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Emerald Group Publishing Limited
Copyright © 2007, Emerald Group Publishing Limited
Welcome to Vol. 2, Issue 4 of IJOEM the last issue of Vol. 2!
This issue has a strong finance and banking theme reflecting a reality that much research on emerging markets continues to focus on finance aspects of economic development. We have papers on banking, stock exchanges, private equity, and venture capital. The exceptions to this cluster of papers is a fascinating study of strategic competitive advantage of the wood industry in Northern Russia and a wonderful case study on e-business in Turkey.
First, up is a paper by Jörg Mannsberger and J. Brad McBride that examines the two-step process of bank privatization in Mexico in the 1990s that necessitated a government bailout quite costly to Mexican taxpayers, and which became a cause of resentment against market liberalization among the Mexican public in recent years. The authors claim that the Mexico case offers important implications for other emerging markets in particular, the importance of a reliable and strong regulatory system for the private banking sector. The findings in this paper indicate that the bank privatization process was characterized by inadequate regulatory and financial controls that encouraged large-scale corruption and fraud resulting in a subsequent bank bailout by the Mexican Government. This created a major transfer of wealth from Mexican taxpayers to some of Mexico's wealthiest citizens, who owned or operated banks after the first wave of privatization. The subsequent sale of Mexican banks to foreign investors has also resulted in disappointment, as the quality of service remains poor and banks are inadequate in serving the financial needs of the private sector, necessary for the country's development.
Our second paper is from Jan Smolarski who documents existing pre-investment risk management practices of European and Indian fund managers, to explore if risk management techniques differ based on legal systems and in developing markets (India), and to determine whether fund size affects risk management practices. The results indicate few differences between European and Indian managers. Where differences are found, they appear related to issues concerning asymmetric information and market structures. Legal systems do not appear to be a significant explanatory factor in determining how private equity funds manage risk at the pre-investment stage.
Third up is a study by Gopi and Ramayah who identifies the factors influencing the intention to use internet stock trading among investors in Malaysia. Based on a structured questionnaire of 300 respondees, the authors find that attitude, subjective norm and perceived behavioral control have a direct positive relationship towards behavioral intention to use internet stock trading. Thus, the authors argue that the theory of planned behavior can be used to explain variation in behavioral intention and actual usage. Indeed, this paper is a research rarity in that little work has been done on internet trading in a developing country.
The last paper in the finance cluster comes from Darek Klonowski who has previously published in volume 1. His latest paper continues his ongoing research into venture capital in Central and East Europe (CEE). The paper focuses on the investigation of the venture capital investment process in the emerging markets of CEE, including Hungary, Poland, the Czech Republic, Slovakia, Romania, and Russia. The study describes the mechanics by which venture capital firms operating in the CEE region process deals.
The study has two conclusions. Firstly, the study confirms the existence of a nine-stage venture capital investment model. Secondly, the proposed model defines the venture capital process in terms of three channels of activity: document channel, information channel, and decision channels. There are several novelties in this important research. Firstly, the study focuses on the investigation of the entire venture capital process. Previous research in the area focuses on some specific facets of the venture capital process. Secondly, the paper investigates the connection between decision-making, information gathering and written communication within a venture capital fund. Thirdly, the study focuses on the most recent period of development of the CEE industry. Many venture capital firms have only recently crystallized their venture capital process.
Moving away from finance directly, Toppinen et al. claim that little is known about the organizational structure, strategic orientation, and future goals of woodworking firms in the East European countries in transition. Their paper provides an analysis of the nature of strategies of wood industry firms in North-west Russia. In the medium term, the largest potential increase in both production of and demand for wood products is in Russia, and this paper examines the issue in a case study of 18 small and medium-sized wood industry companies in North-west Russia. The results indicate that closeness to the main markets, good logistics connections and access to large markets, i.e. other than raw-material related factors, are the main perceived sources of competitive advantage among the Northwest-Russian woodworking firms. Intangible resources are valued over tangible assets in the companies surveyed. The authors argue that the producers in the region should move away from commodity-based wood products towards greater customization and value-added.
From wood to the internet, our final paper by Vichuda Nui Polatoglu who identifies, analyzes and discusses successful strategies and approaches taken by a small retailer with internet storefront in an emerging market economy – Turkey. The case provides information about various successful strategies that have been designed to improve the performance of internet retailers in a developing country. Little if no work has been done on SMEs internet strategies in emerging markets. This case study is a wonderful first foray into an important sub-field for researchers.
Organizational changes at IJOEM
We have decided that to more effectively meet the editorial and review challenges of our journal, that IJOEM will have a regional editorial structure. To this end, we are absolutely delighted that Dr Rangamohan Eunni, at Youngstown State University, will serve as our Americas Editor and Dr Kate Hutchings from Monash University will take on the key role as Asia-Pacific Editor. Both new colleagues bring with them an extensive knowledge and interest in emerging markets. Dr Eunni co-guest edited a special issue of IJOEM in Vol. 2 and his mastery of the process and bringing the project to fruition was one of the major reasons we tapped him for this role. Dr Hutchings published in our inaugural issue and her conceptual and empirical knowledge of emerging markets will be a fantastic resource for us as we moved forward. As Editor-in-Chief, I will be responsible for submissions from Europe, Middle East and Africa.
We are also continually seeking to add members to our Editorial Advisory Board and you can check progress on this by periodically checking the journal web page.
Yusaf H. Akbar