KDI School of Public Policy and Management

We report strong OLS and instrumental variable evidence that an overall corporate governance index is an important and likely causal factor in explaining the market value of Korean public companies. We construct a corporate governance index (KCGI, 0∼100) for 515 Korean companies based on a 2001 Korea Stock Exchange survey. In OLS, a worst-to-best change in KCGI predicts a 0.47 increase in Tobin's q (about a 160% increase in share price). This effect is statistically strong (t = 6.12) and robust to choice of market value variable (Tobin's q, market/book, and market/sales), specification of the governance index, and inclusion of extensive control variables. We rely on unique features of Korean legal rules to construct an instrument for KCGI. Good instruments are not available in other comparable studies. Two-stage and three-stage least squares coefficients are larger than OLS coefficients and are highly significant. Thus, this article offers evidence consistent with a causal relationship between an overall governance index and higher share prices in emerging markets. We also find that Korean firms with 50% outside directors have 0.13 higher Tobin's q (roughly 40% higher share price), after controlling for the rest of KCGI. This effect, too, is likely causal. Thus, we report the first evidence consistent with greater board independence causally predicting higher share prices in emerging markets.

Purpose The primary purpose of this study is to examine the relationships between the level of trust and several relevant constructs drawn from transaction cost analysis (such as asset specificity, behavioral uncertainty, and partner's opportunism) and social exchange theory (informational sharing). Design/methodology/approach A comprehensive questionnaire based on various theories on trust and commitment was mailed in 2001 to supply chain practitioners in the Midwest region. A total of 171 valid returns were received out of 1,800 mailings (9.5 percent). A path analysis was used to estimate parameters or relationship between relevant constructs and trust, and trust with the level of commitment. Findings A firm's trust in their supply chain partner is highly associated with both parties’ specific asset investments and social exchange theory. Information sharing has a primary impact on reducing (improving a partner's uncertainty behavior which, in turn, would improve the level of trust. Finally, the level of commitment is strongly related to the level of trust, supporting Morgan and Hunt's hypothesis. Research limitations/implications This research used supply chain practitioners in one region as a target population. It is highly recommended to duplicate this study in other regions to verify the findings. Originality/value This is the first research paper linking various variables to trust and trust to commitment in supply chain management using path model.

Private tutoring in South Korea is quite pervasive. In 2006, the household sector spent 2.57% of the nation’s GDP on private tutoring for primary and secondary school students. Government spending on those students was about 3.5% of GDP, which is about the average level among OECD countries. Despite the substantial government expenditure on the formal education system and strong policies that try to reduce private tutoring activities, household spending on private tutoring has been increasing very rapidly. We argue that the prevalence of private tutoring is a market response to the government’s rigid and uniform education policy. The desire to enter elite universities in a very hierarchical higher education system and a heavily regulated and equalized secondary school system has created an enormous demand for supplementary private tutoring. Empirical analyses indicate that students with high academic ability and high family income whose parents are highly educated spend more on private tutoring. Also, students in regions without school choice spend more on private tutoring. The estimated income elasticity of private tutoring is about 0.5. Pervasive private tutoring may create an inefficient as well as inequitable educational system. Korean experience studied in this article suggests that private tutoring should be studied as an integral part of the whole educational system.

The effects of the ongoing digital revolution have been profound and have been studied in many contexts such as government interaction with the public (e-participation) and administrative structures (e-administration). However, the study of how the digital revolution has changed leaders’ interactions with followers via information and communication technologies (ICTs) has been modest, and the theory building in organizational studies and public administration has been, for the most part, nonexistent. A major reason for this lack of progress is the inability to produce an operational definition of e-leadership that spans telework, team, and enterprise settings. The article examines an exploratory case study to propose an operational definition based on six factors (or broad e-competencies) for e-leadership. Research limitations and future research opportunities are discussed. Points for practitioners E-leadership, technology-mediated leadership, has become critically important for leaders at all levels, both inside and outside of the organization. E-leadership is as much about blending technologies and traditional communication as it is about simply using more ICT-mediated communication. While there is a lot of consistency in the types of leadership skills needed in traditional and virtual environments, they are not the same and the differences are critical to success and failure. The areas in which competence in e-skills were most important included: e-communication, e-social skills, e-team building, e-change management, e-technology skills, and e-trustworthiness.

Abstract While many aspects of the dramatic shifts caused by digital government have made enormous progress, the leadership of those who serve the public via electronic means has yet to take a significant step forward. This article addresses three questions: How significant has e‐leadership become? What are the challenges in trying to create a more comprehensive model of defining and measuring e‐leadership? And, based on current knowledge, what skill and behavioral elements are candidates for a concrete e‐leadership model? The authors develop and test an original model that focuses on e‐leadership as a competence in virtual communications (i.e., the use of ICT‐mediated communications) and the digital opportunities and challenges that are created. The results provide strong support for the proposed model. The article concludes with a discussion of a future agenda for e‐leadership research that can be developed in a manner that is fruitful for theory and practitioners .

Respondents from five Asian countries were surveyed in terms of their consumer ethnocentrism, animosity, and attribution towards the USA and Japan in the context of the Asian economic crisis. The results indicated that the more severely hit a country was, the more ethnocentric respondents were. In general, animosity towards the USA was higher than towards Japan with regard to the Asian crisis. Koreans held the greatest stable animosity towards the Japanese because of the atrocities experienced during the Second World War. Respondents attributed the blame of the Asian crisis more to themselves. They also felt that they and the Japanese could have controlled the turn of events during the crisis. Implications arising from the findings are discussed.

As a transitional economy, Vietnam is open to many new marketing experiences. Along with slowly increasing wealth, changes are occurring in the retail environment as stores begin to replace individual vendors. The changing retail environment suggests the usefulness of understanding shopping behaviors relevant to retail settings. The authors examine impulse buying behaviors of urban consumers in Vietnam. The authors conducted an exploratory study that included both qualitative and quantitative methods to provide a general understanding of urban Vietnamese consumers’ impulse buying behaviors. Results show that individualism, age, and income are significantly related to impulse buying behaviors of Vietnamese consumers. In addition, personal-use products are the most common impulse purchase items, despite the collectivist nature of consumers in Vietnam. The authors’ findings suggest that, at least with respect to impulse buying and despite cultural differences, consumers from transitional economies such as Vietnam may share some common tendencies and behaviors with consumers in advanced economies. The authors discuss other observations and conclude with suggestions for further research.

The long-held precept of equating entry barriers with sustainable incumbent advantage increasingly is met with skepticism as incidents of innovative late entrants leapfrogging over market incumbents become more pervasive across industries. Ostensibly, the reassessment of the traditional assumptions underlying entry barrier strategy has become imperative; to this end, the authors present a framework that investigates the contingent effects of incumbents' barrier building on their own performance. Specifically, the authors examine five types of entry barriers (capital requirements, cost advantages, switching costs, distribution access, and proprietary assets) for the nature of their impact in the following presupposed yet unresolved roles: (1) as effectual versus ineffectual entry deterrents and (2) as enablers versus inhibitors of incumbents' innovativeness. In addition, the authors take other variables into account (i.e., competitors' innovativeness and incumbents' market and technological orientation) to identify the contingencies of the framework. Using data from Korean consumer product industries, the authors empirically test and substantiate the variable (i.e., positive, negative, and neutral) impact of entry barriers on incumbents' performance.

Abstract Theories describing rent seeking in the public sector posit a number of negative fiscal outcomes that the choices of corrupt officials may generate. The evidence presented in this article shows that states with greater intensities of public corruption have higher aggregate levels of state and local debt. If corruption in the 10 most corrupt states were only at an average level, their public debt would be 9 percent lower, or about $249.35 per capita, all else being equal. Notably, institutional control measures may not have succeeded in restraining the expansion of state and local public debt in the presence of greater levels of corruption. State and local governments would achieve more efficient levels of fiscal discipline by curbing public sector corruption .

Much has been written about organizational and professional commitment; however, little has been directed toward the internal auditing profession. Given the recent decline of Enron, WorldCom, etc., and new regulations (eliminating the outsourcing of internal auditing) the internal auditor is likely to gain more responsibility in the firm. It will benefit employers and the professions to better understand what leads the internal auditor to become committed to his/her organization and profession. This study addresses that need. Results show that factors influencing organizational commitment are different from those influencing professional commitment. Multiple linear regression models show strong relationships between organizational commitment and job meaningfulness; however, task identity has a strong positive relationship with professional commitment while gender and organization size (services sector and internal auditor certification) have a positive (negative) influence on organizational commitment. Internal auditor certification also shows a positive impact on professional commitment. Management implications of these results are discussed.

Abstract Whereas the concept of platform government emerged a decade ago and virtual states are predicted beginning early 2000s, supporting technologies and infrastructures are now being installed and implemented with highly integrative technologies such as cloud computing, big data analytics, mobile computing, social media, Internet of Things, and artificial intelligence. This realization of platform governments leads us to rethink what have been predicted decades ago. Time has come for us to really open up real opportunities by facing realistic challenges for public management. The pressure for government innovations, such as algorithmic bureaucracy and collaborative value creation, is increasing. Attentions need to be paid with respect to how the managerial role and activities are being transformed, how the nature of work in government is fundamentally changed, and how the decision‐making processes are re‐institutionalized. Further research issues are discussed at the end of this Viewpoint. Evidence for Practice Platform governments predicted earlier are now being realized by highly integrative technologies such as cloud computing, big data analytics, social media, mobile computing, Internet of Things, and artificial intelligence. Platform government demands new approaches to public management, changes the nature of work of public managers, and reshapes the decision‐making processes. Algorithmic bureaucracy provisioned by these new platformization will enable more anticipatory decision‐making, require stronger leadership commitment on digitalization and innovation, and provide higher agility in public management. Collaborative value creation can and will be expedited by the technological capabilities provided but also with a lot of social experimentation on these platforms. The nature of work of public managers will be changing continuously in serious orders on these platform governments.

In 1994, Bangladesh introduced the Female Secondary School Stipend Program that made secondary education free for rural girls. This paper examines the long-term effects of the stipend program on education, marriage, fertility, and labor market outcomes of women. We find that the stipend increased years of education for eligible girls by 14%–25%. These girls were more likely to get married later and have fewer children. They also had more autonomy in making decisions about household purchases, health care, and visiting relatives. They were more likely to work in the formal sector than the agricultural or informal sector. Eligible women were likely to marry more educated husbands who had better occupations and were closer in age to their own. Their children’s health outcomes also improved. These results imply that school-based stipend programs can increase female empowerment through positive effects on schooling and marriage market outcomes over the long term.

This article analyzes how senior managers’ transformational leadership and the climate for creativity associate with employees’ perceptions regarding a culture of innovation in the context of public management reform in local government. Based on a survey of 1,576 employees in the Seoul Metropolitan Government, this study finds that the degree to which an employee perceives senior managers’ transformational leadership is positively related to the degree to which the employee perceives a culture of innovation. The findings of the study also indicate that the climate for creativity—through enhancing the recognition of employee creativity, the flexibility to change, and resources for innovation—is significantly associated with employees’ perceptions of a culture of innovation. Finally, the study finds that there is a variance in the degree to which the employee perceives a culture of innovation among agencies, and supervisors’ transactional leadership still matters in fostering a culture of innovation in local government.

Purpose Even though e-leadership was broadly defined in 2001 (Avolio et al. ), there has been surprisingly little progress (Avolio et al. , 2014). In order to make a better progress, the authors recommend dividing the field into four quadrants to facilitate the research focus. It can be divided by e-leadership phases (the adoption of technology phase vs the quality of use of technology phase), as well as the purposes (e-leadership as virtual communication vs e-leadership as management of organizational structures). The paper aims to discuss these issues. Design/methodology/approach This study provides a model of e-leadership as communication adoption at the individual level (ECAM i ). Structural equation modeling was used to test a previously published model by Van Wart et al. (2017a). The model included select traits and skills (as antecedent conditions), awareness of ICTs, evaluation of ICTs, willingness to expend effort in learning about ICTs, intention to use ICTs, and facilitating conditions. Findings The overall model demonstrates a good fit. It can be concluded that the ECAM i represents a valid model for understanding e-leaders’ technological adoption. It is also found that while all select skills and traits are significant – energy, responsibility and analytical skills stand above the others. Originality/value To the best of the authors’ knowledge, this represents the first effort to operationalize e-leadership.

ABSTRACT Most banks pay corporate income taxes, but securitization vehicles do not. Our model shows that, when a bank faces strong loan demand but limited deposit market power, this tax asymmetry creates an incentive to sell loans despite less‐efficient screening and monitoring of sold loans. Moreover, loan‐selling increases as a bank's corporate income tax rate and capital requirement rise. Our empirical tests show that U.S. commercial banks sell more of their mortgages when they operate in states that impose higher corporate income taxes. A policy implication is that tax‐induced loan‐selling will rise if banks’ required equity capital increases.

This paper presents a study of successive new product introductions in the mature tennis racket industry. The inquiry examines novel design's important role in strategic renewal, under the assumption that innovation includes not only the development, production, and launch of new products, but also communication between firms and market. We explore this industry's transformation through the strategic actions of innovative firms and subsequent competitive contagion. A tennis racket innovation triggers competitors' imitative reactions and sways the market toward a new de facto standard when the new product launch includes marketing such as product endorsement by high-profile professional players and advertising. Our results indicate that innovators should actively manage various industry participants as an integral part of their strategic renewal efforts, especially when facing rivalry with “me-too” peers. We suggest the interface between firms and consumers as a next focus for research on strategic renewal.

Purpose The purpose of this paper is to examine the different motivational factors that lead to customers' Islamic bank selection decision in Pakistan. In particular, it aims to look into the importance of Shari'a compliance for Islamic banks' customers and thereby the potential risk of deposits withdrawal in case of violations of Shari'a principles. Design/methodology/approach The paper presents descriptive statistics and cross‐tabulation analysis based on data collected from 357 customers. Findings The findings reveal that Islamic banks' customers highly value Shari'a compliance in their banks and that non‐compliance with Shari'a principles leads to disgruntled customers. An interesting pronouncement is that if an Islamic bank is involved in repeated violations of Shari'a , the customers are inclined to switch their banks. Nonetheless, the findings reveal that Shari'a compliance is not the only satisfaction yardstick for Islamic banks' customers; they also expect their banks to be convenient, technologically advanced and provide security of their capital. Practical implications The paper has profound implications for Islamic financial institutions operating in Pakistan. Although Shari'a compliance is the most important factor that Islamic banks need to observe, they also need to be competitive with conventional banks. Originality/value The paper is a unique contribution to Islamic banks' selection criteria where the importance of Shari'a compliance and conventional bank patronage factors has been explored. The paper's has practical implications for Islamic banks' owners and regulators.

Although a growing body of literature has touted e-participation as a means of facilitating greater citizen participation in policy decision-making processes, little is known about the driving forces behind citizens’ use of e-participation. Based on a literature review of social capital and citizen participation, this study develops and tests a model proposing that three dimensions of social capital and three dimensions of citizen participation management should be positively associated with e-participation in agenda setting. Using data from a Korean e-participation survey conducted in 2009, we found that citizens tend to be more active e-participants when they have greater trust in government and are weakly tied to offline social groups. We also found that citizen participants’ perception of government responsiveness to their input can facilitate their e-participation. The study findings imply that local governments should pay more attention to the function of public trust in local government and provide quality feedback in response to citizen input. They should also be sensitive to how the social factors of e-participants can facilitate involvement in agenda setting.

BACKGROUND: Medicare-Medicaid dual eligibles are the beneficiaries of both Medicare and Medicaid. Dual eligibles satisfy the eligibility conditions for Medicare benefit. Dual eligibles also qualify for Medicaid because they are aged, blind, or disabled and meet the income and asset requirements for receiving Supplement Security Income (SSI) assistance. The objective of this study is to explore the relationship between dual eligibility and health care utilization among Medicare beneficiaries. METHODS: The household component of the nationally representative Medical Expenditure Panel Survey (MEPS) 1996-2000 is used for the analysis. Total 8,262 Medicare beneficiaries are selected from the MEPS data. The Medicare beneficiary sample includes individuals who are covered by Medicare and do not have private health insurance during a given year. Zero-inflated negative binomial (ZINB) regression model is used to analyse the count data regarding health care utilization: office-based physician visits, hospital inpatient nights, agency-sponsored home health provider days, and total dental visits. RESULTS: Dual eligibility is positively correlated with the likelihood of using hospital inpatient care and agency-sponsored home health services and the frequency of agency-sponsored home health days. Frequency of dental visits is inversely associated with dual eligibility. With respect to racial differences, dually eligible Afro-Americans use more office-based physician and dental services than white duals. Asian duals use more home health services than white duals at the 5% statistical significance level. The dual eligibility programs seem particularly beneficial to Afro-American duals. CONCLUSION: Dual eligibility has varied impact on health care utilization across service types. More utilization of home healthcare among dual eligibles appears to be the result of delayed realization of their unmet healthcare needs under the traditional Medicare-only program rather than the result of overutilization in response to the expanded benefits of the dual eligibility program. The dual eligibility program is particularly beneficial to Asian and Afro-American duals in association with the provision of home healthcare and dental benefits.

Schooling rewards people with labor market returns and nonpecuniary benefits in other realms of life. However, there is no experimental evidence showing that education interventions improve individual economic rationality. We examine this hypothesis by studying a randomized 1-year financial support program for education in Malawi that reduced absence and dropout rates and increased scores on a qualification exam of female secondary school students. We measure economic rationality 4 years after the intervention by using lab-in-the-field experiments to create scores of consistency with utility maximization that are derived from revealed preference theory. We find that students assigned to the intervention had higher scores of rationality. The results remain robust after controlling for changes in cognitive and noncognitive skills. Our results suggest that education enhances the quality of economic decision-making.