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Emerald Group Publishing Limited
Copyright © 2012, Emerald Group Publishing Limited
Article Type: Editorial From: International Journal of Emerging Markets, Volume 7, Issue 2
Below is a brief summary of the articles in this issue.
Two articles from Central and Eastern Europe run alongside an issue dominated by research on India. We’ll start out by taking a look at our papers from Eastern Europe.
Our first paper by Andrianova and Yeletskikh on Belarus considers whether the principles of Societal Marketing prevalent in developed economies have applicability to transition economies and whether adjustments need to be made. This research is the first comprehensive view of the complex issues related the implementation of Corporate Social Responsibility (CSR) in Belarus. The paper proposes a framework on societal marketing that considers the factors that influence CSR development and provides recommendations for businesses operating in Belarus on how to achieve a competitive advantage in transition economies.
The study is a qualitative one drawing on insights from capacity building activities on societal marketing organized by the Local Network Global Compact Belarus for private and public enterprises. Two types of companies are examined: start up-companies who see their CSR activities as philanthropic actions and “On the way-companies” who appear to integrate elements of societal marketing such as vision and stakeholder management into their practices. According to the research in this paper, this second category of firms have begun to explicitly integrate their awareness of CSR into their marketing strategies. Yet they represent only 27 percent of the sample of firms examined in Belarus suggesting that there is a substantial way for them to go if they are to achieve levels attained in the European Union.
Our second paper, on the same topic – CSR, examines how corporate reputation (CR) and CSR are discussed in the print media in Ukraine. Like the previous analysis of Belarus, this is the first study of its kind to examine media coverage of CSR and CR issues in a transition economy. Chernov and Tsetsura employed an interpretive discourse analysis and elements of framing analysis through the consideration of 102 articles on CR and CSR published in the major Ukrainian print media between 2007 and 2010 both in Russian and Ukrainian. The analyses revealed four major themes in discussing a growing importance of CR and CSR for Ukrainian businesses.
The authors emphasize the uniquely important role of Ukraine as the largest post-soviet country (Russia excepted) and that the desire to adopt principles of CR and CSR for utilitarian ends is enjoined with a idiosyncratic and Ukrainian effort to implement these principles in a market economy as a part of an attempt to join the European Union. The analysis demonstrated that the government of Ukraine alongside national and international business entities has made efforts to establish standards that define CR and CSR. It also showed that the current economic crisis contributed to the media coverage of how CR and CSR are defined and manifested in a largely positive light, i.e. that the crisis should drive Ukraine to be more proactive towards CSR and CR activities.
The third paper in the issue by Gopalaswamy et al. delves into a quantitative study of the importance of human capital in impact share prices of Indian companies. The authors use a time asset-pricing model where a nonmarketable asset, i.e. human capital along with other factors is used to predict stock returns and explain the risk return relationship. The study also aims at contributing to the extant literature on risk return relationships with human capital by investigating the hypothesis that human capital is a significant factor affecting stock prices.
The paper examines stock price data for a ten-year period (1996-2005). The authors find that a model that includes human capital as a proxy for aggregate wealth in the economy can better predict stock prices than standard empirical capital asset pricing models. There is a granger cause relationship between stock prices and labor income and it is further concluded that labor and dividends are significant factors affecting stock prices.
Paper four, again on India, by Kumar employs similar quantitative methodologies to Gopalaswamy et al. – specifically, the paper examines the statistical properties of volatility index of India, India Vix (Ivix): its relationship with the Indian stock market and its predictive power for forecasting future variance. Further, the study examines the volatility transmission between India and developed markets. It is the first paper of its kind to be published on Ivix. The paper is also novel in employing quantile regression methodology to examine the empirical relationships of a volatility index.
A significant Monday effect is observed in the Ivix returns. The quantile regressions show that the Ivix returns are negatively related to stock market returns on an average. But when market moves up sharply, Ivix returns and Indian stock exchange returns rather move independent of each other. Volatility forecasts obtained from Ivix contain important information about realized market volatility and the empirical work in the paper demonstrates that Ivix appears to be an unbiased estimator of future realized volatility. Finally, the study finds that overnight volatility changes in the US market significantly affect the Indian market volatility while transmission in opposite direction was not observed whereas Japanese stock markets have no impact on the Indian bourse nor is there transmission in the opposite direction.
The fifth paper in the issue is a macroeconomic study of China that discusses the change in China’s exchange rate regime during the 2001-2009 period when both the pegged and floating exchange rates were adopted by the monetary authorities, offering a rare empirical opportunity to address. The effects of China’s interest rate differential (IRD) and unemployment rate on the exchange rate are also discussed in this paper. Employing co-integration analysis to evaluate long-term equilibrium in China’s economy, the authors use a Unit root test, co-integrating test and a vector error correction model used to scrutinize China’s exchange rate regime for different time periods.
Since the authors find no correlation between the exchange rate and IRDs, it is possible to predict the value of Chinese Yuan based on China’s unemployment rate, but not IRD. Thus, the Chinese monetary authorities slow down the appreciation of the Chinese currency when the unemployment rate is high suggesting that the government recognizes the importance of fighting unemployment in maintaining social and economic stability in China.
Our last paper by Doegl, Holtbrügge and Schuster is a comparative study of the performance of German renewable energy firms in India and China. Adopting Michael Porter’s well established Diamond framework for understanding industry competitive advantage, Doegl et al. posit that the larger are the discrepancies between the factors for renewable energy in Germany compared to India and China, the greater the potential for German firms to have a competitive advantage. Data for the study was drawn from a wide range of official sources (international organizations and NGOs).
Research findings demonstrate that German firms have a significant competitive advantage in all renewable energy technologies. Positive governmental and cultural influences have been decisive for the favorable development of the renewable energy demand in Germany over many years. Moreover, German firms face strong rivalry and the suppliers as well as the related and supporting industries in this sector are well developed. Disadvantages occur merely in natural factor conditions and here mainly in the low numbers of sunshine hours. India and China, on the other hand, have favorable basic factor conditions for renewables but may not be as competitive as regards advanced factor conditions.
Looking ahead, the study also illustrates that the solar and wind energy industries in China and – to a lesser extent – in India are relatively well developed. Thus, these two countries are in a much better position compared to other emerging markets such as Russia. As a consequence, the competitive pressure in these two countries is likely to increase in the next years. Moreover, market entries of Chinese and Indian renewable energy firms in Germany may be expected. Thus, while German firms may have an advantage in India and China – they also need to keep an eye out for the arrival of competition at home.
Yusaf H. Akbar