Scielo RSS <![CDATA[South African Journal of Economic and Management Sciences ]]> vol. 18 num. 3 lang. en <![CDATA[SciELO Logo]]> <![CDATA[<b>How does the human resource department's client relationship management impact on organizational performance in China? Mediate effect of human capital</b>]]> The human resource (HR) department's client relationship management (HRDCRM) is an area of growing research interest in the field of strategic human resource management practices. By introducing human capital as a mediating variable, with one questionnaire sent per enterprise to chief executive officers (CEOs), middle and line managers, and line staff in 260 Chinese enterprises, empirical research on the effects of HRDCRM on organisational performance was conducted. Empirical results indicate that controlling by enterprise ownership and life cycle stage, human capital either completely or partially mediates the effects of HRDCRM's factors on the two parts of organisational performance (new-product performance and business financial performance). The findings show that the combination of HRDCRM as optimal HR management practices and human capital as organisational strategic assets will further improve organisational performance. <![CDATA[<b>Evaluation of banks' commercial credit applications using the Analytic Hierarchy Process and Grey Relational Analysis: A comparison between public and private banks</b>]]> The purpose of this study is to develop an evaluation model that considers the quantitative and qualitative criteria for the appropriate selection of firms demanding commercial credit for both public and private banks. In this paper, the authors propose an integrated model that combines the Analytic Hierarchy Process (AHP) and Grey Relational Analysis (GRA) into a single evaluation model. The model is illustrated with a case study on bank experts to demonstrate the effectiveness of this integrated method for four firms that applied for a commercial loan. In this study, AHP is applied to determine the weight of the criteria, and GRA is performed to determine the most appropriate firm. The results of this study indicate that, whereas firm morality and news criteria are the main criteria with the highest priority, sale and marketing constructions are the main criteria with the lowest priorities for both public and private banks. In addition, according to the results of GRA, the most appropriate firm for a public bank is Firm 1, and the most appropriate firm for a private bank is Firm 2. <![CDATA[<b>The relationship between leadership styles, innovation and organisational performance: A systematic review</b>]]> This paper is an attempt to consolidate the published scientific knowledge about the impact of leadership styles on the relationship between innovation and organisational performance. Concepts, statements and conceptual frameworks were used as structure to analyse the body of scientific knowledge. After consulting 31 major research databases using the systematic literature review methodology, only seven journals articles that examined the link between leadership, innovation and organisational performance were identified. The synthesis of the journal articles revealed (a) that consensus exists among researchers as far as the relevant concepts are concerned; (b) that most agree on the definition of leadership and innovation but that a uniform understanding of what constitutes organisational performance is lacking; and (c) that conceptual models are too simplistic and do not consider mediator variables or multiple financial criteria measures. The findings further reveal that innovation is significantly and positively related to superior organisational performance, and that, although transformational leadership style is significantly and positively related to innovation, transactional leadership style is more appropriate when the aim is to instil a culture of innovation. Transformational leadership style, by contrast, is mostly associated with organisational performance. In addition, the findings further reveal that none of the studies investigate the mediating effect of the nature of innovation (incremental and radical) on the relationship between leadership and organisational performance, and that none of the studies use the objective measures of financial performance such as ROA, ROE, price/earnings (P/E) and Tobin's Q calculated from annual financial reports. <![CDATA[<b>Institutional forces and divestment performance of South African conglomerates: Case study evidence</b>]]> The history of South Africa serves as a natural experiment in how a changing institutional environment impacts corporate structure. Based on institutional theory, we anticipate higher performance through emulating successful strategies or through restructuring consistent with mimetic isomorphism. Conversely, coercive isomorphism results from restructuring driven by regulation, and we anticipate that they are associated with lower performance. To examine these relationships, we consider divestment by South African firms over two periods, using mixed methods. We find tentative support for our predictions, and we outline implications for policymakers, as well as for management research and practice. <![CDATA[<b>Determining South Africa's export potential to Australia: A panel data approach</b>]]> This study explores South Africa's exports to Australia from 2000 to 2012, using both a static and a dynamic augmented gravity model. Sectors with export potential are identified, whether these are reliable and stable is considered. The largest export potential includes the apparel sectors as well as the basic metals, communication, furniture, glass, iron, leather, motor, paper and printing sectors. The most stable and reliable export sectors are the motor, machinery, iron, basic chemicals and food sectors. Although these sectors could target the promotion of South African exports, South Africa could also serve as an important source country for Australia in strengthening ties with the African continent. <![CDATA[<b>An expanded accounting framework for sustainable growth: Focus on the relationship between a focal firm and its stakeholders</b>]]> In contrast to current accounting principles, which have focused on financial information about the reporting entity, this study suggests that attention should be paid to the information about relationships between a focal firm and its stakeholders. That is, we could more accurately assess the sustainability of a firm's profit and growth by considering both its financial outcomes and business relationships. The rationale of the suggestion is that firms which facilitate mutual profitability between themselves and their stakeholders are more likely to achieve cooperative relationships and consequently enjoy better financial performance and sustainable growth than those who pursue their profitability in an exclusive way. This study therefore suggests that principles of accounting should embrace not only the incomes of a firm and its consolidations (subsidiaries, associates and joint arrangements) but also those of its stakeholders, such as suppliers. <![CDATA[<b>Measuring the impact of marginal tax rate reform on the revenue base of South Africa using a microsimulation tax model</b>]]> This paper is primarily concerned with the revenue and tax efficiency effects of adjustments to marginal tax rates on individual income as an instrument of possible tax reform. The hypothesis is that changes to marginal rates affect not only the revenue base, but also tax efficiency and the optimum level of taxes that supports economic growth. Using an optimal revenue-maximising rate (based on Laffer analysis), the elasticity of taxable income is derived with respect to marginal tax rates for each taxable-income category. These elasticities are then used to quantify the impact of changes in marginal rates on the revenue base and tax efficiency using a microsimulation (MS) tax model. In this first paper on the research results, much attention is paid to the structure of the model and the way in which the database has been compiled. The model allows for the dissemination of individual taxpayers by income groups, gender, educational level, age group, etc. Simulations include a scenario with higher marginal rates which is also more progressive (as in the 1998/1999 fiscal year), in which case tax revenue increases but the increase is overshadowed by a more than proportional decrease in tax efficiency as measured by its deadweight loss. On the other hand, a lowering of marginal rates (to bring South Africa's marginal rates more in line with those of its peers) improves tax efficiency but also results in a substantial revenue loss. The estimated optimal individual tax to gross domestic product (GDP) ratio in order to maximise economic growth (6.7 per cent) shows a strong response to changes in marginal rates, and the results from this research indicate that a lowering of marginal rates would also move the actual ratio closer to its optimum level. Thus, the trade-off between revenue collected and tax efficiency should be carefully monitored when personal income tax reform is being considered. <![CDATA[<b>Focal point pricing: A challenge to the successful implementation of Section 10A (introduced by the Competition Amendment Act)</b>]]> The Competition Amendment Act introduced section 10A, which provides the Competition Commission with the powers to investigate complex monopoly conduct in a market and allows the Competition Tribunal, under certain conditions, to prohibit such behaviour. Although more than five years have elapsed since the Competition Amendment Act was promulgated, this provision has yet to come into force. However, when it eventually does so, it will mark a significant change in South African competition law, as it seeks to regulate firms' consciously parallel conduct. This is coordinated conduct that occurs without communication or agreement, but results in the prevention or substantial lessening of competition. Examples of horizontal tacit coordination practices include price leadership and facilitating practices, such as information exchanges and price signaling. The successful implementation of the amendment poses problems for the competition authorities in assessing the competitive effects of complex monopoly conduct and in providing effective remedies. Oligopoly markets result in mutual interdependent decision-making by firms, which can lead to market outcomes similar to explicit collusion. However, a further and little noticed issue is that firms in oligopolistic markets have opportunities to use focal points to determine coordinated strategies. This paper explores the nature and role of focal point pricing, which can lead to prices that are above competitive levels. The South African banking industry is used as an example. We find that focal point pricing is difficult to control, making the successful implementation of section 10A even more problematic. Moreover, the proposed amendment provides scope for the imposition of structural remedies by the Competition Tribunal, a function that the Competition Tribunal is ill-suited to perform. <![CDATA[<b>Raising the bar on the foreign portfolio to 25 per cent: Strategic implications for South African investors</b>]]> Regulation 28 of the Pension Funds Act now permits an increased allocation of 25 per cent to foreign investments. The regulation previously only permitted a 20 per cent allocation. Establishing the optimal foreign allocation for South African portfolio managers given the 25 per cent upper bound is an important consideration for strategic portfolio planning. In this paper we consider two methodological approaches to establish a strategic foreign allocation weight. Our first approach considers the strategic role of foreign investment in South African global balanced portfolios by using a mean-variance efficient frontier framework over a long-term period. We also implement a second assessment methodology that utilises a non-parametric procedure. Both the mean-variance and the non-parametric methodology yield compelling evidence for the foreign allocation to be set at the maximum allowable bound of 25 per cent. <![CDATA[<b>Board diversity and financial performance: A graphical time-series approach</b>]]> Directors need to guide and govern companies on behalf of and for the benefit of shareholders and stakeholders. However questions remain as to whether boards with higher levels of diversity amongst directors are better equipped to fulfil their fiduciary duty than boards with lower levels of diversity. This research examines whether increased levels of diversity within boards are associated with improved financial performance to shareholders. From the literature, several theoretical frameworks that could explain why increased diversity might or might not lead to improved board performance were noted. Share returns and directors' demographic data were collected for a sample of the largest 40 companies listed on the JSE from 2000 to 2013. This data was analysed using Muller and Ward's (2013) investment style engine by forming portfolios of companies based on board-diversity constructs. Time-series graphs of cumulative portfolio market returns were analysed to determine if the diversity dimensions tested were associated with improved share performance. The results show that racial diversity within boards is not associated with financial performance. However, increased gender diversity and younger average board age are shown to have strong associations with improved share price performance. These findings are mainly attributed to agency-, resource dependency, human capital and signalling theories. Increased diversity is seen to bolster independence and lessen agency problems. Rising diversity levels also enlarge boards' external networks, allowing diverse stakeholders' needs to be accommodated and limiting dependence on strategic resources. Finally, as human capital is increased, the collection of different skills and experiences are associated with better performance. The results, based on a more robust methodology and improved data set, provide additional support to previous studies.