The Business Review

Inflation Expectations, Consumer Sentiment, and Consumption’s Patterns in United States:

Before and After the COVID Pandemic

Dr. Doina G. Vlad, Seton Hill University, Greensburg, PA

ABSTRACT

This paper investigates consumption patterns in United States between 1978 and 2021. It contributes to existing research by considering additional independent variables to explain variation in consumption patterns of current households. Policy implications from the research are: reinforcement of the need to increase financial literacy across the board, so people learn how to deal with possible long-term inflation, and how to make better consumption and investing decisions; policy-makers should find more permanent solutions for consumers to keep up with inflation in the form of wage increases, rather than temporary fiscal stimulus boosts; producers of durable goods should plan ahead and have enough inventory to respond consumer’s demands and supply chain disruptions, before governmental stimulus announcements become a consideration. Standard economics models predict positive correlations between inflation expectations and current consumption. The COVID-19 pandemic shifted people’s preferences towards spending more, once out of the pandemic through the “revenge spending”, to somehow make up for the lost year of non-spending. Recent publications mention the YOLO (“you only live once”) concept, where consumers appear to live in the moment and to spend today. Preliminary data on recent household consumption, starting in the spring of 2021, shows that consumer spending helped the booming economy across all sectors. Up to this date there are only a handful of studies that have analyzed the relationship between current consumption and inflation expectations. The current impact of the pandemic on the economy, and in the context of possibly a new shift in consumer’s behavior in the new YOLO wave, is the question of correlations between current consumption and inflation expectations.

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Managerial Ownership and Bondholder Risk: Evidence from the Over-the-Counter

(OTC) Corporate Bond Market

Dr. Orkunt Dalgic, State University of New York at New Paltz, NY

ABSTRACT

This paper studies the effect of ownership structure on the yield spread of corporate bonds in the OTC bond market. Bagnani, Milonas, Saunders and Travlos (1994) find that when the level of managerial ownership is low, an increase in their fractional ownership does not appear to align managers’ interests more closely with those of stockholders, and thereby lead to a conflict of interest between managers and bondholders. This study confirms the absence of a significant relationship between managerial stock ownership and bond yield spreads, when managers own less than five percent of the firm’s equity. The importance of managerial ownership (MO) in explaining firm performance has been well-documented in the empirical and theoretical literature (e.g., Jensen & Meckling, 1976; Galai & Masulis, 1976). Many studies have argued that greater equity ownership would lead risk-averse managers to align their interests more closely with those of shareholders, and that this in turn would incentivize them to pursue more risky investments, to the benefit of shareholders. Empirical evidence for this argument has been found for industrial firms (e.g., Agrawal & Mandelker, 1987; Datta, Iskandar-Datta, & Raman, 2001), for firms that produce oil and gas (Rajgopal & Shevlin, 2002), and for banks (Saunders, Strock, & Travlos, 1990). On the other hand, high levels of MO could constrain and even reverse the alignment between the interests of shareholders and managers, as the latter shift their focus from maximizing shareholder wealth, to protecting their undiversified personal wealth against potential losses. Managers could also be incentivized to use the voting power of their increased equity ownership to protect their positions in the company. In fact, Amihud & Lev (1981), find that managers with a significant ownership stake prefer lower risk than do well-diversified shareholders.

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Internationalization of Family Firms: A Critical Review of Current Research and

Possible Avenues for Further Studies

Dr. Philippe Gugler, Professor, University of Fribourg, Switzerland

ABSTRACT

Family businesses make up the majority of companies worldwide (Carnazzi Weber, 2017; De Massis et al., 2018). They are strongly active in domestic markets and have had to increasingly engage in internationalization strategies to maintain their competitiveness and seize the opportunities offered by the globalization of markets (Claver et al., 2009, p. 125). Research on the internationalization of family businesses remains highly fragmented and is sometimes limited to descriptive rather than analytical aspects (Cerrato and Piva, 2012, pp. 617-618). The studies present somewhat contradictory results (Arregle et al., 2017, p. 801; Pongelli et al., 2016, p. 787). It is difficult to compare studies because they are based on dependent and independent variables that often differ from one study to another and generally focus on family businesses from a single country or, in rare cases, from a limited number of countries. Finally, there is no single definition of a family business (Cerrato and Piva, 2012, p. 620; Mitter et al., 2014, p. 4; Astrachan et al., 2002, p. 46), and we observe strong heterogeneity among family businesses (Mitter et al., 2014 p. 3; Bauweraerts et al., 2019, p. 2; Rovelli et al., 2021). The objective of this study is to analyze the published findings to identify the main lessons learned from the studies as well as the questions that remain unresolved due to the lack of convergent results. Family businesses make up the majority of companies worldwide (Carnazzi Weber, 2017; De Massis et al., 2018). They are very active in domestic markets and have had to increasingly engage in internationalization strategies to maintain their competitiveness and seize the opportunities offered by the globalization of markets (Claver et al., 2009, p. 125). The process of internationalization of family businesses has peculiarities in terms of the extent, intensity and modes of internationalization (Calabrò et al., 2013a, p. 509). Since the majority of family businesses are small and medium-sized enterprises (SMEs), the literature mainly focuses on the internationalization of small and medium-sized family businesses. Only a few studies consider larger family firms (Chang et al., 2022).

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Early Warning Signals of Recessions: Foreign vs. Domestic

Dr. Filip Basic, University of Zagreb, Croatia

Dr. Tomislav Globan, University of Zagreb, Croatia

ABSTRACT

The paper examines whether certain macrofinancial indicators can be used for early detection of recessions. Analysing a sample of small open post-transition economies of the European Union, we first identify the most important indicators used for early detection of recessions, and then test the validity of the selection by using the signal method and multivariate probit regressions. Our results imply that the most effective predictors of upcoming recessions are the slope of the yield curve, current account balance to GDP ratio, real estate price index, self-financing ratio of commercial banks, nominal effective exchange rate, global exports and LIBOR rate. Using the Mann-Whitney U Test, we also find that foreign indicators emit earlier signals of incoming recessions in analysed countries than domestic ones. Early warning of an impending recession allows economic policy makers to take corrective action to avoid a recession or to significantly mitigate its effects, while unreliable indicators may lead to adoption of unnecessary measures with adverse effects on the economy. By recognizing an impending recession early, policy makers may be in a better position to shorten its duration and mitigate its effects by using monetary and fiscal policies in a timely manner. Numerous researchers have thus recently focused on discovering various indicators that could be used for early signalling of incoming recessions. However, the indicators obtained in empirical analyses cannot be viewed as universal tools for early detection of recessions as their success may vary significantly, depending on the size of the country, the depth of a recession and various other factors. For example, it has been shown the performance of the yield curve in predicting recessions may vary significantly between countries depending on their characteristics (Chinn & Kucko, 2015).

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A Study on Factors Affecting the Core Competencies of Venture Companies in Korea

So Sul Moon, Korea University, Seoul, Korea

Dr. YoungJun Kim, Korea University, Seoul, Korea

ABSTRACT

This study investigates the factors that may affect the improvement of venture companies’ core competencies, such as innovation capabilities, manufacturing capabilities, and marketing capabilities, using a unique survey data. The findings show that external cooperation activities, whether or not there is a R&D organizations or manpower, and experience in attracting government funds play an important role in strengthening firms’ core competencies. In addition, there are differences in the impact of external and internal activities of venture companies on their core competencies by growth stages of companies. The results of this study will shed some light on academia, business strategists, and policy makers. Venture companies refer to startups or other young, often tech-focused companies. In Korea, ‘venture company’ is a small and medium-sized business certified by the government. It is a company that falls under any one of three types: venture investment type, R&D type, and innovative growth, based on high technology and growth potential. As a future growth engine of the country, the importance of venture companies is increasing. In 2019, the number of venture companies in Korea was 36,503, with total sales of 180 billion US dollars, showing continuous growth. However, venture start-up companies are having a lot of difficulty in securing competitive advantage due to the small size, the lack of accumulated internal core competencies, and the lack of R&D investment, leading to disappearing without overcoming the ‘death valley’ (Aspelund et al., 2005). Thus, in the case of small and medium-sized venture companies that are relatively lacking in resources and capabilities such as human resources and financial resources, it is urgent to survive by strengthening the core competencies of the company. This paper proposes that ‘core competencies’ of a venture company include innovation capabilities, manufacturing capabilities, and marketing capabilities, which are essential for the survival and growth of firms.

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Authentegrity: Forging Synergy between Existentialism and Christian Leadership

Dr. David Robinson, Professor, Holmes Institute, Australia

Dr. Gordon Bauer, D.Ed., Academy of Business Acumen, South Africa

ABSTRACT

This paper builds on the prior work by the same authors, entitled ‘Authenticity – exploring potential synergies between existentialism and Christian leadership, in which it was concluded that authenticity, so central to leadership from both existentialist and Christian perspectives, provides a nexus for the two world views. In this paper, a Synergy Star model (Robinson, Davidsson, van der Mescht, 2007) is applied so as to forge synergy between existentialism and Christian leadership. It is asserted that integrity is essential if authenticity is to be of a benevolent form and thus the term ‘authentegrity’ is introduced. Existential angst is the uncanny awareness of the self to be either authentic or inauthentic, to which a nihilistic response is to resort to a comfort zone of an uncritical and unexamined life. For many existentialists, the conditions of the modern world make authenticity especially difficult. Utilitarianism seeks to measure moral value (and even just-ness) in terms of the consequences of actions, as opposed to deontology, which preaches one-right-way, demanding duty above outcome. But both of those perspectives came way after the scriptures. Many existentialists accept the Kantian notion of authentic freedom, i.e. freedom as autonomy. This means that freedom, rather than being randomness or arbitrariness, consists in the binding of oneself to a law, but a law that is self-imposed, in recognition of our (unique) perception of what is needed to cope with conditions of existence. We know that scripture is a written record of spoken narrative, that it was not only transcribed but also translated from one or more languages into English. It is also reasonable to note that, as with any transcription and/or translation, scripture would have been subject to a process of sense-making and interpretation by the agent, in a purposeful and honest attempt to portray the intended message to the current audience (readership). Merleau-Ponty’s claim about people’s limited (worldly) perception is most certainly pertinent to those agents’ historical tasks.

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Gender Effect on Real Estate Pricing and Services Using Price-Quality Heuristics: Further Empirical Analysis

Dr Freddy Su Jin Lee, Professor, California State University at Los Angeles, CA

ABSTRACT

In LEE (2017), we tested three propositions which show how the consumer uses the price-perceived quality in real estate purchases. This may be affected by the property neighborhood, brand of the brokerage and the brand of the Escrow company. What we had initially researched was based on aggregating the consumer as an unsegmented body. Our goal in this paper is to include gender effects and test these propositions to further motivate empirical research pertaining to the factors that influence how consumers of different genders use the price-perceived quality heuristic to determine whether the real estate service is worth the money that they are paying for. We will also conduct a regression analysis on the likelihood of consumers of different gender selling their homes based on these parameters. The findings will point to several ways that brokerages can develop pricing strategies to raise consumer satisfaction and increase revenue. Primary among them are the development and articulation of how to set an asking price based of neighborhood perceptions and brokerage brand.In Lee, F (2017), three areas that were salient in a real estate transaction were investigated to understand how Real Estate Brokers can better understand the impact of the pricing on perceptive quality and hence the resulting consumer reliance on the Price-Perceived Quality Heuristic. The three areas are Neighborhood Popularity, Brokerage Brand and Escrow Brand. The findings were that Consumers rely more on the Price-Quality Heuristic more for popular neighborhoods and Non-branded Brokerages. However, there were no significant findings on the reliance of the Price-Quality Heuristic for the Brand of the Escrow Company. The regression analysis indicated that the more important the popularity of the neighborhood, the more likely price is used to gauge the quality of the product/service. Similarly the more important the franchise branded Brokerages, the less likely price is used to gauge the quality of the product/service. These 2 findings are consistent with what were expected.

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Measuring Crucial Factors for Students Choosing A Marketing Course

Dr. Nasim Z. Hosein, Norwich University, Northfield, VT

ABSTRACT

This research incorporates two attitude-measuring models, observable and abstract, to compare the attributes of a marketing education program in terms of their relative importance in determining students' choice of and perception of marketing courses. To analyze the data SEM techniques were used and the findings indicate that students are influenced by factors associated closely to the program's observable and abstract attributes. These discoveries should assist in the development of a promotional campaign emphasizing the qualities of the marketing program which will incorporate the most significant attributes from this study. Such as students’ interest in choosing courses in the marketing program. The effectiveness of the model in this study can also be demonstrated in measuring student attitudes in other vocational areas. Through studying student evaluations, this research measures students’ attitudes and influences in choosing a marketing course. And, to measure how these factors influence students in choosing the marketing course. This research which is student-centered can be used to make available data to educators to enlighten them in how to interest students with the relevant promotional messages. To attract and retain students to the program these attributes will help direct educational institutions in creating promotional campaigns that are effective. Educators can better prepare themselves for the future by fine-tuning or adjusting their marketing programs, through these findings. Which use several constructs, such as: expectations, confidence, career and comparison to measure factors that influence a students' choice, in choosing a marketing course that can be easily applied to increase the perception of the marketing program. “Student based research can recognize and support in explaining issues in education programs that have led to declining enrollments that may be due to students’ insight about courses and their career path.” (Hosein, 2014). Researchers make these specific details available to educators and academic decision-makers.

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