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Journal of Governance and Regulation
Number of Followers: 1  

  This is an Open Access Journal Open Access journal
ISSN (Print) 2220-9352 - ISSN (Online) 2306-6784
Published by Virtus Interpress Homepage  [6 journals]
  • A study of the banks' efficiency in crisis: Empirical evidence from
           Eastern Europe, Balkans and Turkey
    • "Creative
      This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

      Abstract

      This study focuses on the efficiency measures of banking institutions from sixteen Eastern European countries, the Balkans and Turkey. Authors use a two-step approach to study the efficiency of banks at the regional level during the critical period 2007-2011. First, the study examines whether banks are actively operating differently at a regional level during the under-review period to focus on the development of the crisis. Secondly, authors use the performance measure (Technical Efficiency -TM) that was obtained from the analysis using basic banking accounting characteristics such as capital ratios, assets quality, leverage, liquidity, and operations financial ratio as independent variables. Authors also use Global Governance Indicators to describe the ability of the respective governments to formulate effectively and properly policies related to Political Stability and the Rule of Law.
      Their results suggest that bank accountant and managers of all regions should focus upon profit efficiency, proper capitalization, in order to increase their banks' profitability. In all regions, there is a need for a benchmark in lowering Banks' operating expenses, in order for them to become more efficient. Finally, credit expansion in Eastern Europe and Balkans countries needs to be under a cautious umbrella in order banks should take the momentum for reaching their more efficient operational levels.

      Keywords: Banks, Technical Efficiency, DEA Analysis, Financial Crisis, Accounting Characteristics.

      JEL Classification: M4, G3, G2

      Received: 12.04.2018

      Accepted: 22.07.2018

      Published online: 10.08.2018

      How to cite this paper: Lemonakis, C., Garefalakis, A., Georgios, X., & Haritaki, H. (2018). A study of the banks' efficiency in crisis: Empirical evidence from Eastern Europe, Balkans and Turkey. Journal of Governance & Regulation, 7(3), 8-12. http://doi.org/10.22495/jgr_v7_i3_p1

      2018-08-10T13:38:00Z
       
  • Editorial
  • Corporate governance and internal controls: a case study from Greece
    • "Creative
      This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

      Abstract

      The objective of this paper is twofold. Firstly, it portrays and evaluates the existing corporate governance structure and secondly, highlights its connection with internal audit function and management practices. It is adopted a descriptive research analysis using the quantitative approach on a sample of listed companies in Athens Stock Exchange for the year 2016. Our methodological research instrument is based on COSO (2013) Internal Control - Integrated Framework. The paper concludes that corporate governance is driven to managerial excellence and effective governance because of internal audit processes, risk assessment, control activities, information and communication, and monitoring activities. The research contributes to the corporate governance literature by providing valuable insights into the major aspects of a well-functioning internal control system and its relevance to management performance. Proposed areas for future research directions should be discussed.

      Keywords: Corporate Governance, Internal Controls, Management, COSO Model, Greek Listed Enterprises

      JEL Classification: G3, G34, M4, M42

      Received: 24.03.2018

      Accepted: 13.06.2018

      Published online: 22.06.2018

      How to cite this paper: Koutoupis, A. G., & Pappa, E. (2018). Corporate governance and internal controls: a case study from Greece. Journal of Governance & Regulation, 7(2), 91-99. http://doi.org/10.22495/jgr_v7_i2_p8

      2018-06-22T15:39:27Z
       
  • The impact of auditor rotation, audit firm rotation and non-audit services
           on earnings quality, audit quality and investor perceptions: a literature
           review
    • "Creative
      This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

      Abstract

      This literature review evaluates 103 empirical research studies on the link between rotation and non-audit services on the one hand and their influence on earnings quality, audit quality and investor perceptions on the other hand. After the financial crisis 2008/09, regulators all over the world are aware of decreased stakeholder trust in earnings and audit quality. As a reaction, stricter rules on rotation and non-audit services by public interest entities (PIEs) have been implemented (e.g. in the European Union). However, the impact of these regulations on earnings and audit quality is still controversial. We briefly introduce the theoretical, normative and empirical audit framework that comprises an adequate structure of the state-of-the-art of empirical research in this field. We summarize the findings in each research area, while we split our rotation analysis in an audit firm and audit partner rotation and tenure and our dependent variables in earnings quality, audit quality and investor perception measures. Most of the cited studies are linked to earnings-related measures, especially abnormal accruals models. The mixed results can be explained by the different theoretical impacts of agency- and resource-based view. Finally, we will discuss the current limitations of the studies and give useful recommendations for future empirical research activities on this topic.

      Keywords: Audit Partner Rotation, Audit Firm Rotation, Audit Tenure, Audit Quality, Earnings Management, Auditor Independence, Earnings Quality, Non-audit Services

      JEL Classification: M4, H1, K2, G3

      Received: 27.04.2018

      Accepted: 06.06.2018

      Published online: 11.06.2018

      How to cite this paper: Velte, P., & Loy, T. (2018). The impact of auditor rotation, audit firm rotation and non-audit services on earnings quality, audit quality and investor perceptions: a literature review. Journal of Governance & Regulation, 7(2), 74-90. http://doi.org/10.22495/jgr_v7_i2_p7

      2018-06-11T08:20:12Z
       
  • Cultural differences and similarities between German and Chinese internal
           audit functions
    • "Creative
      This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

      Abstract

      Cultural differences influence the behavior of companies, including management styles, relationships with employees, stake- and shareholders or social responsibility. Obviously, the concept of corporate governance encompassing the Internal Audit Function (IAF) is seen differently in different cultures. Therefore, conformance with the globally effective “International Professional Practice Framework” (IPPF) for Internal Auditors presuming a culture-free, completely homogeneous IAF with uniform working standards worldwide, seems more than difficult. The focus of this study is to compare the IAF characteristics in China and Germany, based on data from Chief Audit Executives (CAE) from both countries. We identify more (culturally influenced) differences than similarities between the German and Chinese IAF, although there can be found a number of fundamental political, economic and cultural similarities between both countries.

      Keywords: Internal Audit Function, Standards, Corporate Culture, Governance, Germany, China

      JEL Classification: G30, M14, M42

      Received: 03.05.2018

      Accepted: 05.06.2018

      Published online: 07.06.2018

      How to cite this paper: Eulerich, M., & Westhausen, H.-U. (2018). Cultural differences and similarities between German and Chinese internal audit functions. Journal of Governance & Regulation, 7(2), 57-73. http://doi.org/10.22495/jgr_v7_i2_p6

      2018-06-07T07:22:18Z
       
  • Order of preference of debts under asymmetric information
    • "Creative
      This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

      Abstract

      The purpose of this article is to investigate the debt hierarchy adopted by French companies in the context of asymmetric information. In other words, we identify the hierarchy between the three most used forms of debt that best describes the debt behaviors of French companies. The study relies on the ordered probit regression to identify the hierarchy that best describes the debt behaviors of a sample of 121 non-financial firms listed on the Euronext Paris stock exchange. Next, we perform panel-data regressions to investigate the impact of the financial crisis on debt behaviors. The empirical results show that French companies listed on the SBF 250 follow the hierarchy Bank debt, Bond debt, Convertible bonds. This hierarchy is explained primarily by asymmetric information. Other variables that explain the adoption of this hierarchy include the size, default risk, deficit and R&D expenditures of the company. At a time of crisis, despite the strong asymmetric information, the debt hierarchy is modified. To the best of our knowledge, this article constitutes the first study that addresses the existence of a hierarchy between three types of debt: bank debt, bond debt, and convertible bonds. Hence, it extends the previous research on capital structure and provides new managerial insights.

      Keywords: Asymmetric Information, Bank Debt, Bonds, Convertible Bonds, Hierarchy Of Debt

      JEL Classification: G11; G34

      Received: 21.03.2018

      Accepted: 15.05.2018

      Published online: 31.05.2018

      How to cite this paper: Khemiri, S., Brinette, S., Benkraiem, R., Miloudi, A. (2018). Order of preference of debts under asymmetric information. Journal of Governance & Regulation, 7(2), 49-56. http://doi.org/10.22495/jgr_v7_i2_p5

      2018-05-31T14:06:04Z
       
  • The effects of Basel III liquidity regulations on banks' profitability
    • "Creative
      This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

      Abstract

      The new Basel III Liquidity Coverage Ratio standard which encourages banks to maintain a diversified pool of high-quality liquid assets against their short-term expected net cash outflows although it appears to be noble from a theoretic perspective it may weigh down banks' performance because liquid assets earn low returns. It is against this background that this study sought to evaluate the impact of the new Basel III liquidity regulations on the profitability of banks in emerging market economies. A sample of 40 banks operating in 11 emerging markets over the period 2011 to 2016 was used in the study. For estimation, system Generalized Method of Moments (GMM) estimator was employed. Surprisingly, empirical results demonstrated that regulatory pressure stemming from Liquidity Coverage Ratio requirement increased instead of diminishing the profitability of banks in emerging markets. The plausible explanation given for this evidence was that banks in emerging markets managed their liquidity in a manner that is consistent with Liquidity Coverage Ratio rule hence the regulation had no detrimental effects on banks in emerging economies.

      Keywords: Basel III, Liquidity Coverage Ratio, Bank Profitability, Emerging Markets, GMM

      JEL Classification: G11, G18, G19, G21, G28

      Received: 26.11.2017

      Accepted: 02.05.2018

      Published online: 11.05.2018

      How to cite this paper: Mashamba, T. (2018). The effects of Basel III liquidity regulations on banks' profitability. Journal of Governance & Regulation, 7(2), 34-48. http://doi.org/10.22495/jgr_v7_i2_p4

      2018-05-11T14:38:09Z
       
  • Does ownership structure improve credit ratings'
    • "Creative
      This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

      Abstract

      This study seeks to examine the impact of Block Ownership structure on Credit Ratings in OECD countries. This research seeks to contribute to the extant literature by exploring the effects of Corporate Governance (CG) mechanisms on corporate credit ratings. The study uses a panel data of 200 companies from Anglo American and European countries between 2010 and 2014. The ordinary least square regression is used to examine the relationships. Additionally, to alleviate the concern of potential endogeneity, we use fixed effect regression, two-stage least squares using instrumental variables. The results show there is a negative and significant relationship between block ownership and credit ratings, with a greater significance among Anglo American countries than among European countries. The rationale for this is that Anglo-American system gives preferential treatment to individual shareholders and its accounting tradition leads to a decline in risk and increase in credit ratings. The result is consistent with the multi-theoretical framework predictions derived from the agency and stewardship theories. Future research could investigate credit ratings using other credit rating agencies, selecting a larger sample that includes small, mid-size and large companies. This paper extends, as well as contributes to extant CG literature by offering new evidence on the effect of block ownership on credit ratings between two different traditions. This will be explored by employing firm-level CG mechanisms by accounting for control variables. The findings will help regulators and policymakers in OECD countries in evaluating the adequacy of current CG reforms to prevent management misconduct and scandals.

      Keywords: Credit Ratings, Corporate Governance, Audit Committee, OECD, Block Ownership, Standard & Poor's, Culture, Legal System

      JEL Classification: G3, K4, G32

      Received: 15.02.2017

      Accepted: 18.04.2018

      Published online: 26.04.2018

      How to cite this paper: AlHares, A., Ntim, C., King, D., & Byrne, R. (2018). Does ownership structure improve credit ratings? Journal of Governance & Regulation, 7(2), 22-33. http://doi.org/10.22495/jgr_v7_i2_p3

      2018-04-26T14:10:20Z
       
  • Pricing of brand extensions based on perceptions of brand equity
    • "Creative
      This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

      Abstract

      The paper explores the role of brand equity when pricing hypothetical brand extensions. Companies tend to use different pricing techniques for their products, and their pricing decisions are based on many factors, including image and category fit of the product with the existing image and products of the company. Brand extensions are usually investigated from a consumer perspective, focusing on the extension attitude, however, it is essential to understand the corporate decision-making process regarding pricing. Exploring this matter using quantitative research methods, the study provides empirical evidence that companies that have invested heavily in marketing actions in the past and have built strong brand equity over-time, show flexibility in the mark-up during the cost decision-making process of a hypothetical brand extensions. Variations in mark-up percentages are also observed when there is a difference in image and category fit of the extension to the original brand. However, companies characterized by greater brand equity exhibited greater flexibility in the mark-up percentages, even for low fit extensions.

      Keywords: Internal Control, Brand Equity, Electronics Sector, Goodwill Value

      JEL Classification: M3, D21 M31, D22

      Received: 22.02.2018

      Accepted: 01.04.2018

      Published online: 17.04.2018

      How to cite this paper: Arsenos, P., Charamis, D., & Garefalakis, A. (2018). Pricing of brand extensions based on perceptions of brand equity. Journal of Governance & Regulation, 7(2), 15-21. http://doi.org/10.22495/jgr_v7_i2_p2

      2018-04-17T12:48:46Z
       
  • Compliance and corporate anti-money laundering regulation
    • "Creative
      This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

      Abstract

      This paper, having traced the evolution of anti-money laundering legislation, defines and frames money laundering and terrorism financing risk inside corporate dynamics. Principles that must inspire corporate actions on the construction of an adequate managing structure to contain risks are set out, considering the fact that there is no risk that this does not have an economical content. This is even truer in the presented case, given that the Italian legislation to counter money laundering is focused on the innovative and modern risk-based approach, which has to guide the organization and functioning of corporations. Possible configuration of corporate anti-money laundering supervisions is therefore analyzed, with the aim of underlining the present connection between anti-money laundering legislation and rules referring to the government and to the internal control system. The present study originates from the interpretation of the new Italian anti-money laundering law. In particular, the first consideration that derives is that the new law does not impose precise obligations in terms of corporate anti-money laundering structure, but a large area of autonomy is left to the will of each company.

      Keywords: Compliance, Anti-Money Laundering, Corporate Governance, Business Regulation, Company Law

      JEL Classification: G30, K20, K40, M48

      Received: 22.02.2018

      Accepted: 02.04.2018

      Published online: 17.04.2018

      How to cite this paper: Pavone, P., & Parisi, F. (2018). Compliance and corporate anti-money laundering regulation. Journal of Governance & Regulation, 7(2), 7-14. http://doi.org/10.22495/jgr_v7_i2_p1

      2018-04-17T12:35:36Z
       
  • Editorial
  • The impact of risk factors on the financial performance of the commercial
           banking sector in Barbados
    • "Creative
      This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

      Abstract

      The objective of this paper is to determine the impact of risk factors on the financial performance of the commercial banking sector in Barbados using quarterly data for the period 2000 to 2015. The empirical results indicate that Capital Risk, Credit Risk, Liquidity Risk, Interest Rate Risk and Operational Risk have statistically significant impacts on financial performance. The only risk variable which does not derive this result is Country Risk. In addition, of those variables which proxy external factors, only GDP Growth has a statistically insignificant influence on financial performance. Credit risk exerted a negative impact on the banks' financial performance, thus the banks must ensure they adopt appropriate measures to minimise the impact of this risk. Higher levels of capital impacted positively on the banking sector's profitability. This paper is the first effort employing such an extensive dataset based on Barbados' commercial banking sector and shows the main factors that influence commercial banks' financial performance in this developing economy.

      Keywords: Barbados, Commercial Banks, Financial Performance, Risk, Risk Factors

      JEL Classification: G21, G32

      Received: 12.02.2018

      Accepted: 26.03.2018

      Published: 29.03.2018

      How to cite this paper: Wood, A., & McConney, S. (2018). The impact of risk factors on the financial performance of the commercial banking sector in Barbados. Journal of Governance & Regulation, 7(1), 76-93. http://doi.org/10.22495/jgr_v7_i1_p6

      2018-03-29T19:33:57Z
       
  • Corporate brand extensions based on the purchase likelihood: governance
           implications
    • "Creative
      This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

      Abstract

      This paper is examining the purchase likelihood of hypothetical service brand extensions from product companies focusing on consumer electronics based on sector categorization and perceptions of fit between the existing product category and image of the company. Prior research has recognized that levels of brand knowledge eases the transference of associations and affect to the new products. Similarity to the existing products of the parent company and perceived image also influence the success of brand extensions. However, sector categorization may interfere with this relationship. The purpose of this study is to examine Greek consumers' attitudes towards hypothetical brand extensions, and how these are affected by consumers' existing knowledge about the brand, sector categorization and perceptions of image and category fit of cross-sector extensions. This aim is examined in the context of technological categories, where less-known companies exhibited significance in purchase likelihood, and contradictory with the existing literature, service companies did not perform as positively as expected. Additional insights to the existing literature about sector categorization are provided. The effect of both image and category fit is also examined and predictions regarding the effect of each are made.

      Keywords: Brand Extensions, Purchase Likelihood, Extension Attitude, Brand Knowledge, Greece

      JEL Classification: M31, G3, D12

      Received: 01.03.2018

      Accepted: 21.04.2018

      Published online: 23.03.2018

      How to cite this paper: Goumas, S., Charamis, D., Maroukla, E., Garefalakis, A. (2018). Corporate brand extensions based on the purchase likelihood: governance implications. Journal of Governance & Regulation, 7(1), 64-75. http://doi.org/10.22495/jgr_v7_i1_p5

      2018-03-23T09:16:49Z
       
  • Monetary Operations and Islamic Banking in The GCC: Challenges and Options
    • "Creative
      This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

      Abstract

      The assessment provides evidence of market segmentation across Islamic and conventional banks in the Gulf Cooperation Council (GCC), leading to excess liquidity, and an uneven playing field for Islamic banks that might affect their growth. Liquidity management has been a long-standing concern in the global Islamic finance industry as there is a general lack of Shari'ah compliant instruments that can serve as high-quality short-term liquid assets. The degree of segmentation and bank behavior varies across countries depending on Shari'ah permissibility and the availability of Shari'ah-compliant instruments. A partial response would be to support efforts to build Islamic liquid interbank and money markets, which are crucial for monetary policy transmission through the Islamic financial system. This can be achieved, to a large extent, by deepening Islamic government securities and developing Shari'ah-compliant money market instruments.

      Keywords: Islamic Banking, GCC, Monetary Operations

      JEL Classification: E42, E43, E44, E52, E58, E61

      Received: 05.09.2017

      Accepted: 22.02.2018

      Published online: 19.03.2018

      How to cite this paper: Basu, R., Prasad, A., & Rodriguez, S. (2018). Monetary Operations and Islamic Banking in The GCC: Challenges and Options. Journal of Governance & Regulation, 7(1), 49-63.
      http://doi.org/10.22495/jgr_v7_i1_p4

      2018-03-19T13:46:48Z
       
  • Corporate social responsibility and small-medium sized enterprises:
           evidence from Greece
    • "Creative
      This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

      Abstract

      This paper is a qualitative empirical research of Greek Small and Medium-sized Enterprises (SMEs) and examines their dominant perceptions and attitudes towards Corporate Social Responsibility (CSR). The research was conducted in the Region of Western Macedonia, North Greece, via personal interviews based on a structured questionnaire, which was completed by 420 enterprises, with different business functions, and were randomly chosen from local Chamber registers. The results demonstrated that, as Greek SMEs in the periphery have not decided on a particular strategy for Social Responsibility practices, CSR is frequently defined as sponsorship or charity programmes. The research also revealed the restraining factors for SMEs in implementing CSR policies: financial cost, small size of enterprises, absence of specialized partners, and poor supporting role of public authorities. Whereas, the most significant non-financial goals for the enterprises attempting to implement CSR in Greece are: responsibility and respect to customers, promotion of sustainability, environmentally-friendly practices; human resources and protection of rights are less emphasized. Interestingly, more than 80% of the subjects hold that engaging in CSR practices in the current financial context is vital. With regard to the benefits resulting from CSR, the research demonstrated that: Enhancing ‘corporate image', ‘business performance', and ‘customer satisfaction' are significant. Nevertheless, the research highlighted that implementing CSR strategies are rather positively than strongly correlated with the benefits deriving from CSR.

      Keywords: Corporate Social Responsibility (CSR), Small and Medium Enterprises (SMEs), Greek enterprises

      JEL Classification: A13, L31, M14

      Received: 12.12.2017

      Accepted: 12.02.2018

      Published online: 19.03.2018

      How to cite this paper: Pitoska, E., Giannakis, K., Sdraka, D. (2018). Corporate social responsibility and small-medium sized enterprises: evidence from Greece. Journal of Governance & Regulation, 7(1), 40-48. http://doi.org/10.22495/jgr_v7_i1_p3

      2018-03-19T13:30:17Z
       
  • A study of the relationship marketing effect in banks: The case of an
           emerging market
    • "Creative
      This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

      Abstract

      This study aims to provide an alternative model for understanding customers' loyalty behavior by examining the effect of relationship marketing (RM) and service quality on customer satisfaction and customer loyalty moderated with switching costs. A laboratory experiment was carried out to ascertain the controlled variables based on factorial design: 2 (RM: high vs low) x 2 (service quality: high vs low) x 2 (the switching costs: high vs low). The study was based on bank clients as participants, and multiple linear regression was chosen to examine the causal relationship between the variables that are hypothesized. The results indicate that loyalty of banking customers is significantly influenced by RM, service quality and customer satisfaction. In addition, switching costs have a role in moderating customer loyalty. The implications of this study were discussed to give insight into contributions of theoretical and practical aspects, and for future studies.

      Keywords: Relationship marketing, Service Quality, Switching Costs, Customer Satisfaction, Customer Loyalty, Bank

      JEL Classification: M3, G21, M31

      Received: 13.09.2017

      Accepted: 18.01.2018

      Published online: 01.02.2018

      How to cite this paper: Wachyudi, N. (2018). A study of the relationship marketing effect in banks: The case of an emerging market. Journal of Governance & Regulation, 7(1), 26-39. http://doi.org/10.22495/jgr_v7_i1_p2

      2018-02-01T15:25:32Z
       
  • The effect of the fast-track corporate rehabilitation program on the
           interest coverage ratio of the companies under court receivership
    • "Creative
      This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

      Abstract

      Given the fact that a swift rehabilitation procedure is very critical due to the risk of the collapse of business foundation (e.g. falling asset value), this paper analyzes the effect of the Fast-track program, introduced to address insolvent companies swiftly. A Differences-in-Differences model is used to analyze and compare the prior-and-post effects of the program. The analysis result shows that the effect of this program on ICR (interest coverage ratio), representing the degree of rehabilitation, is positive; but its statistical significance is low. This is because the business foundation has been undermined around the time of receivership; and even after the termination of the receivership, the program effect is limited due to the bankruptcy stigma. The same result is observed in estimations by company size and by industry. This result has following implications. First, to improve the effect of Fast-track, institutional efforts are required to reduce disadvantages induced by the bankruptcy stigma (e.g. a fall in credit rating and high-risk premiums). Next, as observed in the empirical analysis of steel and shipbuilding, the effect of the Fast-track may not be exercised to the full with weakened industrial competitiveness. Therefore, restructuring efforts such as business reshuffle are necessary.

      Keywords: Corporate restructuring, Court receivership, Fast-track program, Bankruptcy stigma, Differences-in-Differences model

      JEL Classification: G30, G34, G38

      Received: 28.11.2017

      Accepted: 16.01.2018

      Published online: 30.01.2018

      How to cite this paper: Choi, Y. J. (2018). The effect of the fast-track corporate rehabilitation program on the interest coverage ratio of the companies under court receivership. Journal of Governance & Regulation, 7(1), 7-25. http://doi.org/10.22495/jgr_v7_i1_p1

      2018-01-30T14:50:09Z
       
  • DOWNSIDE OF CORPORATE PERFORMANCE MANAGEMENT PRACTICES IN LOW-INCOME
           MARKETS
    • "Creative
      This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

      Abstract

      Based on theoretical literature review, the paper demonstrates the misgiving of market economy corporate performance management practices when applied in poor markets. Western developed management practices are incongruent to serve poor customers in low-income markets. The findings of the literature review are that these management systems are exclusionary and conflict with sustainable development as they reject the poor as unprofitable and worthless to pursue as customers. In addition, they are based on antiquated assumptions and contradict ideologies and cultural contexts of the poor. In recent times, corporates are under pressure to enter low-income markets as developed markets get saturated. The poor are, however, significantly different from the affluent customers obtained in higher income segments. Corporates find themselves poorly equipped to succeed. Because poor markets are only latent, firms are expected to do more in order to create value than they would do when entering developed markets. The paper provides recommendations for the firms from developed markets to adjust their performance management practices in order to be successful in emerging markets.

      Keywords: Performance Measurement; Low-Income Markets; Sustainable Value Creation; Traditional Performance Management; Firm Behavior

      Received: 24.09.2017

      Accepted: 30.11.2017

      How to cite this paper: Mazambani, L., & Mutambara, E. (2017). Downside of corporate performance management practices in low-income markets. Journal of Governance & Regulation, 6(4), 69-77. http://doi.org/10.22495/jgr_v6_i4_p7

      2018-01-15T14:38:51Z
       
  • Date of the issue publication: December 26, 2017
    • This issue of the Journal of Governance and Regulation was published on December 26, 2017.

      2018-01-15T09:08:05Z
       
  • Date of the issue publication: October 19, 2017
    • This issue of the Journal of Governance and Regulation was published on October 19, 2017.

      2018-01-15T09:06:20Z
       
  • Date of the issue publication: June 29, 2017
    • This issue of the Journal of Governance and Regulation was published on June 29, 2017.

      2018-01-15T09:04:20Z
       
  • Date of the issue publication: March 29, 2017
    • This issue of the Journal of Governance and Regulation was published on March 29, 2017.

      2018-01-15T08:58:56Z
       
 
 
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