gassenferth, Marie A. Chauvel and Maria Augusta Soares Machado. ¾ Satisfaction With the Administration of Complaints Among Brazilian Consumers: Structural Equation Modeling. 259. Beth Graham, Kevin Chua, Monica Shanafelt, & Gerald Ledlow. ¾ A Comparison of Pharmaceutical Price Controls in the United States, Japan, Korea, France, Germany, Canada, and the United Kingdom. 269. ©Copyright 2007 by the Global Business and Technology Association, All Rights Reserved. x.

(11) Mehmet Ali Gurol and Sefa Usta. ¾ Independence as the Leading Pull Factor in WomenEntrepreneurship: Results of a Survey on a Young Female Population. 275. Chengter Ho and Phuong-Mai Nguyen. ¾ Supplier Selection Criteria in Construction Industry: A Comparative Study of Taiwan and Vietnam. 284. Shu-hwa Hsiao and Tom Baum. ¾ Working in the Hotel Industry on a Part-time Basis From a Student's Perspective. 290. Ker-Tah Hsu. ¾ A Study of Banks' Credit Scoring of Cash Card Holders in Taiwan. 299. Maxwell K. Hsu and Gary Chao. ¾ An Efficiency Comparison of Top U.S. MBA Programs: Top Ten MBA Programs vs. Non Top Ten MBA Programs. 308. ¾ Racial Disparities in Perceived Public Health Care: Johan W. de Jager Responsive and Assurance Related Services and Thérèse du Plooy. 315. Johan W. de Jager and Werner Soontiens. ¾ The Importance of Internationalization in Tertiary Education: A South-African and Malaysian Comparison. 325. Basil Janavaras and Emanuel Gomes. ¾ Bringing Reality Into the Classroom Via Web-Based Tools: The Case of the Global Marketing Management System Online. 333. Dae-Yul Jeong, Sung-Gyun Kim and Chan-Gyu Oh. ¾ The Roles and Strategies of the Regional E-Learning Centers for Higher Education in Korea. 342. Hyojae Joun, Seunghee Oh and Namjae Cho. ¾ IT Payoff and the Adoption of E-Commerce in Public and Private Sector. 350. Yamen Koubaa. ¾ Effect of Outsourcing Activities on Brand Image Perception and Brand Image Structure a Case of Two Brands With Different Levels of Reputation. 358. Yamen Koubaa. ¾ Country of Origin Information: Who Use It? When and How It is Used?. 368. ©Copyright 2007 by the Global Business and Technology Association, All Rights Reserved. xi.

(12) Engin Kucukkaya, Ugur Soytas, and Ramazan Sari. ¾ Assessing the Value of the (New) Turkish Lira. 377. Chugan Pawan Kumar. ¾ Advance Pricing Arrangement, Transfer Pricing and Multinational Corporations (MNCs): The Implications for Foreign Investment in India. 382. Kenneth K. Kwong, John W.K. Leung, and H.M. Yau. ¾ Accounting for the Differences Between Delighted and Satisfied Customers. 393. Gerald R. Ledlow and Mark A. Cwiek. ¾ The Critical Link: A Continuous Progress Review Process Ensures Successful Strategic Plan Outcomes. 401. Keun S. Lee and Yong Zhang. ¾ American Consumer Ethnocentrism and Its Impact on Both Domestic and Foreign Products. 408. Auke R. Leen. ¾ A Constitutional Framework for the Market Order Versus Resource Usage Within IT: The Case of a EU Fiscal Constitution. 417. Tatiana Leonova and Ekaterina Frolovicheva. ¾ BRIC-markets and Countries: Scenarios, Tendencies and Recommendations. 425. Yaonan Lin and TaKuang Hsu. ¾ Information Privacy Concerns, Government Involvement and Corporate Policies in the Customer Relationship Management Context. 430. Martti Lindman and Jukka Peltoniemi. ¾ Bypassing Competition Through New Business Concepts. 438. F. Victor Lu, Andrew Russakoff, and Farok Vakil. ¾ Applying Data Envelopment Analysis: Issues and Spreadsheet Tools. 446. T. Diana L.V.A. Macedo-Soares and Alexandre Celaro. ¾ The Influence of Strategic Alliances on Competitive Strategy: A Case Study. 457. T. Diana L.V.A. Macedo-Soares and Claudia Torres Volpon. ¾ Strategic Alignment of Corporate SocioEnvironmental Responsibility in the Case of Firms That Operate in Relationship Networks: Research Results Focusing on the Firm PETROBRAS. 468. ©Copyright 2007 by the Global Business and Technology Association, All Rights Reserved. xii.

(13) Paulo R. Maisonnave, Thiago Drummo Ribeiro Goncalves M., Reinaldo Castro Souza, Andre Machado Caldeira, Walter Gassenferth and Maria Augusta Soares Machado. ¾ A Spare Part Optimization System for the CGF Fortaleza City Thermoelectric Power Plant. 481. Antanas Makštutis, Rasa Smaliukienė and Stasys Paulauskas. ¾ Harmonious Development of State and Society. 487. Bruno Mascitelli. ¾ Italian Postwar Migration and Its Impact on Italian Australian Trade Relations. 492. Robert W. McGee, Susana N. Vittadini Andres. ¾ The Ethics of Tax Evasion: A Comparative Study of Taiwan and the USA. 499. David Mello. ¾ South African Tourism: Prospects and Challenges. 507. Vesna MilanovicGolubovic and Slavica KosticNikolic. ¾ Natural Resources -- The Source of Comparative Advantage of a Country. 514. Leslie Moore, Kristin Westphal and Gerald R. Ledlow. ¾ Physician Migration: Relevant Factors to Manage a Global Resources. 522. Nina Muncherji. ¾ An Approach Paper on Pedagogy in a B-School : An Indian Study. 527. Mehmet Zeki Onal, Onay Ceylan and Tamer Sikoglu. ¾ An Aggregated Information Technology Checklist for Operations Risk Management. 535. Wilson Ozuem, Kerry Howell and Geoff Lancaster. ¾ Internet and Marketing Communications: Beyond Hypodermic Perspective. 543. ©Copyright 2007 by the Global Business and Technology Association, All Rights Reserved. xiii.

(14) Taina Paju. ¾ Offshore Outsourcing of R & D Operations: What is So Special About IT?. 550. Sang-Hyeok Park and Seok-Kyu Kim. ¾ The Success Factors of E-Business Implementation in Public Sector: A Case Study of On-Bid System and Organizational Change in Kamco. 558. Yuri G. Pavlenko. ¾ Economic Success Factors in Contemporary Russia. 567. Antti Piirto, Petri Paajanen and Kaj U. Koskinen. ¾ Transfer of Nuclear Safety Culture. 573. Olga M. Pisareva and Diana V. Mazidullina. ¾ Investigation of Structural Changes and International Competitive Power of the Russian Economy: Transformation or Preservation of the Course. 582. Olga M. Pisareva. ¾ Evolution of the Forecasting Function in the Context of Russian Management Practice. 590. Kawpong Polyorat and Varoon Tuntabundit. ¾ Brand Personality Structure: Thai Consumers' Perceptions. 598. Anna Putnova. ¾ Social Responsibility - Challenge or Threat to Business?. 606. Andre Lacombe Penna Da Rocha. ¾ The Brazilian Green Consumer Profile: A Study on Rio De Janeiro Citizens and Contributions to Marketing Strategies. 612. Giuseppe Maria Russo, T. Diana L.V.A. MacedoSoares and Marcos Vianna Villas. ¾ The Importance of Ranking Scientific Journals: Results of an Empirical Investigation in Brazil and a Proposal of a Bibliographical Research Method. 626. Giuseppe Maria Russo and T. Diana L.V.A. MacedoSoares. ¾ Empirical Analysis of the Essential Benefits of Strategic Alliances Between Airlines Based on the Co-Opetition Model and a Preliminary Proposal for Performance Indicators. 640. S. Reza Salami. ¾ Iran's Experience of Reforming National Innovation System Toward Knowledge-Based Economy: Lessons for Other Developing Countries. 653. ©Copyright 2007 by the Global Business and Technology Association, All Rights Reserved. xiv.

(15) Leon G. Schiffman, Deborah Y. Cohn, Elaine Sherman and Jaeseok Jeong. ¾ An Investigation of the Opening Blog Page: Preferences for Text or Pictures. 660. Tsui-Yii Shih. ¾ Competence, Competitive Advantages and Internationalization: Evidence from the Taiwan Banking Industry. 668. Jiunn-I Shieh and Hsin-Hung Wu. ¾ A Framework of Using a Hidden Markov Model to Analyze Customer Requirements in Quality Function Deployment. 674. Jurica Šimurina, Tomislav Gelo and Šime Smolić. ¾ R&D Intensity in Central and East European Economies. 680. Che-Jen Su, Muh-Lin Tsai and Eunmi Koo. ¾ Analysis of Key Success Factors of Event Sponsorship - A Case Study of Taiwanese and Korean Beer Industries. 688. Che-Jen Su. ¾ Applications of Upward Impression Management in the Hotel Industry: A Perspective of Social Information-Processing and Attitude Formation. 696. Omur Suer. ¾ Impact of Basel II on the Lending Process in the Turkish Banking Sector. 703. Sonia Swanepoel and Lucille Britz. ¾ Cognitive Ability, Emotional Intelligence and Academic Performance. 710. Lei Tang. ¾ 3G Mobile Services Adoption in France: An Empirical Study. 718. Janusz Teczke and Remigiusz Gawlik. ¾ The Influence of Non–Governmental Organizations on Main Determinants of the Open Systems Model with Application of the Correlation Analysis Method. 728. Uma Tripathi and Frank P. Le Veness. ¾ Technological Responses to Global 'Eco-Eco' Issues: Threading the Twin Needles of Ecological and Economic Problems. 736. Igor N. Tsarkov. ¾ The Model of Managed Impacts: How to Make Optimal Budget Decisions for a Company. 743. ©Copyright 2007 by the Global Business and Technology Association, All Rights Reserved. xv.

(16) Farok Vakil and F. Victor Lu A. Vasilopoulos. ¾ The Effect of Online Brokerage Accounts on Stock Market ¾ Understanding and Using Analysis of Variance With the Help of Minitab. 752. Jan Vermaak and Leon De W Fourie. ¾ Continuous Performance Improvement in the South African National Defence Force. 773. Marcos Vianna Villas ¾ The Influence of Strategic Alliance Networks on Information and Communication Technology: and T. Diana L.V.A. Results of an Exploratory Empirical Study Macedo-Soares. 757. 784. I-Lin Wang and Chun-Ta Dai. ¾ Mining Changes of Patterns from Multi-period Datasets. 796. Serpil Yilmaz and Hatice Ocal. ¾ The Role and the Effect of Advertisement on Customers' Attitude in the Urban Area of Antalya. 802. Jian Ying Zhang, David Young, Ken Coghill, Sonja Petrovic-Lazarevic, Ron Borland, ChungHsing Yeh and Susan Bedingfield. ¾ A New Theoretical Framework for Modeling and Analysing Complex Tobacco Control Systems. 811. Anna N. Zhilkina. ¾ A Quality Control in Financial Management: Theory and Practice. 818. Sasa Zikovic. ¾ Can Popular VAR Models Be Trusted?: A Case of the New EU Member States. 825. Razali Bin Mat Zin. ¾ Total Quality Management (TQM) in a Rationalistic Environment: A Qualitative Analysis. 832. Koen Dittrich and Kathleen Park. ¾ CEO Succession and Alliance Transformation: How. 840. New Top Leadership Impacts Alliance Strategy. ©Copyright 2007 by the Global Business and Technology Association, All Rights Reserved. xvi.

(17) ISLAMIC BANKING IN KUWAIT – A CONSUMER PERSPECTIVE. Farah Ahmad, University of Liverpool, UK Shaukat Ali, University of Wolverhampton, UK. ABSTRACT This paper sets out to research the attitudes of consumers towards Islamic banks in Kuwait and the general bank selection criteria in this country. The findings indicate high awareness levels, a positive attitude towards Islamic banking, perceived lack of efficient service and proper marketing effort by Islamic Banks. For bank selection criteria, most respondents ranked better return on investment, quality of services offered by the bank, easily available ATM facilities and bank reputation as being most significant factors irrespective of their demographic background.. INTRODUCTION The objective of this research is to investigate how the population of Kuwait-both Muslims and non-Muslims; locals and expatriates, perceive Islamic Banking and what are their selection criteria in choosing a bank for their personal banking needs. The justification for this research is the growth in the number of banks being established in Kuwait, hence the desire to ascertain what factors attract consumers towards Islamic Banks. In addition to this, the research makes a contribution to the growing literature on Islamic banking. The research not only intends to ascertain important general bank selection criteria for the predominant Muslim population in Kuwait, but also addresses the significance of Islamic Banking in this country across the different demographics.. LITERATURE REVIEW There is significant published research that illustrates consumer bank selection criteria in different countries e.g. Anderson et al (1976); Erol and El-Badour (1989) Kaynak et al (1991) ; Kazeh and Decker (1993) ; Haron et al (1994); Metawa and Almossawi (1998) , and Delvin (2002). Evidence suggests that a majority of previous research on consumer perceptions of Islamic Banking have been based on the work of Erol & El-Badour (1989). Whilst acknowledging the important contribution of Erol and El-Badour, this research uses a combined framework based on the works of Cunningham & Gerrard (1997) on Singapore and Haron et al (1994) on their work on Malaysia. Haron et al. (1994) concluded that there was no significant difference in the selection criteria for Muslims and non Muslims, concluding that quality of service is an important factor in selecting any bank by Muslims and nonMuslims . In terms of bank selection criteria their results were similar to that of Erol and El Badour (1989) where efficiency and speed of transaction, along with friendliness of bank personnel were the foremost criteria in choosing a bank. However, in contrast to Erol and El Badour’s (1989) research, recommendation by friends, and appearance of the bank was not considered important in Haron et al’s (1994) research. Cunningham & Gerrard (1997) carried out a similar research in Singapore, which has a minority Muslim population. Both Muslims and non-Muslims there appeared unaware of Islamic Banking services. In terms of bank selection criteria, there were similarities in the ranking of certain criteria between Muslims and non-Muslims. The most highly ranked criteria for selecting a bank were fast and efficient service and confidentiality of the bank.. ©Copyright 2007 by the Global Business and Technology Association. 1.

(18) Unlike Erol & El-Badour’s (1984) research, outside influences such as recommendation by friend and external appearance of the banks were the least important factors. Regarding knowledge about Islamic Banking, Muslims, not surprisingly, had comparatively more awareness level compared to non-Muslims. Though in contrast to the previous two researchers’ results, even the majority of the Muslims were not aware of the basic terminology related to Islamic Banking, with only 20% knowing the meaning of Riba and 31% knowing the meaning of Shari’a. Metawa and Almossawi (1998) carried out a research to investigate the banking behaviour of Islamic bank customers in Bahrain. From the survey, they concluded that more than fifty percent of Islamic bank consumers had maintained their current banking relationship with Islamic Banks for more than six years. Customer awareness levels for the various Islamic bank services were quite high and most customers were satisfied with their investment banks accounts. In terms of service delivery too, Islamic bank customers were highly satisfied and their main bank selection criterion was adherence to Islamic principles, followed by rate of return. . In addition, the results also suggested that Islamic bank consumers in Bahrain were satisfied with the products and services they used. Kaynak et al (1991) in their research carried out a similar research as the above researchers and tried to find out the bank patronage factors of commercial bank users in Turkey. They focused on the different socio economic factors that influence the consumer decisions. They compared their work to that of Stanley et al (1985, cited in Kaynak et al(1991)) who found that there was a close association with consumer age and bank services usage, and Chebat et al (1988, cited in Kaynak (1991)) who concluded that education also effects bank usage . In the same year Yavas (1988, cited in Kaynak et al (1991)), did research on Saudi men in an effort to understand their needs, attitude, satisfaction and behaviour patterns and came to the conclusion that they chose banks based on experience, reputation , service and personnel. Khazeh & Decker (1993) carried out a very systematic research on how customers choose banks in Maryland, USA. They analyzed the feedback by considering both the criteria ratings and comparison ratings. Overall, the highest ranking determinant attributes were service charges, reputation of the bank, interest rates on loans, service time for approval of loans and friendly staff. Their survey concluded that these were the most important factors affecting bank selection and should be emphasized by individual banks seeking a competitive edge in the banking market. Edris & AlMahmeed (1997) based their research in Kuwait slightly differently compared to the previous researchers mentioned though their methodology is the same as that followed by Khazeh and Decker (1993). They aimed to identify the relative importance of banking services to business customers’ needs and to find out the determinants of bank selection decisions. Their results show that most business firms in Kuwait have accounts in multiple banks and that 77% of them deal with commercial banks rather than Islamic banks. Based on the results, they also came to the conclusion that business customer segments in Kuwait are significantly different in their perceptions of the relative importance of different services offered by the banks. Delvin (2002) studied customer knowledge and their choice criteria in UK retail banking. Unlike previous works such as Kaynak & Kucukemiroglu (1992) where they focused on frequent and infrequent bank users for differing choices of consumer bank selection criteria , Delvin (2002) focuses on their financial knowledge. His research relied on secondary data collection and assessed consumer financial knowledge on the basis of their education level based on which he classified consumers into low, high and medium knowledge groups. He also divided the attributes into intrinsic and extrinsic factors based on the work of Zeithaml (1988 cited in Delvin (2002)) where he defines intrinsic as criteria that are service specific e.g. interest rates, service charges and extrinsic as attributes whose factors can be generic and not specific to a particular service e.g. bank reputation or advertising. The research finally concluded that higher financial knowledge can only be associated with increased importance of intrinsic choice criteria. On the whole, location and recommendation by friends were factors significantly important to consumers irrespective of their financial knowledge which are both extrinsic attributes Zeithaml (1988 cited in Delvin (2002)). The current research in Kuwait seeks to make a contribution in providing a different context. When Haron et al & Cunningham et al’s research was undertaken, Islamic Banks had not established themselves in the selected countries. Since the largest Islamic Bank – Kuwait Finance House - was established in the 1970’s, it is likely that consumer perception would be different, being moderated by Kuwait having a majority Muslim population as well as its longer presence.. METHODOLOGY Primary data were sought from consumers of retail banks (both Islamic banks and conventional banks) of different nationalities and professions including both Muslims and non- Muslims. The data for the research were. 2. ©Copyright 2007 by the Global Business and Technology Association.

(19) collected through a self-administered questionnaire. The questionnaire design was based on the works of Erol and El-Badour (1989) and Cunningham and Gerrard (1997) suitably modified to suit consumers in Kuwait. A pilot test on a sample size of 30 consumers from different demographic backgrounds was undertaken and the final survey form was translated to Arabic. An email version was created in both languages for easily passing it on to a broader consumer target. Back translation was undertaken from Arabic to English.. RESULTS AND ANALYSIS The sample population profile was 64-34%% Kuwaitis/non Kuwaits, with the male/female split being 76/24%, a representative percentage – since the Kuwaiti job market is predominantly male and, being an Islamic country, most of the official representation for banking is done by males in the households. There was a wide age group distribution, with 12% in the 55 age group (in most government offices, 55 is the retirement age, other age groups were 21% (41-50); and 41% (31- 40) and 26% (20- 30). The sample respondents for occupation were selected randomly but the survey forms were distributed in a manner such that considerable representation was done from each category for age and occupation. Approximately equal numbers of the respondents were employed in the private and government sector (46% & 48% respectively). Due to lack of availability and reluctance of businessmen consumers a proper representation could not be done in the self-trading category, where only 6% were represented. The sampling was done randomly, with a majority of consumers (70%) having accounts in conventional banks as opposed to only 27% have accounts in Islamic banks. A very small percentage of consumers (3%) used both banks. In comparing occupation against type of bank used, 34% and 33.7% of the respondents from both private and government sector use conventional banks. Majority of Islamic Bank users are from the government sector (15%) with 10.3% being from the private sector. On the whole 27% of the working representatives are Islamic Bank consumers. This could possibly be due to the dominance of conventional banks in Kuwait or due to the higher awareness level of people about Conventional banks or possibly due to the better approach conventional banks have towards the consumers. Kuwait shows a substantial representation of Islamic Bank users compared to other countries (Global Investment House 2005, pp.22) which may be attributed to the earlier establishment of such a bank in this country as well as a majority of the population in this country being Muslims. But its representation in terms of number of consumers is quite less compared to conventional banks. The results could be skewed for the self trading sector because only 6% is represented in our sample respondents. Other than this 6%, some respondents from the self trading group of people were approached individually and their feedback was taken as part of an informal discussion. Their opinions have been incorporated in the analysis later on. The results showed that irrespective of nationality, the majority of the consumers opt for conventional banks. Almost 38% of Kuwaitis and just over 32% of non-Kuwaitis chose conventional banks against just over 23% and just under 4% respectively for non Islamic banks. Just over 3% of Kuwait’s chose both, with none for non-Kuwaitis. This can be attributed to the predominance in the sector of conventional banks. Kuwait currently has seven conventional banks and only one Islamic Bank, which is quite surprising considering the early establishment of Kuwait Finance House. Only recently the Kuwait government has allowed the establishment of two additional Islamic banks. Another explanation for the hitherto apparent monopoly of Kuwait Finance House could be the large government shareholding – a strong incentive to discourage competition. The survey further indicates that majority of the Kuwaitis have a better understanding of the difference between conventional and Islamic banking compared to Non–Kuwaitis where only about half of them understand the difference. Sixty-nine percent of all the respondents of the survey replied positively to the question about whether they understood the difference between Islamic Banks or not. Ninety four percent on the whole, irrespective of which bank they used or their nationality, thought that these banks need to explain their services better. The high awareness level could also be attributed to the media coverage given to the 31st Islamic Development bank conference, being hosted in Kuwait during the data collection. The average degree of satisfaction by both Islamic bank users as well as conventional bank users was approximately 1.85 on a scale of 1 to 4 where 1 was most satisfied and 4 represented dissatisfied, indicating that irrespective of which bank people used they seemed to be reasonably satisfied. Though individual comments received from people indicated that the consumers would like to see improvement in the services offered by Islamic Banks. The various bank selection criteria’s that were rated by the respondents during the survey were - Easily available ATM withdrawing facilities, Better Return on Investment, Quality of service offered by the bank personnel , Bank Reputation , 24Hrs customer support services ( Tele-banking), Banks effectiveness in completing transactions. Availability of Internet Banking facility, Fast and Efficient Service, Low Service Charges, Money transfer facility, Number of bank locations in Kuwait, Company association with banks for salary transfer, Good. ©Copyright 2007 by the Global Business and Technology Association. 3.

(20) credit services , Various banking schemes offered, Low Interest Charges on Loans, Recommendation by friends and relatives, Online brokerage facilities , Effective advertising, Better Interest rates on Savings accounts, Special Services for Women. These criteria were ranked on a scale of one to four where 1 represents very important and 4 signifies insignificant. The bank selection criteria preference was measured based on comments given by Islamic Bank users and Conventional bank users. With only two different categories, confidence interval testing provided the sample means and sample variance for the different bank selection criteria. The average mean rating of all the criteria’s based on the overall ranking done by the respondents showed that quality of service, better return on investments, bank reputation and easily available ATM locations are ranked as the top most criteria for selecting a bank. The preference given by the respondents was similar to the feedback received by Edris & Almahmeed (1997) in Kuwait. The second category of important criteria was the availability of 24 hour support, banks effectiveness in completing a transaction, Internet banking, fast & effective service, low service charges and number of banking schemes and locations. Online brokerage, recommendation by friends, effective advertising, better interest rates and special services for women were criteria ranked lowest compared to the rest of the attributes. Further analysis compares the ranking of the same criteria by both conventional bank users and Islamic bank users separately. The results show that amongst the first five criteria there is a lot of similarity in selecting a bank amongst both Islamic Bank and Conventional Bank users. Better return on investment, bank reputation, easily available ATM, quality of service of bank personnel and 24 hour customer support are attributes that have been ranked amongst the top five categories. A numerical difference was shown in ratings given by different users of banks for interest rates on loans and interest rates on savings account—even though conventional bank users ranked it at 12 and 16 the rating given was 1.79 and 2.28 respectively on a scale of 1 to 4 where 1 represents very important and 4 stands for insignificant. In contrast Islamic Bank users rated interest rates on loans and interest rates on savings account as insignificant by giving it a rating of 3. 3 and 3.36 and ranked them as lowest . The ranking of these two criteria can be said to be low because almost 73% of CB users are represented by Muslims. Also, this indicates that unlike some of the earlier research works, most Islamic bank users opt for these banks due to religious reasons. Low preference given to Interest rates in spite of being in a country dominated by conventional banks shows the religious inclination of the people here. Low representation of Islamic Bank consumers in this society may be due to less number of options available to them. The results of a boxplot analysis between the mean ranking of various categories of bank selection by Islamic Bank users and Conventional Bank users showed that there is not much difference between the overall mean of bank selection criteria amongst the two types of consumers. The results were further analyzed to compare the ranking given by Muslims and non-Muslims on the same criteria . The results showed that low interest charges on loans and better interest rates on savings account were ranked as 2.37 and 2.77 by Muslims and 1.73 and 1.88 by non-Muslims respectively. One can interpret the low importance given to interest rates in as being due to the majority of consumers being Muslim. Though this does not mean that Kuwaiti consumers are not concerned about the return they get on their money. The overall rating for the criteria of better return on investment is 1.34, is indicative of the fact that they would not mind getting value for their investment money, keeping in line with the Shari’a principles. Special services for women, as a criterion, was ranked as insignificant by both different banks users despite the fact that Kuwait is a predominantly Muslim society where special provisions for women exist in various government institutions and in the largest Islamic Bank in Kuwait, which has a separate section for women. The respondent’s ranked religion as their top criteria for selecting an Islamic bank which is further confirmed when the results showed that from the total respondents only 1.28% were non-Muslims, who opted for an Islamic Bank. This result was similar to that found by Mutawa and Mossawi (1998) in Bahrain when they surveyed only Islamic Banks users. In this research Islamic bank consumer’s ranked this criterion as 1.16 on average for using an Islamic Bank. This is further validated in the hypothesis test, which gave a p-value of 0.000, which clearly showed that we can reject the null hypothesis of the means being equal and accept the alternate hypothesis that religion of the respondent played a significant role when choosing an Islamic Bank. When running a multiple regression analysis on the bank selection criteria “better interest rates”, the results indicated a low p-value Religion and the bank the respondents dealt with, showed that these two factors were not independent. The results gave us an Rsquare value of 36.6 %. Amongst the regression coefficient that were considered , Nationality, Religion, Age, Gender , Religion, Occupation and the bank the consumers dealt with, the analysis gave us a p–value of 0.000 for Religion and the bank consumers used which indicated these two factors did have an influence on the R-square value for “better interest rate ” criteria . One possible explanation for the low R square value above is that there may be more than the two factors that affect the outcome of this criterion which have not been considered in this research.. 4. ©Copyright 2007 by the Global Business and Technology Association.

(21) Inferential - two sample analysis was used to further test the statistical difference between the means of the bank patronage factors between Kuwaitis /Non Kuwaitis, Islamic bank users/Conventional bank users and Muslims/ Non Muslims. The analysis results showed that only a few of the selection criteria had a p-value such that would lead us to reject the null hypothesis at 1% and 5 % significance level. The criteria with low p-value indicating that the means are not equal were -- special services for women, better interest charges on savings account and loans, number of bank locations, effective advertising, online brokerage facilities, and good credit services. An interesting point to note was that these same criteria had a difference in means for people of different nationalities, bank users and religion. Gender, age and occupation based differences were not analyzed further because the mean ratings of these groups for different bank selection criteria indicated a very close value of their average mean. The correlation statistical analysis also showed an extremely weak correlation between these factors and the bank selection criteria’s. There was a slightly significant correlation between good credit services and age, which is highlighted in the box plot analysis conducted. It indicates that as age of the respondents increases the significance of good credit services decreases as a bank selection attribute.. CONCLUSION, IMPLICATIONS AND RECOMMENDATIONS If we consider trends in Islamic Investment banking, establishment of more Islamic banks should work towards improving services and lowering charges of these institutions. Therefore, the establishment of new Islamic Banks in the country could be considered a positive step in the direction of eliminating the monopoly that exists in this market. On the other hand in terms of marketing and educating the retail consumers, Islamic banks need to be more proactive to be able to attract new clients. Kuwait Finance House will no doubt lose retail consumers with the active entry of new banks such as Boubyan and Kuwait Real Estate Bank. Also, if the banking market reports are to be believed and foreign banks are allowed to enter the market with Islamic banking services, continuing the current growth of KFH will be difficult in terms of retail banking. KFH has been enjoying considerable growth over the past few years and it needs to change the various aspects of its operations to continue its leadership position in the long run. It currently enjoys a market leader position and therefore is at a competitive advantage over other banks. The research also highlights that with the increase in competition within the banking industry, Islamic banks should not only depend upon Muslims as a source of depositor. They should try to increase their customer base by including non-Muslims as potential customers (Haron et al 1994b) and in Kuwait their focus should particularly be towards the expatriate community which is largely ignored. Our findings leads us to conclude that a more user/ customer friendly environment needs to be created by Islamic banks by reaching out to expatriate retail consumers in the Kuwait market and use English as a medium for communication, advertising and other public relation activities. This research along with the work done previously by researchers shows that the various bank selection criteria would be different for different countries. The current research also highlights better return on investment, quality of services offered by the bank, easily available ATM facilities and bank reputation as being most important for the majority of the consumers. Compared to previous works the one factor which is seen common to all consumers throughout various countries is the quality of service and efficiency of service offered by the bank. Based on the inferential results, the research also implies that some of the factors based on which the opinions of people differed was interest rates, special services for women, effective advertising, online brokerage facilities, and credit services. Choice of the first two attributes may differ due to religious and cultural differences. But differences in ratings for latter attributes by different bank consumers is probably because of lower importance attached to these services in Islamic financial institutions while these remain to be important for banking consumer community.. REFERENCES Almossawi, M. (2001) ‘Bank selection criteria employed by college students in Bahrain: an empirical analysis’. International Journal of Bank Marketing,19(3), pp 115-125. Anderson, W T. et al. (1976) ‘Bank Selection Decisions and Market Segmentation’, Journal of Marketing, 40, Jan 1976, pp. 40.. ©Copyright 2007 by the Global Business and Technology Association. 5.

(22) Cunningham, J B. & Gerrard, P. (1997) ‘Islamic banking: a research in Singapore’. International Journal of Bank Marketing, 15(6), pp 204–216. Erol, C. & El-Bdour, R. (1989) ‘Attitudes, Behavior and Patronage Factors of Bank Customers Towards Islamic Banking’. International Journal of Bank Marketing, vol. 7, December 1989, pp. 31-39. Edris, T. A. and Al Mahmeed, M.A.(1997) ‘Services considered important to business consumers and determinants of bank selection in Kuwait: a segmentation analysis’. International Journal for Bank Marketing, 15(4), pp 126-133. Delvin (2002) ‘Customer knowledge and choice criteria in retail banking’. J of Strategic Mk, vol 10, pp. 273-290. Global Investment House (2006) ‘Banks’ assets hit KD 20.5b; Policies pay off’. Arab Times, 12th Feb 2006. Global Investment House (2005) ‘Regional Report’. Banker Middle East, July 2005, Issue 61, pp 22-24. Haroon, S. (2000a ) , ‘The philosophy of Islamic Banking’, In: Asma, S.(ed.) London: Publisher Institute of Islamic banking and insurance. pp55 -58.. Anthology of Islamic Banking .. Haron, S. et al (1994b), ’Bank Patronage factors for Muslim and Non Muslim Customers’. International Journal of Banking, 12(1) , pp 32-40 . Kaynak, E., Kucukemiroglu, O. and Odabasi, Y. (1991) ’Commercial bank selection in Turkey’. International Journal of Bank Marketing 9 (4), pp. 30-9. Kazeh K. & Decker W (1992) ‘How customers choose banks’, Journal of Retail Banking, 14 (4), Winter, pp 41-44. Kuwait Finance House Annual Report (2005). Laroche, M. and Taylor, T. (1988) ‘An empirical research of major segmentation issues in retail banking'. International Journal of Bank Marketing, 6(1) pp. 31-48. Metawa, S A. , Almossawi, M .(1998) ‘Banking behavior of Islamic Bank customers: perspectives and implications’. International Journal of Bank Marketing, 16(7) , pp 299-313. Naser, K., et al (1999). ‘Islamic banking: a research of customer satisfaction and preferences in Jordan ‘. International Journal of Bank Marketing. 17(3), pp135- 150. Nienhaus, V. (1986), ‘Islamic economics, finance, banking theory and practice’. Journal of Islamic Banking and Finance, 3(2) pp. 3654. Rashad B.(2006) ‘Report on Banking in the Middle East’ . Arab Times, May 31st, 2006, pp28. Shameen, A. (2005) ‘Islamic Banks: A Novelty No Longer’ BusinessWeek Online, 8 August 2005. Usmani, M. T. (1998) , An Introduction to Islamic Finance. Karachi: Publishers Idaratul Maarif. Yavas, U. (1988) ‘Banking behavior in an Arabian gulf country: a consumer survey’. International Journal of Bank marketing, 6 (5), pp. 40 -8. Zaithaml ,V.A. (1988) ‘Consumer perceptions of price, quality and value: a means-end model and synthesis of evidence’. Journal of Marketing, 52 (2), pp. 22.. 6. ©Copyright 2007 by the Global Business and Technology Association.

(23) Zaher ,T.S. & Hassan M.K. (2001) ‘ A comparative Literature Survey of Islamic finance and Banking’. Financial Markets Institutions & Instruments, 10 (4), November 2001, pp 155.. ©Copyright 2007 by the Global Business and Technology Association. 7.

(24) CONSTRUCTION AND PRACTICAL EVALUATION OF A HOLISTIC BUSINESS-TO-BUSINESS MODEL. Marco Aurélio Fagundes Albernaz and Maria Angela Campelo de Melo, Pontifícia Universidade Católica do Rio de Janeiro, Brazil. ABSTRACT This study shows the construction and practical evaluation of a holistic model of interrelationship among companies and institutions for the Business-to-Business environment, the ‘B2B Global Model’. This model was developed based on concepts taken from theories of Systems, Networks, Virtual Corporations and Supply Chains. Its usefulness in understanding, characterizing and analyzing the complex systems operating in the Business-toBusiness environment is evident while evaluating a real life case – Canal Cliente (Client Channel), the sales portal of Petrobras (Petróleo Brasileiro S.A.), one of the largest in the world.. INTRODUCTION In the mid-90s, companies around the world realized that the value of internet lay not just in obtaining information or exchanging e-mails, but mainly in generating new business. In today's complex business environment, new business opportunities appear all the time, requiring companies to respond quickly and effectively to the new challenges posed by technological, market, regulatory and social changes. Opportunities in electronic commerce depend on the company's capacity to connect to clients, suppliers and other players in the global market. Frequently, companies view these opportunities but are unable to take advantage of them because of the structural changes required. The e-commerce environment among companies supported by Internet, known as Business-to-Business, is complex. Among the different types of organizations that coexist in this environment are e-marketplaces, intermediaries for transactions between consumers and suppliers of goods and services, providers of services related to technology, marketing, legal matters and finance, and logistics and transport companies. Partnerships with service providers enable companies to concentrate only on activities directly related to their business, thus becoming more agile and able to adapt easily to the frequent changes and uncertainties in this virtual environment. A company's entry in the Business-to-Business environment is gradual and requires much effort in terms of physical and financial resources to obtain the essential competencies. Integration of the players who interact in the Business-to-Business and operation in this environment require a holistic knowledge of its diverse areas, such as technology, legislation, marketing, electronic financial transactions and supply chains. This knowledge is needed to facilitate understanding the business, view in an integrated manner the diverse players interacting in this business environment, support decision making and elaboration of strategies that add value to companies conducting their transactions in it.. 8. ©Copyright 2007 by the Global Business and Technology Association.

(25) Research on this knowledge resulted in the creation of a generic model of interrelationship among companies and institutions for the Business-to-Business environment, which was named ‘B2B Global Model’ by Albernaz (2004).. THEORETICAL FRAMEWORK While preparing the B2B Global Model, various concepts were used from the System Theory, Network Theory, Virtual Corporation and Supply Chains. The System Theory contributed to viewing organizations operating in the Business-to-Business environment as parts of a system and not as isolated elements, since some of their properties can be adequately dealt with only if studied in a holistic manner. This theory also helped to study organizations from the dynamic point of view, taking into consideration the interaction among diverse organizations and their dependence on the environment. Based on the Network Theory, it was possible to analyze the Business-to-Business environment as a complex network whose components support each other with the objective of facing the growing dependence on technology and the need to develop and adapt their offering and requirements to the increasingly specific demands of this market. The image of isolated players fighting against each other in an impersonal market is increasingly becoming unfit for a world in which companies participate in social and professional networks and in exchanges with other organizational players. Knowledge of Virtual Corporations contributed to a better understanding of Virtual Markets. A virtual corporation may be defined as a temporary network of independent companies - suppliers, buyers, clients and even rivals - connected by information technology, which quickly unite to explore business opportunities that appear and disappear rapidly (Byrne, 1993). Knowledge of Virtual Corporations also emphasized the importance of studying alliances and agreements relating to outsourcing tasks for a better understanding of virtual corporations. The Supply Chain theory contributed to a better understanding of the concepts related to flow of products from the supplier to the end consumer in this new business environment, supply chain structure, especially the processes, and the finite life cycle of the Supply Chain. Below is a brief description of some of the topics that most contributed to conceiving and building a Global Model. System Theory – According to Feibleman and Friend (1945), the study of organizations must be approached from two points of view – static and dynamic. From the static point of view, the organization must be treated independently of its environment, that is, isolated from the problems relating to its interaction with other organizations. In the dynamic point of view, the organization must be treated according to the environment it belongs to and hence, considering its interaction with other organizations. In reality, organizations are neither completely static nor completely dynamic. Bertalanffy (1962) admits that the study of systems may follow the Empirical-Intuitive or Deductive methods. The Empirical-Intuitive method has the advantage of being adopted in close contact with the reality based on the study of various systems, and its product can be easily verified in a practical manner. The Empirical-Intuitive method was used to develop the B2B Global Model. The Deductive method proposes that the study be started by examining a set of all possible systems and then reduce this group to a feasible system. Network Theory – From the viewpoint of a group of organizations, the network may be seen as a long-term arrangement among different organizations with profit motives to obtain and maintain the competitive advantage for these companies vis-a-vis their competitors who do not belong to this network (Jarillo, 1987). It can be so complex and have so many dimensions that it can never be completely described and analyzed (Ford et al., 1985). Usually, the formation of networks is attributed to the influence of external factors like distribution of technological resources or dependence on resources (Pfeffer e Salandick, 1978; Burt, 1983). Organizations create. ©Copyright 2007 by the Global Business and Technology Association. 9.

(26) relations among themselves to manage their operations better in uncertain environments and thus satisfy their lack of resources and competencies, and meet external restrictions. Business-to-Business through the Internet – B2B – can be seen as a network in which the nodes are the companies that operate in the e-commerce environment and the arrows are the relationships between them. In the context of B2B, both the nodes and the arrows have their own characteristics and have a differentiated baggage of resources, knowledge and intelligence associated to them (Hakansson, 1997). This baggage comes from the complex interactions, adaptations and investments in the company itself and among companies over a period of time. Each of these has a position defined in the network, has its own resources and also uses resources available in its relationships. These technical, economic and social resources are the sources of power and the foundation for the company's growth and development in a rapidly expanding market. Virtual Corporation – As the market demands lower response time and greater flexibility in adapting to client needs, there is growing recognition of the need for new forms of flexible cooperation aimed at organizations integrated in the network (Erben & Gersten, 1987). Virtual corporations are characterized by "plug-compatible" members in the value chain who join and leave the corporation, which is important for new industries in which product specifications and market requirements are subject to dramatic and unexpected changes (Womack & Jones, 1994). In a virtual corporation, companies share costs and competencies and access global markets, with each partner contributing to the corporation what it has best. Virtual Markets – Virtual markets refer to environments in which business transactions are conducted via open networks based on fixed infrastructures or on the Internet (Amit & Zott, 2001). These markets are characterized by high connectivity (Dutta & Segev, 1999), focus on transactions and the importance of information about goods and services (Shapiro and Varian, 1999). Another highlight of these virtual markets is that they involve a significant number of companies and products that can be accessed quickly and at low cost. Supply Chain – One of the most significant changes in the modern business management model is that individual businesses do not compete as autonomous entities but as supply chains (Lambert et al., 1998). The supply chain infrastructure covers two elements that are closely interconnected: the network (of the supply chain) and the processes (Cooper et al., 1997). The network contains the members of the supply chain and their interconnections. Business processes are the activities that generate value for clients. Network management components are the managerial variables by which business processes are integrated and managed throughout the supply chain. With the advent of B2B and Internet, expansion of supply networks created a big challenge for integrating clients and suppliers. This challenge is due to: a) cultures based on old traditions in the companies' country of origin; b) establishment of confidence between the new partners; c) coordination of resources throughout the extension of the network; d) determination of the project leaders and resources required; e) cost-sharing; f) fear of leak of confidential information (Gibson, 1999).. A HOLISTIC VIEW OF B2B The B2B Global Model shown in Figure 1 was constructed to provide a wider understanding about the way companies operate in this environment in Brazil or abroad. Initial research helped to understand the complexity of the Business-to-Business environment. A study of technical books and articles, in print and on-line, led to the conclusion that Business-to-Business was only partially understood. Most of the authors studied this business environment from a marketing viewpoint and a small minority studied it only under one of the following aspects: technology, legislation, financial services or supply chains.. Figure 1: B2B Global Model. 10. ©Copyright 2007 by the Global Business and Technology Association.

(27) To avoid labeling B2B as a problem relating to a specific area, efforts were made to discover its origin, evolution, how it works, its economic importance and impact on the diverse business areas involved. It was only after getting a wider vision of this complex business environment and stronger theoretical bases that a model was constructed for contributing to a systemic understanding of the B2B environment. Companies participating in businesses for the B2B environment may be differentiated by culture, technology, legislation they are subject to and by the regulations imposed by governments and trade unions, due to which they must hire service providers or establish partnerships with local companies that provide the necessary support for their operation (Afuah, 2000; Williams et al., 1998; Hakansson et al., 1999; Austin, 1990; Barney, 1996). The functions of the different types of companies participating in the B2B environment can be classified into purchase, sale, intermediation, service delivery, supply chain, partnership, and regulation and inspection (Albernaz, 2004). B2B companies may also be classified according to the characteristics of the market they operate in. These markets may be vertical or horizontal. Vertical markets serve a specific sector, such as automobiles, space research, energy or metals. Horizontal markets serve various sectors simultaneously with the goal of providing general services to these sectors in the most efficient manner. Examples of horizontal markets are logistics and transport services, technology providers, office stationery suppliers and MRO – maintenance, repair and operations. To execute and ensure continuity of business within the B2B environment, companies basically rely on 5 areas. They are: a) Technology; b) Marketing; c) Legal advice; d) Payment, and e) Supply chain. Technology Area – To be able to execute all the functions relating to e-commerce, B2B companies must have a technological platform that meets market standards and enables the transactions demanded by clients. Due to the. ©Copyright 2007 by the Global Business and Technology Association. 11.

(28) complexity and speed of changes in the B2B environment, it is physically and economically not feasible for companies to develop and maintain their own systems, which requires hiring companies specialized in providing and integrating their systems with those in the market. Marketing – The relationships between clients and suppliers form the basis of marketing. The current phase of Marketing was denominated by McKenna as “Real-Time Marketing” (McKenna, 1995). In this era, companies compete in the virtual market by offering a large number of products to their clients. For their part, clients have instant access to any type of information and the desire to execute their transactions regarding purchase of products and services at the most convenient moment for them. In this extremely competitive and volatile B2B environment, companies must not only be attentive to their present clients but also continuously look out for new ones. This requirement is met by companies specializing in Marketing, capable of developing strategies for retaining the loyalty of existing clients and winning new ones, considering the differences in culture and values of each client. Legal Area – When purchases and sales are made through Internet, the establishment of confidence between the entities is more complex. On-line transactions are made with a low degree of human intervention and hence it is difficult to have greater knowledge about business partners. Security concerns (Friman et al., 2002), absence of specific legislation (Lucking, 2001; UNCITRAL, 2002) and taxes on transactions, which vary across regions and countries (OECD, 2003) create the need for support companies specializing in B2B operations. Payment – Despite the unstoppable wave of financial globalization, there is still a considerable number of payment methods even in countries with sophisticated IT infrastructure and economic development like USA, England and Sweden (Grealish, 2002; Bis, 1999). Due to the difference in the payment system standards of each country, it is difficult to integrate payment systems of companies to the systems of financial institutions, and so there is a need for intermediation of support companies specializing in this area. Supply Chain – The set of shared processes and links that exist between suppliers and buyers may be called the Supply Chain. Business-to-Business transactions may bring benefits in processing purchases or sales, reducing inventories, improving service levels and reducing the total trading time. However, it is difficult to obtain these benefits in the short term (Agrawal et al., 2001). Among the more promising Supply Chain strategies are implementation of collaborative processes among companies and alignment of the supply chain in the form of a logical company that operates in an integrated and optimized manner, from suppliers to clients (Anderson & Lee, 2001).. CANAL CLIENTE PETROBRAS The B2B Global Model was applied to the analysis of the sales portal called Canal Cliente (Client Channel), pertaining to Petróleo Brasileiro S.A. – Petrobras. Canal Cliente was the first experiment of Petrobras in eCommerce and was created in 2000 using the company's own resources and the support of a consulting firm. Canal Cliente was chosen for evaluating the B2B Global Model as it is one of the largest Business-to-Business portals with sales of around US$ 72.0 billion in 2006, which corresponds to around 96% of Petrobras income. By using the B2B Global Model, participants in this case could better understand and characterize the relationship between Petrobras and the entities that interact with it for commercializing its products. To analyze Canal Cliente, we used Checkland’s Soft methodology (Checkland & Scholes, 1990) to understand the problem situation and formulate proposals of desirable and culturally feasible projects that are capable of adding value to the portal's present version. This methodology is based on the principle that there is a perceived problem situation and the need to better define this problem. In social contexts like that of organizations, different managers view a problem in different ways. The differences in their views help to understand the complexity involved in the problem and generate actions that promote a feasible and desirable change for the company.. Views of Managers. 12. ©Copyright 2007 by the Global Business and Technology Association.

(29) As a part of applying Checkland's Soft Methodology, we interviewed technicians who played an important role in developing Canal Cliente of Petrobras. The objective of these interviews were: • to present a systemic view of Canal Cliente based on the B2B Global Model; • to survey the project’s history, including facts that preceded its development, experience of competitors, implementation alternatives studied, difficulties encountered during its development and the importance of support from consulting firms; • to obtain information needed for analyzing the situation, that is, for analysis of the social system, for political analysis and for analyzing the intervention in the system; • to learn the views of technicians who had or have a more significant relationship with the Canal Cliente project. Based on information extracted from the technicians' views and analyses of the social system, the political system and intervention system, essential elements in the Checkland Methodology, proposals of relevant modifications were prepared in terms of systems and that are feasible with relation to the company's culture. Some of these proposals were based on concepts emphasized by the B2B Global Model, such as: facilitating electronic payment of clients of Canal Cliente through Financial Institutions and hiring companies specialized in legal matters to help extend Canal Cliente to other countries. Participants in the survey about the actual problem situation were: Petrobras’ Manager of E-commerce, who provided the project overview and marketing vision, Manager of Technological Architecture, who gave the technology view, Manager of Credit, who cooperated with the payment view, Manager of Legal Affairs, who contributed with the legal view, and Manager of Operational Planning, who provided the supply chain view.. Cultural Analysis In Checkland’s Methodology, Cultural Analysis of the problem situation consists of three parts: the first refers to intervention analysis, since any implementation of changes in a system affects not just the internal system parts but also the existing environment and processes. The second relates to the social analysis and seeks knowledge of the players involved in the context of the study, in this case Petrobras units located in several regions of Brazil (from Amazonas state to Rio Grande do Sul state) and abroad (Bolivia, Argentina, Venezuela, USA, Angola and a few other countries.) This analysis aims to understand the continuous interaction among the three elements of the social system: roles, norms and values. Finally, the third part deals with the analysis of the political system, since any situation has a political dimension that includes the process through which different interests are accommodated. This dimension must be explored and referred when there are proposals for changes to the system.. Improvements and Concerns - Mapping and Comparing with the Reality Interviews with Petrobras technicians showed the opportunities for improvement and the concerns to be addressed in future versions of Canal Cliente. Notable among them are: • Supply Chain Management – integrating the flow of information from Canal Cliente to the physical flow of products. This integration seeks to explore the benefits from the synergy in the business between Petrobras, clients, transporters, logistics operators and sellers of the products. • Integration of all clients with Canal Cliente – today, only a few Brazilian clients do not use Canal Cliente for their purchases. Non-inclusion of these clients implies maintenance of a structure parallel to Canal Cliente to receive orders and enter them in the system, resulting in costs and possible errors due to manual entry of data. • Integration of Canal Cliente with other Corporate Systems of the Company – with benefits relating to business performance, integration of subsidiaries and relationship with shareholders, investors and clients. • Integration of Payment Systems – to integrate the flow of information (Client-Bank-Petrobras) thus enabling Petrobras to have on-line and real-time knowledge of the payments made by clients while purchasing Petrobras products through Canal Cliente.. ©Copyright 2007 by the Global Business and Technology Association. 13.