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Emerald Group Publishing Limited
Copyright © 2008, Emerald Group Publishing Limited
Already into our third volume, this first issue demonstrates one of the problems encountered when journals begin to attract significant numbers of submissions from scholars around the world. All of the papers in this issue were submitted in 2006 yet will only appear in 2008. For a journal that emphasizes both empirical and conceptual research on areas of the world where change is rapid and in many instances, hard to predict, there is a potential risk that IJOEM will be unable to get published work out fast enough. Our editorial team, working with our reviewers, will continue to work as hard as we can to give decisions on papers. Our reviewers are unpaid and do their work for us out of collegial and scholastic goodwill. On behalf of the editorial advisory board and my fellow editors, I want to take this chance to publicly thank the reviewers for their efforts.
So, to the papers in this issue: our first paper co-authored by Tarek Eldomiaty and Mohamed Azim continues our tradition in publishing finance papers in IJOEM. The paper examines the debt financing strategies of Egyptian companies in order to test the applicability of three well-known theories of capital structure: tradeoff, pecking order, and free cash. As ever, the degree of quantitative and methodological rigor is high in this paper. The findings of the paper confirm that emerging market companies have similar behavioral strategies towards debt financing as do their developed country competitors and that risk profiles play a distinct role in cash flow strategies.
Our second paper is from Batool Asiri who examines whether the fast-growing Bahrain Stock Exchange (BSE) follows the weak-form of the market efficiency hypothesis. Using a range of statistical tests, Asiri finds that the BSE's evolution confirms the weak-form hypothesis. Since, Bahrain is considered as an emerging market, the new methodologies used could be replicated for all other emerging markets. In addition, the finding is used as a base for testing the market efficiency in the semi-strong form, which has not yet been tested by any researcher. Asiri's study is valuable in that it is the only study which covers all the listed companies and over an extended period of time. Moreover, the paper exploits five different methods in the same paper which have not been found in the previous literature on this topic.
The third paper in this issue takes us away from finance and towards the vitally important issue of China's oil demand and, by implication, it's impact on world oil markets. Jens Hölscher, Ray Bachan and Andrew Stimpson use an econometric model to examine the determinants of oil demand in China. A longitudinal study covering the period 1978-2000, the paper captures the dramatic changes in economic reform and moves towards market liberalization in China and how this impacts demand for oil. The implications not only for China but also the whole world are frighteningly obvious. China's demand for oil is growing at a rate that will be hard to sustain. The world's refineries close to capacity as they seek to maximize the benefits of high oil prices. As the Chinese economy continues to expand and increased demand for new vehicles continues, it appears that reorientation towards other energy sources will be needed to satisfy China's continued growth. By end 2007, oil prices have reached close to $100 per barrel – Holscher et al. clearly demonstrates China's role in this inexorable rise in the price of oil.
Our fourth paper takes us from oil to milk! Fang Wang, Wojciech Kozlowski and Ming Ouyang examine the impact of EU membership on the UHT milk market in Poland for the marketing strategies of companies in the industry. To understand the nature of the market, this paper employed a marketing persistence analysis, to explore the relationship of short-term marketing efforts and long-term market response in Polish UHT milk market. Wang et al. argue that existing marketers should increase marketing investment to strengthen brands, gain market share, and build long-term customer relationships. International marketers also have good opportunities now to enter Polish UHT markets through intensive marketing campaigns.
Our fifth paper is a policy paper by Georg Caspary from the Organization for Economic Cooperation and Development (OECD). Caspary is interested in how governments in developing countries that face domestic opposition to fiscal reforms. By examining two key industrial sectors to economic development (natural resources and infrastructure). The study is based on a two-year discussion and review process the OECD organized among its member countries (mostly aid agencies that had been involved in fiscal reform in developing countries) in collaboration with the IMF, the World Bank, and experts and government representatives from China, India and South Africa between 2003 and 2005. Caspary argues that policymakers should focus on transparency, pragmatism and sensitivity to local ownership if reforms are to be successful. These claims appear to reinforce the shift in international agencies like the OECD, IMF and World Bank away from blind adherence to globalization per se and towards a more nuanced approach to reforms.
Our sixth paper is a case study from Thailand by Scott Hipsher who examines the phenomenon of “born foreign” companies whose first forays into business start with an international market entry. The companies are Thai companies investing in Cambodia and this paper is a fascinating study of emerging business activities in South East Asia. Hipsher uses a case study method using interviews were held with owners, managers and employees of eight Thai owned companies operating in Cambodia. Existing internationalization theory suggests that companies start their internationalization process slowly and often start out in purely domestic business. With experience they expand beyond national borders. Hipsher found that traditional mode of entry frameworks were useful for classifying the two largest firms in the study, however the smaller entrepreneurial firms could not be accurately categorized according to the existing classifications and therefore he identifies an additional group: the born foreign firm. The implications of this case study for emerging markets is clear. As small enterprises are responsible for the vast majority of business activities in developing countries, understanding the nature of born foreign firms can provide scholars, policymakers and entrepreneurs with new, novel avenues for research, education and strategies for emerging market companies.
Yusaf H. Akbar