Development of Tourism Affected by Culture

DEVELOPMENT OF TOURISM AFFECTED BY CULTURE
Hossein Dehdaran
Tourism Industry technician, Tehran, Tehran
ABSTRACT
Tourism, which brings individuals and human communities into contact, and through them cultures and
civilizations, has an important role to play in facilitating dialogue among cultures. Cultural and natural
heritage, that attracts so many tourists, and is a resource for development, is, fortunately, distributed
throughout the world, thus providing an additional opportunity for many non-industrialized countries. As we
know, tourism industry is related to culture and economics, and developing the case in a society affects on
sociology and it would be important in development of a country in some aspects. Raising awareness,
educating and training the staff concerned, is essential in involving communities in the process of conserving
and enhancing their heritage. It is the involvement of all that will enable the heritage of humanity to be better
preserved, living conditions to be improved and poverty reduced. Preserving cultural and natural heritage, to
bring it within reach of all, making cultures and civilizations better known, improving daily living conditions
and reducing poverty, is what gives meaning to the sustainability of tourism development. However, these
objectives depend upon the quality of the design and the implementation of tourism policies and activities -
that is to say, their understanding of culture and their sustainability - which involves the participation of
communities in the preservation and enhancement of cultural heritage in the long term. Further, the cultural
tourism plays a significant role in the recovery of some districts zones, localities or towns.
Keywords: tourism Industry, Culture, Development.
INTRODUCTION
This is the purpose of this paper: to open a debate on the complex questions that surround the relations
between culture and tourism, tourism and development, tourism and dialogue among cultures; questions that
every decision-maker and actor engaged in tourism should address before a tourism project is launched. Being
amongst people who use a different language, eat different foods, and behave in different ways is at the very
heart of tourism. Experiencing directly different ‘ways of life’, can have a valuable educational function that
stretches beyond tourism, and despite advances in communicative and virtual reality technologies it is difficult
to emulate except through basic human contact, encounter and exchange. In a world where much conflict is a
product of cultural misunderstanding, miscommunication and a basic lack of knowledge of the ‘hows and
whys’ cultures are different, exposure to, and experience of, a wide variety of cultures in the most ordinary of
ways is essential. Since tourism is nowadays used to stimulate regional development, cultural heritage tourism
is used for, both preservation of regions as well as economic development of the regions. Cultural tourism can
be defined as the subset of tourism concerned with a country or region's culture and its customs. Cultural
tourism generally focuses on communities who have unique customs, unique form of art and different social
practices, which basically distinguishes it from other types/forms of culture. Cultural tourism includes tourism
in urban areas, particularly historic or large cities and their cultural facilities such as museums and theatres. It
can also include tourism in rural areas showcasing the traditions of indigenous cultural communities (i.e.
festivals, rituals), and their values and lifestyles. Preserving cultural heritage appears to be a key factor in
economic policies supporting tourism development. It is a widely accepted fact that preservation of cultural
heritage is important and it is also used as a tool for tourism product differentiation
From cultural to creative production

The expanded role for culture in tourism development mirrored the growth of culture as a factor of
development in general. It is found that how the growth of culture-led development was tied to the workings
of the symbolic economy. Culture provided the symbols, such as museums, art galleries and iconic
architecture, which could be used to increase land values and stimulate business activity. This growth in turn
supported employment in the cultural sector, strengthening its lobbying for more investment in culture. This
produced powerful arguments to preserve the heritage of the past and expand contemporary culture in order
to maximize the ‘real cultural capital’ of places. Culture has therefore come to play an important role in
distinguishing places from each other. This is increasingly essential in a globalizing world where place
competition is fierce, and cities and regions strive to create distinctive images for themselves.
© ICBTS Copyright by Author(s) The 2017 International Multidisciplines Research Conference in Paris 61
One of the problems inherent in cultural distinction strategies is that many places adopt similar strategies (often
copying or ‘borrowing’ ideas from one another), and therefore even ‘culture’ begins to lack distinction. The
growth of ‘serial reproduction’ of culture epitomized by some researcher and the spread of signature
architecture to cities around the world makes it harder and more expensive to use material culture to distinguish
places.
The need to bundle and identify cultural resources led to the development of ‘cultural quarters’, ‘cultural
districts’, ‘creative clusters’ or ‘creative districts’, where cultural and creative producers were clustered in
order to generate a ‘buzz’. In such a climate, the ‘creative turn’ became almost a logical successor to the
cultural development process of previous decades.
The Tourism Promotion and Development Fund has emerged from the Tourism
Promotion Fund Law that was passed in 1972. The purpose of the fund is to secure
more capital for the growth of tourism industry. The Fund supports the construction of basic tourism facilities,
construction and renovation of overall basic facilities, the development of accommodations and resort
business, and for research activities that contribute to balanced tourism industry development.
Cultural Heritage Tourism

There is no singular, specific definition of either cultural or heritage tourism Some call it cultural tourism,
some heritage tourism, some cultural & heritage tourism or shortly cultural heritage tourism. Culture is a set
of distinctive spiritual, material, intellectual and emotional features of society or a social group. It
encompasses, in addition to art and literature, lifestyles, ways of living together, values systems, traditions and
beliefs. The World has some 6000 communities and as many distinct languages. The National Trust’s
definition of cultural heritage tourism is “traveling to experience the places and activities that authentically
represent the stories and people of the past and present. It includes historic, cultural and natural resources.".
In 1985, World Tourism Organization (WTO) provided two definitions of cultural tourism. The narrower
definition includes: "movements of persons for essentially cultural motivations such as study tours,
performing arts and cultural tours, travel to festivals and other cultural events, visits to sites and monuments,
travel to study nature, folklore or art, and pilgrimages.' The wider definition includes: 'all movements of
persons… , because they satisfy the human need for diversity, tending to raise the cultural level of the
individual and giving rise to new knowledge, experience and encounters.' Heritage is a broad concept and
includes the natural as well as the cultural environment. It encompasses landscapes, historic places, sites and
built environments, as well as biodiversity, collections, past and continuing cultural practices, knowledge and
living experiences. It records and expresses the long processes of historic development, forming the essence
of diverse national, regional, indigenous and local identities and is an integral part of modern life. Cultural
tourism market share development strategy focuses on promotion of the unique cultural aspects of a city or
region, in order to draw tourists interested in those particular cultural subjects to the area. Heritage
management, on the other
hand is defined as management of regions’ natural, cultural and built environments. As a strategy, this focus
is gaining widespread acceptance nation wide and internationally among tourism offices and bureau to
differentiate their cities, regions and states as desirable tourist destinations in an increasingly competitive
marketplace.
CONCLUSION
In order to enhance attractiveness of the Temple Stay as a cultural resource, close collaborations are
essential. The government, private religious organization, and other private expert organizations in terms of
operational excellence should be involved in developing cultural resources efficiently and effectively. Above
all, the central government should establish a relevant long-term plan to develop the Temple Stay program as
the most attractive cultural tourism product in the world. The program should also benefit from private
expertise in terms of operation and management.
There are a number of strategies to develop the temple resources into
cultural tourism attractions: First, it is to build a convenient, clean, and comfortable infrastructure including
accommodation facilities, meditation places reflecting the traditional cultural spirit, and restaurant facilities to
experience Buddhist food, etc. The government’s role is to finance the construction of this infrastructure. In
fact, the Korean government plans to invest more than %80of the total cost of innovating facilities, while
religious organizations share about 10% of finance.
Second, it is to bundle available cultural attractions around temples to create a themed set of attractions that
collectively constitute a primary attraction. Airfare, accommodation, ground transport, and a variety of other
services are combined to create a new product. Bundling, within a cultural tourism context, typically involves
combining a variety of similarly themed products and experiences and promoting their collective consumption
to the visitor”. The Temple Stay should be bundled with other tourism assets that exist in local communities.
In this way, the economic benefit of cultural tourism is dispersed more widely. More important, bundling helps
create a theme for a place, creating a stronger sense of destination for the tourist by invoking many places with
similar meanings. In line with this implication, community involvement in the development and sustainability
of cultural tourism should be made.
Third, it is very important to foster skilled human resource for the Temple Stay. The program for training
the guide should be provided by the public and private sectors. The Temple Stay guide is an individual who
helps domestic or foreign tourists with cultural experiences by explaining them and imparting an accurate
understanding of Korean Buddhism and cultural relics and local culture. The program aims to recruit and train
Temple Stay guides to satisfy the demand related to tour packages, including cultural experience products and
the facilitated discovery of historical relics, rather than the simple experience of the temple.
The impact of the tourism development in given areas could and must be controlled by adequate planning,
development and management. We should note that the cultural tourism is a “consequence branch” whose
evolution is permanently correlated with the development level and rate of the other economy branches.
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TECHNOLOGICL INNOVATION CAPABILITIES AMONG
SMALL AND MEDIUM MANUFACTURING FIRMS IN
MALAYSIA: TO WHAT EXTENT ENTREPRENEURIAL
ORIENTATION PLAYS AN IMPORTANT ROLE?
*Nor Azila Mohd Noor, 2 Azli Muhammad 3 AbdulQadir Ahmed Aljanabi
1, 3
Othman Yeop Abdullah Graduate School of Business, University Utara Malaysia, Sintok,
Malaysia
2
Polytechnic Seberang Prai, Penang, Malaysia
*Corresponding author: azila@uum.edu.my
ABSTRACT
It is notable that the dynamic Malaysian economy has become more competitive across a broad
range of manufactured goods and has also managed to switch to higher value-added manufacturing
products. The outward oriented economic strategies have somehow progressed well in establishing the
manufacturing sector, namely the electronic and electrical sectors. Moreover, it is widely recognized that
innovation is a key factor in sustaining Malaysia’s competitiveness in the face of rapid globalization.
However, studies concerning innovation capabilities in Malaysia are limited. While there have been few
studies on innovation and internationalization of R&D activities in Malaysia, less attention has been paid
to analyzing the issue as a system hence providing little evidence for any significant policy directions.
Therefore, the purpose of this study is to shed further light on the factors influencing technological
innovation capabilities among manufacturing firms in Malaysia. This study involves small and medium
sized manufacturing firms in Northern region in Malaysia. In order to effectively generalize the research
findings, 112 questionnaires were distributed to the respondents. The results show that technological
innovation capabilities are positively influenced by entrepreneurial orientation of the firms. The result
indicates that strategic orientation that is risk-taking, pro-activeness and innovativeness urges the firms to
consider new ideas and take part in creative venture, tolerate risks and proactive. In making decisions that
are related to technological innovation, enterprises are likely to consider whether or not they receive
entrepreneurial opportunities. The outcome of this study is expected to be used by Malaysian government
and agencies in developing the best strategies to enhance industrial SMEs within this region, in
conjunction with initiatives aimed at increasing cooperation with foreign companies to increase their
experiences and support their competencies to exploit externally generated knowledge.
Keyword: Technological innovation capabilities, Entrepreneurial orientation, Small and medium sized
industry, Manufacturing.
INTRODUCTION
It is proven that since its independence, Malaysia’s has achieved a remarkable economic
achievements by any standard. Throughout the period, the Malaysian economy has changed from an
economy that highly depends on exports of primary commodities (such as tin and rubber) to one that is
driven primarily by the exports of manufacturing goods. Today, manufactured goods account for 31 per
cent of the country’s GDP and more than 70 per cent of the country’s exports.
Since 1990s, a growing interest in the manufacturing sector has been emerged in Malaysia particularly in
order to move the industry wheel and solve the problem of unemployment (Batal, Alrawy, & Ali, 2011).
However, despite of the need, there is lack of clear plans to develop this sector and the most important
characteristic of this sector is the lack of sufficient governmental and private investment that help to
develop it. Amongst others, the reasons are contributed by (i) reduction in the scientific level of agencies
and government institutions that manage industrial activities and (ii) manufacturing industry in Malaysia
suffer from poor managerial practices and manpower turnover (Ali, 2013).
It can be argue that insufficient of specific resources might represents one of the main reasons for the low
level of technological innovation among manufacturing firms in Malaysia. This probably due to the fact
that some of the firms has suffered from deficiency in the level of capabilities and resources (Bowen, 2012;
Tas, 2012), particularly on the level of human capabilities (Klomp, 2011). Apart from that, firms may not
achieve the desired innovation level probably because they are having lack of competency which limits
them from the best use of such resources (Bakar & Ahmad, 2010). According to Malaysian Ministry of
Science, Technology and Innovation, in comparison with neighboring countries, the manufacturing
industry in Malaysia is suffering from lack of professionals human resources, legislations, technology,
appropriate knowledge to the current industrial evolution, and even in forms of productions. Furthermore,
it suffers from traditional and monotone measures of customer needs. This is reflected in the inability of
local industrial products to vie with imported products due to the weaknesses in the technical and marketing
evaluation processes, weak import and export legislation (Bakleh, 2007).
This research believes that one of the issues contributing to the present decline in innovation in
manufacturing firms are related to scarcity of proactive manner, risk-taking trends, and innovativeness
within these enterprises which is quite connected to entrepreneurial orientation (EO). Related literature
have pointed out three incorporated dimensions of EO namely, risk taking, pro-activeness and
innovativeness (Millert, 1983; Baker & Sinkula, 2009; Jones & Rowley, 2011; Wales et al., 2013). The
majority of these studies have been conducted in large-sized firms within mature and stable economies and
developed countries. Therefore it is important to extend the study on the effect of EO on technological
innovation capabilities within SMEs manufacturing firms in developing economy like Malaysia.
LITERATURE REVIEW
According to Kamasak and Bulutlar )2010(, innovation is best understood as generation, adoption and
implementation of new ideas, policies, programs, process, product/service to the organization adopting it.
Meanwhile, Crossan and Apaydin )2010( defined it as the generation or adoption, assimilation and use of
value-added new invention in the economic and social field that realizes the renewal and enlargement of
products and development of novel production techniques, and the establishment of new systems of
management. It is process as well as outcomes.
Entrepreneurial orientation )EO( is described as the firms’ strategic orientation that encapsulates certain
side of entrepreneurship of decision-making patterns, working manners and their managerial practices. In
addition, it represents the firm’s priority when it comes to the identification and exploitation of
opportunities found in the market )Baker & Sinkula, 2009; Huang & Wang, 2011; Pérez-Luño et al., 2011(.
Owing to the significance of entrepreneurship to the performance of firms )e.g. firm innovation( )Hughes,
Hughes, & Morgan, 2007; Huang & Wang, 2011(, EO could be an impersonation of a significant measure
of the pathway through which a firm is structured and organized —one that improves the achievement
advantage of a firm resources that based on knowledge by concentrating on the use of such resources for
the discovery and exploitation of scopes. Thus, EO underlies the process followed by the managers that
enable firms to stay advanced on their rivals as it facilitates firm action on the basis of initial signals from
its environments )Lumpkin & Dess, 1996; Wiklund & Shepherd, 2003(.
Firms can survive in the business environment due to the demand for their products and possess certain
resources to compete with others. Miller )1983( shows that simple firm’ strategies affected by its owner
personality and attitudes and indicate that those confident owners-managers of their abilities are most
possible to be entrepreneurial. Based on this notion, Huang and Wang )2011( through their work
characterized by promoting innovation levels in SMEs, have considered innovation as EO outcome.
Empirical evidences showed that entrepreneurial orientation has a significant impact on the firm's ability
to adapts to environmental changes through the provision of different types of innovations )Hong, Song,
& Yoo, 2013; Li et al., 2008(. As indicated by the relevant literature, firm that owns an EO must be
characterized with risk-taking, pro-activeness and innovativeness )Baker & Sinkula, 2009; Jones &
Rowley, 2011; Miller, 1983; Wales et al., 2013( to be able to understand the requirements of both market
and customers and satisfy these needs through new innovations )Baker & Sinkula, 2009; Boso, Cadogan,
& Story, 2012b(. Along these lines, Atuahene-gima and Ko )2001( gave an accurate depiction for the
relationship that link EO with innovation, they argued that the main reason implied in this relationship
represented in one of the EO dimensions which is a high grade of innovativeness. Henard and Szymanski
)2001(, and Baker and Sinkula )2007( have also reported that product innovation strongly related with
innovativeness. Moreover, researches highlighted the role of other dimensions of EO, for instance, risk-
taking can foster firm’s ability to produce new products and process )Chen, 2012; Cheng et al., 2012(.
Risk-taking nature promotes firms toward dedicate the necessary resources which help in obtaining new
innovations )Ko & Lu, 2010; Zhou & Tse, 2005(. Previous studies have also indicate positive influence of
pro-activeness on innovation and value creation )Zellweger et al., 2011(. Hence, EO plays a significant
role to promote technological innovation capabilities of the firm )Weerawardena & Coote, 2001(. This
leads to the following hypothesis:
H1: The higher the entrepreneurial orientation )EO( of the firm, the higher the technological innovation
capabilities )TC( the firm will acquire.
METHODOLOGY
This study was cross-sectional in nature where data were collected once to answer the study’s research
questions )Sekaran, 2010(. Data were collected through personal survey using questionnaire. The
population of this study comprises of SMEs manufacturing firms in Malaysia. In this research, 250
questionnaires were distributed over the eleven manufacturing activities representing all manufacturing
SMEs operating in the northern region of Malaysia, of which 128 questionnaires were returned. From this
number 16 were incomplete and were excluded from further analysis. With 112 completed questionnaires,
it brings the response rate of 45 percent.
Entrepreneurial orientation is conceptualized as a three dimensional construct namely product innovation

capability, which refers to submitting of any novel product to satisfy customers’ needs; process innovation
capability which involves firm’s wide efforts to create or improve a new manufacturing method; and bring
about new developments in the process or system. This variable was measured using instrument adapted
from Camisón & Villar-López, (2012) and Jiménez-Jimenez et al., (2008). On the other hand,
entrepreneurial orientation is operationalized as the entrepreneurial model applies to firms that innovate
boldly and regularly while taking considerable risks in their product-market strategies. The instrument with
six items developed by Boso et al., (2012) was used to measure entrepreneurial orientation. Responses to
the questionnaire items were elicited on five-point scales ranging from “5=strongly agree” to “1=strongly
disagree”. Item relating to a particular construct were summed to create overall composite scores for each
respondents. Table 1 shows the means, standard deviations and reliability coefficient of each construct.
Table 1. Descriptive Statistics for Dimensions of Variables
Mean Standard α
Dimension value Deviation (reliability
(Variables) coefficient)
Technological 3.71 .36 .72
capabilities
Entrepreneurial 3.50 .59 .83
orientation
ANALYSIS
Regarding the background information of the responding SMEs manufacturing firms, it was found that
majority of the respondents (56%) involved in the machinery and equipments. With regards to the duration
the firms have been operating in the industry, the majority of the firms (56%) have been operating for 10-
20 years, these results show that the sample in the present study constitutes manufacturing firms that
possess considerable experience to enable them to make new innovations. The size of the firms was
determined through the number of employees they employed. For this purpose, the firms were divided
into three groups. The majority of the firms (63%) have between 20-99 employees; followed by 28 percent
with employees between 10 to 19 employees and the remaining nine percent have less than or equal to
nine employees. Also, the results show that all the firms are owned by local owners.
Table 2 provides a summary of the correlation analysis results. The stated hypothesis regarding the
influence of entrepreneurial orientation on technological innovation capabilities was tested using
regression. Prior performing the actual hypothesis test, correlations between the constructs were derived.
Table 2 shows the correlation structure of the data used in this study. As shown in table 2, positive
correlation exists between entrepreneurial orientation and technological innovation capabilities (r = .78;
 < .01). The individual hypothesis was then tested using a regression prediction model (Hair et al., 1998)
with technological innovation capabilities as the dependent variable. Results from the analysis are
summarized in table 3. As shown in table 3, entrepreneurial orientation is positively related to
technological innovation capabilities (β= .67; p < .01). Therefore, the hypothesis was supported.
Table2. Pearson Correlation
Entrepreneurial Technological
orientation orientation
Entrepreneurial 1.0
orientation
Technological .78(**) 1.0

orientation
** Correlation is significant at 0.01 level (2 tailed)
Table 3. Regression Analysis
Independent Coefficient B SEB

variables (β)
Dependent
variable:
Technological
orientation
capabilities
Entrepreneurial .67** .31 .08

orientation
DISCUSSION
The result shows that the entrepreneurial orientation (EO) is positively related to technological innovation
capabilities of the firms. The positive relationship between entrepreneurial orientation and technological
innovation capabilities found in the present study is consistent with prior studies, such as Boso et al.,
(2012b); Huang & Wang, (2011); Jones & Rowley, (2011); Pérez-Luño et al., (2011); Zahra, (2008); Zhou
& Tse, (2005); and Zortea-Johnston et al., (2011). Despite these evidences, Messersmith & Wales (2011)
elucidate a non-significant relationship between entrepreneurial orientation and small firms’
technological innovation capabilities. This study gives particular importance to the role of entrepreneurial
orientation in fast responding to the opportunities of new products and process innovations, which emerge
when some entrepreneurs have shrewdness into the value of some resources that others do not. Ren and
Yu (2016) argue that the entrepreneurial orientation has a great impact on improve the company’s renewal
capability and organizational learning capability specially for new enterprises.
The positive relationship implies that in making decisions that are related to technological innovation,
SME manufacturing firms are likely to consider whether or not they receive entrepreneurial opportunities.
This indicates that the nature of entrepreneurial orientation and its dimensions drive the firms to take into
account new ideas and involve in creative venture, tolerate risks and proactive activities. With respect to
the Malaysian SMEs manufacturing firms, it can be concluded that entrepreneurial orientation of the
firms is a sturdy tool for achieving technological innovation capabilities and this may be more relevant
during the economic instability which rocking Malaysian since last year.
From the managerial perspective, the obtained results have important implications for practitioners and
policy-makers. They provide beneficial and enlightening insights on the way entrepreneurial orientation
can improve the technological innovation capabilities of manufacturing SMEs. First, the study’s findings
can enlighten the institutions working in the Malaysian manufacturing industry on the significance of
technological innovation to support SME owners. The results also explain that technological innovation
is one of the major survival characteristics of a company that is seeking to achieve a strategic position in
the marketplace. Leveraging the findings may enable manufacturing SMEs in Malaysia to follow effective
plans to improve their innovation level through authentic knowledge that can enhance product and process
development.
CONCLUSION
The current competitive and challenging business environment has precipitated the investigation of the
constructs of technological innovation capabilities in the fields of management and marketing. For most
of the companies, knowledge about customers is the main focus where customers are deemed to be the
primary partners to achieve firm success. In other words, it is pertinent for firms to respond to the needs
of customers and satisfy them in order to thrive and develop. The improvement of SMEs’ technological
innovation capabilities has been the focus of decision-makers in developing nations, including Malaysia.
Further, entrepreneurial orientation has been widely acknowledged as a good factor that influence
technological innovation capabilities of industrial SMEs. Measuring the technological innovation
capabilities levels could assist the organizations to achieve superior performance and launch products and
processes.
The study’s results evidence the significant role of entrepreneurial orientation on technological innovation
capabilities. Enhancing this factor among manufacturing SMEs can help enhance their innovation level.
To conclude, the manufacturing sector in Malaysia should directly focus on their technological innovation
capabilities and ensure that their efforts and activities are aligned with the requirements of their customers
for innovative products and processes.
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THE CHALLENGES FOR AACSB ACCREDITATION AT CEIPA
BUSINESS SCHOOL: ADAPTING NEW STANDARDS FOR A
CONTINUOUS IMPROVEMENT PROCESS
Ramon Corona
National University, La Jolla, California 92037, USA
Diego Mauricio Mazo-Cuervo,

CEIPA Business School, Sabaneta, Colombia
ABSTRACT
CEIPA business school in Medellin, Colombia, is a 40-year-old institution that developed its education model
based on "problem nucleus,” allowing students to start their learning process by analyzing a real problem or
issue in a company, then developing the appropriate competencies and skills to solve it. The model
encompasses not only classroom and online acquisition of knowledge and skills, but also hands-on
experiences, and outdoor training for polishing of personal skills and managerial abilities.
This year, the institution has decided to initiate the AACSB accreditation process to enhance its reputation and
position in the highly competitive higher education landscape in Colombia, as well as to become a recognized
business school in the global marketplace.
This process will take several years and implies many structural and cultural changes toward a more evidence-
based process at all levels, thus generating many interesting opportunities for improvements.
This paper analyzes the process of adaptation of the AACSB standards for CEIPA, and the challenges for
change at all levels, including the student admission process, teaching methodology and the online component,
student services, and the installation of assurance of learning and assessment processes in all programs, to
name a few.
Since the AACSB accreditation of business schools in Latin American countries is still limited, this paper may
also help other institutions to embrace this challenge to become a world-class business school.
Keywords: accreditation, cultural changes, AOL, assessment, education, Latin America, Business School.
INTRODUCTION
CEIPA Business School was founded in 1972 in Medellin, Colombia, with the purpose of providing integral
education to students, by means of programs focused on the field of administration. During the first 20 years
of operation, it offered technological programs1 of about three and a half years: the majority of students had a
job in order to pay for their tuition.
In 1992, after a very long and difficult process, the National Ministry of Education authorized CEIPA to turn
from being a Technological Institution into a University. This change allowed CEIPA to offer five-year
professional undergraduate programs and post graduate education, as well as consulting and university
extension.
This authorization means a great strategic challenge for the institution since about 90% of higher education
institutions in Colombia have a department of administrative sciences, and this represents about 30% of the
students registered in higher education. In other words, this is the most competitive area with the highest
educational offer in the country.
1
In Colombia, higher education proposes three levels: technical professionals, technologists, and highly
qualified professionals. Besides the degree of professional responsibility, it is understood that the length of
their education differentiates the programs. Professional majors take longer.
© ICBTS Copyright by Author(s) The 2017 International Academic Research Conference in Paris 72
By using an approach towards the instruction of students for the corporate world within the country and the
region, and since as most of them work in order to pay for their studies, it was then necessary to ponder if the
classical model of university formation was appropriate for the education of the students at CEIPA.
Several consultations were conducted regarding the time it took for students to finish their studies, their
expectations, and their employers’. These studies showed that a high number of them (150, at the time),
graduated within the five years in the institution plan; that there were subjects that both employers and students
did not find any application for in their professional lives; and other perceptions that gave basis to work on a
new proposal.
The need to differentiate ourselves from others, and to offer an instruction of the highest quality for our
students, made us formulate the following hypothesis: Is it possible to educate a professional in business
administration in less than 5 years? Is there a pedagogical model that allows the optimization of resources and
teachers? How can we increase academic quality? These questions led us to undertake a national and
international search for a new educational model.
By mid-1995, the proposal to adopt an educational model based on problem-solving and theme-based nuclei
was consolidated. This model was implemented using a different timeline; that is, instead of studying two
semesters in a year, each of 16 weeks, we moved into creating five periods per year, each of 8 weeks. Therefore,
each nucleus had to entirely be redesigned, and the programs changed from 60 subjects to a maximum 24
nuclei.
By adopting the model, the programs could be structured into four-year programs, thus reducing the number
of required teachers while allowing students to focus on just one nucleus per period and the making of
applicability tasks connected to the industry.
CEIPA’s educational model
Problem-Based and Theme-based Nuclei of Studies have been an extensively discussed proposal with
application experiences (López N. and Puentes A. V. 2011; Silva, L. y Domínguez, F.2017), both positive and to
be improved, of which we will share some fundamental aspects originating from different authors. Some of
these compilations have been retrieved from the work of Edmee Córdoba, Master in Education from Javeriana
University who states:
“It is a group of similar knowledge which allows the definition of lines of research concerning the object of
transformation; methodological strategies, which guarantee the theory-practice relation and the communitarian
participation activities.” (ICFES, 1989).
“Convergence of knowledge: specific, popular, incorporated and pedagogical for the comprehension,
integration, and application of a theoretical-practical solution to problems.” (Munevar, R, and Aguirre, R, 1980).
“A basic work nucleus or ‘work around a basic nucleus’, exclusively involves a group of knowledge from
different fields and incorporates them, merging them into a work unit. The interrelated disciplines maintain
their identities, are grouped and thought in regards to a particular subject which serves as its nucleus.” (Garcia,
1988).
“A thematic nucleus represents a theoretical-practical group of learning experiences where conceptualization,

reflection, and application of knowledge takes place in relation to a specific topic or to a particular problem-
based situation. (Department of Pedagogy, Faculty of Education, University of Caldas, 1989; López N. and
Puentes A. V. 2011; Silva, L. y Domínguez, F.2017).
“In the words of Madgenzo (1986) “An Integrated Curriculum in which all disciplines or contents are related or
integrated, theory-practice. This means that theory cannot be worked separately from practice. Much less does
it mean to assign a teacher for theory and another one for practice.”
Problem-based Nuclei in the CEIPA Curriculum
We can define the problem-based nucleus in the CEIPA curriculum as the basic, dynamic unit for analysis,
planning, organization, integration, and continuous and improved construction of knowledge, specifically in
respect to the administrative and managerial fields, and related to solving problems specific to organizations.
In the model´s unique nature, each nucleus is designed and focused towards students and professionals’
effective confrontation and intervention on the restrictions organizations face, as well as the use of their skills;
centered on the knowledge and development of administrative and corporate theories and practices.
The articulated intent of the nucleus feeds off students and teachers’ experiences, and administrative
knowledge. It is structured so that, in practice, the executive’s intervention within the organization, allows it to
optimize its relationship with its settings (economic, social, political, legal, environmental), through the
aligning of its strategies and internal processes with its systems, structures, culture and different public
interests in order to fulfill its objectives.
It is, therefore, important to acknowledge that, as systems, both the corporate life as well as the educational
process of executives and managers, are related to the development of specific competencies that empower
them to contribute to the solving of problems (human, social, economic, technical, technological, etc.), which
are ethically acceptable, socially valid and effective within the scope of the corporate world.
On the basis of the aforementioned, the problem-solving perspective in which the nucleus is based, favors a
systemic and a systematic vision of the organization and its setting, and, in this way, students develop a
peripheral inside-outside view of their organization, in order to understand and intervene it at different times
and scenarios.
The above is then achieved through the work in and outside the classes, and on several instances (disciplines,
knowledge, methodology, tools, practice). During the nucleus practice stage, this is achieved through different
activities, readings, case studies, visits, online search, and basic research elements that go from one nucleus to
the next. It is also obtained by means of the different projects that students deliver; through, the socialization,
expansion, and discussion of experiences and from the expert collaboration of the teachers and, at times, from
the occasional invitees of the corporate sector (Cardona, 2011).
The corporate practicum, which have as much of art as they have of discipline, and the knowledge itself,
integrated to corporate theory (which effectively educates executives and managers, at least from a conceptual
point of view), has inter, trans and multidisciplinary contributions due to the complexity of the problems that
organizations face, and the need for integral contributions in order to solve them.
COMPONENTS OF THE
THEME-BASED NUCLEI AT
CEIPA
THEME
ECONOMIC, SOCIAL,
PROBLEM SOLVING CULTURAL
GLOBAL,
NATIONAL RELATED AND
AND LOCAL EDUCATIONAL
ENTREPRENEURIAL PROJECTS
SETTINGS SETTINGS
RESEARCH
ONLINE
RESEARCH PROCESS
Figure 1. The CEIPA educational model showing the process for student learning and different elements
involved in the process.
Given this unique background at CEIPA, this paper focuses on the process of the alignment of the AACBS
accreditation standards to this educational approach, and the correlated activities and changes needed to take
the university to the next level. In the Literature review section, this article first analyzes some of the existing
known challenges to AACSB accreditation in recent years with similar universities in Europe and other
countries, followed by a list of the various areas involved in the accreditation process, including the changes
and the implementation of new elements such as Curriculum Maps, Assessment plans and signature
assignments. On the conclusion section, the authors highlight some of the preliminary benefits of the process,
as well as the potential for discoveries and improvements in the next few years for CEIPA.
LITERATURE REVIEW
AACSB International is the leading accrediting organization for business schools (Bunker, Cagle and Harris,
2014) and has over 100 years of history as a prestigious institution that most business schools seek to be
connected to achieve their accreditation, and participate as members. According to AACSB’s website, its
accreditation represents the highest standard of achievement for business schools worldwide, with less than
5% of the world’s 13,000 business schools accredited (AACSB 2017). It is the longest serving global association
dedicated to advancing management education worldwide, with 786 business schools accredited in 53 different
countries, and it has 1,500 members from 90 countries around the world.
AACSB is not the only determinant of quality business education for business schools, but given the
proliferation of business programs worldwide and of MOOCs (Massive Open Online Courses), it has become
indispensable to have a framework of reference for quality by following the operational and academic
standards followed by the most prestigious and successful business schools in the 21st century. After several
modifications and iterations throughout the years, AACSB provides a set of revised 15 standards for quality
business education with the overarching pillars of engagement, innovation, and impact, and overseeing all
areas of the business school including a) mission and vision, management and innovation, b) participants
(students, faculty and professional staff), c) Learning and teaching, and d) Academic and professional
engagement. In other words, it covers all relevant areas of a business school that impact what the student
achieves in obtaining a degree.
Compliance with the AACSB standards does not guarantee a quality business education, but given the brand
reputation it certainly increases visibility for the institution, global recognition, and attracts better students,
increased funding as well as potential donors and partnerships. It is also used to assess the school’s mission,
vision, faculty teaching and scholarship, interaction with students, corporate partnerships, and impact to the
business community. Possibly the most significant change involves developing an appropriate mission and its
connection to faculty research consistent with that mission. Faculty often finds this very challenging in
assessing their performance.
To embark in any accreditation process implies changes at many levels of the organization as well as associated
costs, and thus institutions should be careful in considering this process to make sure it can produce the
expected benefits, both tangible (like attracting more and better students) and intangible (reputation and
positioning), to justify the additional investment.
There is also the gold standard for a business school to obtain the “triple accreditation”, from not only AACSB,
but also EQUIS and AMBA.
One of the examples in Latin America for the triple accreditation is IESA University in Venezuela, which
thanks to the accreditation process they claimed to have obtained many benefits, including raising standards
to a global scale, reviewing mission and vision, assessing strategy, systems and processes from different angles
(Jaén, 2013). Furthermore, Jaén (2013) states: “Accreditation encourages and helps develop a school’s own
standards for managing faculty in accordance with its mission, vision, and strategy, so as to serve a given
market”. The process also promotes internationalization and strengthens a school’s brand recognition, giving
stockholders a guarantee for quality education.
However, some questions need to be addressed before engaging in this process, including whether or not
accreditation fits the school’s strategy, why does a school want to get accredited, and what for, how does
accreditation will reinforce our strengths and diminish our weaknesses, to name a few. It is also recommended
to hire an experienced mentor or consultant, to help with the process with an outside perspective (Jaén, 2013).
Business schools are one of the most success stories in higher education in the last 50 years, both form an
academic (faculty, research, qualifications) and a business (customers, revenue, profitability) perspective
(Osbaldestone, 2015). Given the incremental competition between business schools world-wide, it is hardly
surprising that some leading schools have turned to accreditation to demonstrate their worth, and provide
quality assurance to their board of trustees.
On the other hand, critics emphasize that rigid accreditation following specific rules discourages
experimentation and innovation. Moreover, there are different types of university approaches for example
teaching, research, entrepreneurship, that find adherence to standards very limiting, and prefer to be more open
to new trends in the market, especially now with the TEL (Technology Enhance Learning), the online formats
and platforms, as well as recent learning models like Precision and Adaptive Learning as well as Competency-
based education. These new methodologies have been growing significantly in the last ten years and present a
challenge to all accreditation agencies.
To make matters more defiant, some business colleges have labored for 10 or more years to achieve AACSB
accreditation (Al-Khalifa, 2016). Therefore, it is a long process that requires many changes in all areas, sizable
investments, and a profound cultural transformation.
Assessment of student learning is one of the critical components of the AACSB accreditation process, in
addition to the changes in the internal operations to comply with the standards. They include revising the
mission statement that drives everything else in the process, admission process, student mentoring, community
engagement, as well as faculty qualifications and relevant scholarship. Historically, the evidence of student
learning was performed via direct assessment (exams, case analysis, presentations, papers, etc.), but the 2013
AACSB standards also allow schools more flexibility by incorporating indirect assessments using opinions of
students, alumni and employers in surveys, focus groups and exit interviews (Al-Khalifa, 2016). The new
standards also include a new classification of faculty research based on relevancy and engagement: Scholarly
Academics (SA), Practice Academics (PA), Scholarly Practitioners (SP), and Instructional Practitioners (IP)
(AACSB, 2017). This brings a whole new approach to make business schools more impactful to their students
and business community.
The accreditation process consisting in developing and implementing outcomes assessment, or assurance of
learning (AoL) to meet AACSB standards takes at least three to four years to develop learning goals and
objectives and to create the metrics and rubrics needed to measure student’s progress towards the goals and to
address deficiencies (closing the loop). Moreover, “The school uses well-documented, systematic processes for
determining and revising degree programs learning goals; designing, delivering, and improving degree
program curricula to achieve learning goals; and demonstrating that degree programs learning goals have been
met” (AACSB, 2013, p.5).
Marques and Garret (2012) presented an evaluation of the ongoing debate about the pros/cons of the AACSB
AoL procedures to the university’s constituents including students, faculty and administrators, given the
possible transformation changes in the implementation, to comply with the 2013 standards. On the positive
side, this created an increased faculty cooperation as well as transparency and consistency. However, there are
some philosophical concerns about the reliance and emphasis on quantitative methods of assessment as a
standardized approach for all institutions.
The AACSB Accreditation for CEIPA
While AACSB is the most sought after accreditation for business schools in Latin America, little has been
written about the challenges and efforts required to achieve this accolade, especially in the context of the
region and in particular in Colombia. There are a limited number of universities accredited by AACSB in
South America, including two in Brazil, one in Argentina, three in Peru, one in Venezuela, three in Chile, one
in Costa Rica, three in Mexico, and two in Colombia (AACSB, 2017); this is mostly due to the efforts and re
sources required both in terms of faculty, processes and financial.
As a result, in late 2015 the administrators at CEIPA decided to embrace the challenge of pursuing the AACSB
accreditation process, given the emerging opportunities from the new 2013 standards that expand alternatives
for non-traditional, teaching-oriented, and non research-oriented universities. As previously noted in the
introduction, CEIPA is a Business School with a problem-based educational approach and modular courses
that has been proven successful for the last ten years in their specific context, and the format has been refined
and successfully implemented. Therefore, the first challenge was to try to adapt and incorporate the AACSB
standards to the existing model without changing its essence. Other challenges include the prevalent cultural
approach to comply with norms and standards (as it is current practice for governmental accreditation in many
Latin American countries). In that sense, the new 2013 AACSB standards also bring a fresh look by connecting
all institutional activities to its mission, vision and values.
This paper intents to describe the initial efforts in disseminating the information about the AACSB standards,
as well some of the first steps in implementing the AoL and Assessment process for all programs at CEIPA.
Dissemination process
In late 2015, CEIPA organized a series of workshops about the AACSB accreditation to various groups
including full-time faculty, part-time faculty, and all other departments of the institution in Medellin
(Communications and TV, Planning and Quality Control, Business School staff and administrators, Finance
Laboratory, Community Development, Human Resources, Language School, Outreach and Business
Development, Online Development, Finance Department, IT, Library, Research Department, Entrepreneurial
Department, General Services), as well as in the campus in the city of Barranquilla.
The purpose of these sessions was to a) introduce the AACSB accreditation, b) to highlight the potential benefits
for CEIPA, and c) to discuss possible implications to each department, both in the short and long term. The
culture of mission-driven activities was especially emphasized and the continuation of the existing educational
approach that has been successful for CEIPA for a long time. Many of the implications were addressed and
clarified, to make sure all participants felt comfortable with the future changes.
CEIPA’s decision to pursue AACSB accreditation was confirmed by its Rector in a public video
communication to the university shareholders in December of 2015, emphasizing that the development and
implementation may take a few years, as well as accentuating the potential benefits and strategic positioning
for CEIPA in the region as a result of these efforts. Constant visit by consultants and periodic follow-up in
2016 and 2017, resulting in a series of initial actions described in the following section.
Fig 2. Matrix showing the various process and areas involved in CEIPA administration, starting with the
mission and vision, formation, supporting activities and Quality improvement and customer satisfaction.
Implementation and actions
1. Mission and Vision. CEIPA’s mission and vision was reviewed and analyzed to make sure it continues to
be relevant for the students and the community they serve. Their original “driving principle” (principio
rector) states “CEIPA Business School is a leading enterprise that manages business knowledge in online
and face-to-face environments; is committed to the development of people and organizations, to foster the
entrepreneurial spirit and integral formation”. (CEIPA 2017). Its ‘bridge’ values include: Integrality, learn
how to be; Respect, learn to live together; Flexibility, learn to learn; Responsibility, learn to do;
“Fractalidad”, learn how to meta-compete, or develop a wide variety of competencies and abilities, as
professionals and human beings; and Innovation, learn to be entrepreneur and develop new businesses.
2. Review and development of Program Learning Outcomes (PLOs). Each program director developed a
revised list of PLOs, linked to CEIPA’s mission and ILOs. This process generated some questions about
what the students should learn in each program and the connection to the ILOs. Adjustments were made
accordingly.
3. Review of Institutional Outcomes. The existing institutional goals and CEIPA’s “raison d’être” were
reviewed and formally established as Institutional Outcomes: to Meta-compete, Problem Resolution,
Leadership, Critical Thinking, and Social Responsibility. These will become integral part of all programs.
This process helped disseminate and reinforce CEIPA’s values and outcomes to experienced and new
program directors, as well as adjuncts.
4. Curriculum maps for all undergraduate and graduate programs. Program directors also developed a
curriculum map for each program, stating for each module/course if it was Introduction, Developed, or
Master of each PLO. Curriculum maps show a clear connection of the entire program with the expected
outcomes. This was probably the most beneficial action since it forced the program directors to revisit
each of the modules to make sure they have a logical connection with the PLOs. Several modules had to
change and others could be eliminated.
5. Student’s end of course evaluation. The evaluation was reviewed to make sure it had the information
needed, and implemented at the proper time and conditions for the students. It also should include the
expected parameters to assess the class environment, as well as find future enhancements and feedback
for the instructor.
6. Faculty qualifications. This is probably the most challenging standards to meet, given the existing group
of full time and part time faculty at CEIPA, and the notorious scarcity of professors with a Ph.D. or terminal
degree in the country. This is a big problem for all Colombian universities, and for CEIPA it means both
an analysis of each of the professors and the specific actions to elevate the academic level, as well as the
hiring of new faculty with the appropriate qualifications to meet AACSB standards, as described before
in this paper.
7. Outdoor training. CEIPA currently has a great assignment/activity at the end of the core requirements for
graduate programs, consisting on spending a weekend in a hotel outside the city (in the mountains) where
students participate in numerous activities, games, and social interactions, to test their abilities, including
leadership, team building, ability to negotiate, decision making, etc. It is also a great way to get students
more involved with CEIPA staff and administrators, and have a fun weekend.
CONCLUSIONS AND RECOMMENDTIONS
These activities and efforts are only the beginning of a long series of activities and changes for CEIPA to
become eligible for AACSB accreditation, but the most important thing is that it is an on-going process that is
starting to change the culture at CEIPA in all areas, and here are some examples: a) all fulltime and part time
faculty participate in sessions and workshops about AACSB accreditation, but most importantly by not only
changing and adapting existing programs to comply with the AoL, but also by incorporating AACSB criteria
in the development of new programs. One example is the new Graduate program in Financial Markets, as well
as the future MBA program, currently under approval by the Ministry of Education, where they presented the
justification and rationale of the program based on PLOs and curriculum maps, generating very positive results
from the government accreditors. b) Supporting departments are looking for ways to modify or adapt what they
currently do in supporting students, to adhere to AACSB. For instance, in the admissions area they are adapting
the initial self-development assessment for students (to determine competencies), to develop a follow-up test
later and measure changes and improvements in student’s abilities. This assessment includes effective
communication, persuasion, social intelligence, emotional performance, flexibility, self-confidence, openness
to new experiences, strategic decision-making, innovation and creativity, management, persistency, planning,
and teamwork.
The most important outcome of this initial process has been the cultural change and adaptation in embracing
the AACSB standards and criteria for faculty and administrators, and the legitimate aspiration to become one
the best business schools in the world in Latin America.
This paper describes the initial stages of the AACSB accreditation process and its benefits to this date, however
additional research will be performed in the next few years to describe and discover new improvements and
implications at CEIPA Business School.
REFERENCES
AACSB (2017). Retrieved from www.aacsb.edu on March 18, 2017.
Al-Khalifa, (2016). Outcomes Assessment and Quality Enhancement Through AACSB Business
Accreditation: The Case of the University of Bahrain. International Journal of Higher Education, Vol. 5, No.
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THE LEVEL OF DEVELOPMENT IN THE MUSLIM WORLD: A
FINANCIAL INQUIRY
Ihsan Isik, Ph.D.
Professor of International Banking and Finance, Department of Accounting and Finance,

Rowan University, Glassboro, New Jersey, USA,
E-Mail: isik@rowan.edu
ABSTRACT
Utilizing the most recent macro and micro-economic data available and calculating the modern measures of
financial sector development, this extensive inquiry purports to determine the current state of finance, both in
terms of depth (size) and breadth (diffusion) dimensions, at the 57 OIC countries vis-à-vis their income and
regional counterparts in the world. After controlling for country size and density factors, it also tries to
investigate the association between financial development and other country traits. It is astonishing to see that
three out of four adults in the Islamic world are excluded from the financial system. Furthermore, the size of
the financial industry in a typical Muslim country is almost fifty percent smaller than the typical country in
the world. Such level of financial exclusion and financial underdevelopment is an incredible waste of valuable
development resources.
Keyword Index Terms— OIC, Islamic finance, financial development, financial access
I. INTRODUCTION
INANCE has been shown to matter for countries’ economic development. The empirical and theoretical
Fevidence that finance causes growth is so robust that it is available at all levels (country, sector, firms, and
households) and supported by various econometric techniques. Furthermore, based on extensive cross-country
databases, researchers have found a strong and causal relationship between indicators of financial sector
development and GDP per capita growth, productivity growth, poverty, firm growth, and entry rates (Beck and
Levine, 2005). Finance is important for several reasons. It promotes growth through raising and pooling funds,
thereby allowing more and more risky investments to be undertaken, by allocating resources to their best uses,
by monitoring usage of funds, and by providing instruments for risk management. More importantly, finance
helps with improving income distribution and poverty reduction (Beck et al., 2004). Clearly, financial
development is not only pro-growth but also pro-poor. More abundant private credit creates a rising tide that
lifts all boats but gives a bigger lift to the poorest ones, according to Asli Demirguc-Kunt, a research manager
in the World Bank. Hitherto, the empirical literature behind the evidence that finance causes economic growth
has used financial sector depth, typically measured as the ratio of financial assets (e.g., private credit or liquid
liabilities or total deposits) to GDP as the “independent variable”. The underlying assumption was that financial
depth is a good surrogate for financial development. However, de la Torre et al. (2006) rightly argue that the
intricate web of institutional and market interactions at the heart of financial development can hardly be
reduced to a single dimension. Financial development, with all of its dimensions, not just financial depth,
lubricates and boosts the process of growth. These dimensions include stability, depth, and breadth (access to
finance). Of these dimensions, access to finance is a new discovery that has attracted wide attention from the
This paragraph of the first footnote will contain the date on which you submitted your paper for review. It will also contain support
information, including sponsor and financial support acknowledgment. For example, “This work was supported in part by the U.S. Depart-
ment of Commerce under Grant BS123456”.
The next few paragraphs should contain the authors’ current affiliations, including current address and e-mail. For example, F. A. Author
is with the National Institute of Standards and Technology, Boulder, CO 80305 USA (e-mail: author@ boulder.nist.gov).
S. B. Author, Jr., was with Rice University, Houston, TX 77005 USA. He is now with the Department of Physics, Colorado State
University, Fort Collins, CO 80523 USA (e-mail: author@lamar.colostate.edu).
T. C. Author is with the Electrical Engineering Department, University of Colorado, Boulder, CO 80309 USA, on leave from the
National Research Institute for Metals, Tsukuba, Japan (e-mail: author@nrim.go.jp).
World Bank to the United Nations and from politicians to academicians in a very short time.
Political democracy and market economy are separable concepts, but they tend to converge over the long
run. McKinnon and Shaw postulate that private intermediaries operating in a liberalized financial environment
(as distinct from government planners) make better use of funds at their disposal. There is much empirical
support for their view that financial liberalization leads to financial deepening and fosters a more efficient
allocation of investment (Williamson and Mahar, 1998). However, the well known study, “Good-bye financial
repression, hello financial crash” (Diaz-Alejandro, 1985), reminds us that the economic stage should be
prepared for change before liberalization is put in motion; otherwise the system could become prone to crashes,
as demonstrated lately in Chile, Mexico, Russia, and several Eastern and Central European countries. Banks
and securities markets cannot function properly unless their institutional foundations are strong. At the very
least, we have learned out of experience that sudden financial liberalization can create instabilities when the
underlying institutional structure contains serious weaknesses. Thus, the way financial liberalization occurs
also matters, particularly for ensuring that financial development rests on sound institutional footings. It seems
that what matters the most for growth is not the form in which financial services come, but the fact that they
are provided in an efficient manner and supported by a proper institutional and competitive environment
(Claessens, 2005).
Countries differ vastly in terms of economic and financial development around the globe. The average GDP
per capita in the Islamic world is $8,600, whereas, it is $16,800 in non-Muslim countries. The global average
income is $14,450 (see Table 1). Apparently, the income per capita, widely acclaimed measure of development
in a country, is significantly lower for the Islamic world than the rest of the world (almost half). Given the
extant literature on the positive association between finance and growth (see Levine, 2005 for the survey of
the literature), it is worthwhile to study the role of finance in the relative underdevelopment of the Muslim
countries. To that end, this study presents the state of finance in the Islamic world by measuring the modern
indicators of financial sector development (the breadth and depth statistics) at the 57 OIC countries. We also
test the differences between OIC and non-OIC countries in terms of financial development, after controlling
for economic development and regional endowments variations across countries. In the final stage, we relate
these financial depth (vertical) and breadth (horizontal) indicators to the measures of institutional, regulatory,
legal and physical and social infrastructure in the Islamic world (this stage is still under development).
II. THE LEVEL OF FINANCIAL DEVELOPMENT IN MUSLIM WORLD

The World Bank periodically publishes overall financial development indicators for many countries, as
initially developed by Hanohan (2007), and indicators of financial access and use, as developed by Beck et al.
(2006). In this analysis we utilize the most recent data sets collected by the World Bank, IMF, Heritage
Foundation and Pew Research Group to examine the state of finance in the Islamic world as well as study the
determinants of financial development, as measured by financial access and depth variables.
As Figure 1.1 reveals, the average income at the OIC countries is $8,600, whereas it is $17,000 at the non-
OIC countries and $14,000 at a typical country in the world. It is clear that the state of economic development
in Islamic countries is significantly lagging behind that of the rest of the world. The OIC countries can only
catch up by achieving faster economic growth than their peers. However, although its direction is debated, a
strong economic growth requires a strong financial system (Levine, 2005; Isik, 2008). As Figure 1.2
demonstrates, about 75% of the adult population in Islamic countries is outside the financial system, with no
formal account at a formal financial institution. This is a clear manifestation of underdevelopment of financial
system in the OIC countries. Whether money or talent or nature or knowledge, most developing economies,
including Muslim ones, tend to underutilize their scarce resources. So to speak, the challenge of economic
development in Islamic countries is on the shoulder of only 25% of the population. The financial resources of
the rest of the population are absent in the economic scene.
Fig. 1. Economic And Financial Development In The Islamic World – The GDP Per Capita & Diffusion Of
Financial Services At The OIC Members
Not surprisingly, given the low participation by the populace, the financial systems of Islamic countries are
rather shallow. The average size of the banking industry at the OIC countries is 43% of the national income,
whereas it is 76% in the non-OIC countries. The average size of securities markets in the Islamic world,
represented by stock market capitalization to GDP is also lagging behind that of the rest of the world by about
10%. Furthermore, the levels of private credit, liquid monetary resources and bank deposits, which are the raw
material for finance and necessary to finance entrepreneurship, innovation and productive investment
opportunities in an economy are also rather low in the Muslim countries. Certainly, the lower “inside money”
in the Islamic world means insufficient funds to support the intended faster growth. This could be a product of
the Muslim world’s prosperity level or the Muslims’ attitude to financial institutions.
We know that “above ground money” should be flowing to either into banks or in securities markets in a
typical economy. However, bond markets in the developing Islamic countries, are literally inexistent and the
stock markets occupy non-trivial place in their financial system. The average size of the banking system, as
mentioned, is less than half of the national income in the Islamic world, while most developed economies,
have a banking market at least as big as their national economy. Obviously, the “Muslim money” does not travel
to formal financial markets or institutions and are apparently wary of the current financial system. The
miniscule size of the financial system in the Islamic countries obviously suggests that there are substantial
drains from the system. Lack of trust in the financial system might have induced people to keep their money
under mattress or in alternative forms of value storage, foreign currencies, gold, or other jewelleries.
Any nation with important economic and financial goals needs every ‘dirham’, every talent, and every
positive NPV project, however small, which will help it attain these goals. Thus, financial inclusion and
financial diffusion are important and critical policy variables among the OIC countries to close the widening
historical gap with the rest of the world. Then, towards this end, the first task is to determine the current state
of finance in the Islamic world. What is the level of financial exclusion in this world? Why are many individuals
and firms operating underground? What obstacles are they facing in accessing financial services? What could
be done to broaden access and ‘domesticate’ idle resources, including the reluctant “Muslim money”?
III. WHAT EXPLAINS FINANCIAL DEVELOPMENT?

The limited breadth and depth of the financial sector at the OIC countries imply that there must be some
barriers to financial access and use. World Bank researchers have developed a number of indicators of barriers
to financial access and categorized them into three different dimensions: 1) Physical access refers to the points
of service delivery. 2) Affordability means the costs in terms of minimum balances and fees that bank customers
need to pay to obtain financial services. 3) Eligibility refers to the criteria (in terms of documents or other
requirements) that determine who can access financial services and who cannot. Explanations of the lack of
access fall into two dimensions: financial institutions’ specific factors and barriers from the overall institutional
environment.
Beck et al (2005) in their empirical analysis explored such factors and barriers to explain cross-country
variations in access to finance. Their correlation and regression results show that financial access indicators
are significantly and positively associated with conventional indicators of economic development (GDP per
capita) and financial development (private credit, liquid liabilities, and bank deposits to GDP). They also find
that geographic access to banking services is positively correlated with population density. Expectedly, access
to financial services is greater in larger economies. These results somewhat reflect economies of scale in the
provision of financial services. Another noteworthy finding is that where access is wider, firms report lower
financing obstacles. Moreover, even after controlling for country size and density, the authors detected
important associations between financial access and other country traits and policy variables. In particular,
they find that a better communication and transportation infrastructure is closely associated with greater access.
Countries with better-developed institutions enjoy greater levels of financial access. Quality of credit
information sharing systems is positively associated with measures of access to bank outlets, whereas,
restrictions on banks’ activities and entry requirements are negatively correlated with access. They also reported
that government ownership of financial intermediaries does not necessarily mean greater access and more
concentrated banking systems are unexpectedly associated with more usage of financial services. Foreign
banks do not directly increase access, nonetheless, their very existence pushes local firms to look downward
and reach more customers. Interestingly, the effect of outreach does not systematically vary across firms of
different size.In a follow up paper, Beck et al. (2006) examined the variations in barriers to bank access and use
around the world. Specifically, they investigate indicators of ‘physical access’, ‘affordability’ and ‘eligibility’
barriers to deposit, loan and payment services. They found that banks in more economically and financially
developed economies impose lower barriers. Barriers are negatively correlated with financial outreach and
with lower financing obstacles. They concluded that bank size and the existence of physical infrastructure in a
country are the most important determinants of barriers. In particular, they reported that larger banks demand
lower minimum balances to open a checking account, charge lower checking and savings fees, require fewer
documents to open accounts, impose lower minimum loan amounts for SMEs and consumer loans, need fewer
days to process loans, and are more likely to accept loan applications through non-traditional delivery channels
such as phone or the Internet. This is also another indication of scale economies in delivering financial services.
Hitherto, empirical and theoretical literature has not attached much weight to the relationship between
infrastructure, input costs, and financial depth and breadth.
IV. INCOME, GEOGRAPHY & FINANCE IN THE MUSLIM WORLD

Because there is a close association between GDP per capita and access and use of financial services, we
constructed Table 1, to control for wealth, when comparing the OIC members with the rest of the world. The
results indicate that in the great majority of financial depth and breadth statistics, the OIC countries lag behind
those in the non-OIC countries even after controlling for differences in income. In the low, middle income and
high-income country groups, the Muslim countries tend to follow from behind the rest of the world. However,
the Muslim countries demonstrate relative superiority in the lowest income group as compared to their peers.
The cultures, traditions and life styles are determined by geography. In addition, the endowments also
significantly differ across localities.
In Table 2, we compare the financial development statistics of the OIC members with those of the neighbour
countries in the same region. We come across with a similar finding that the OIC countries do not fare as well
as their neighbours in terms of financial breadth and depth. Table 3 provides the correlations between financial
depth and breadth measures. It is clear that financial development is very critical for economic growth as all
the financial development measures are significantly correlated with GDP per capita.
Also the Muslim population percentage variable correlations demonstrate, as the fraction of Muslims
increase in a country, the financial development variables tend to diminish. It is evident that average Muslims
do not approve or find the current financial system and products appealing to his or her expectations or beliefs.
This is both a challenge and also opportunity in the Islamic world to develop inventive products to increase
financial inclusion among the populace.
TABLE I
FINANCIAL DEVELOPMENT (DEPTH AND BREADTH) STATISTICS OF THE OIC COUNTRIES BY
GDP QUINTILES [Q1=LOWEST, Q5=HIGHEST]
TABLE II
FINANCIAL DEVELOPMENT (DEPTH AND BREADTH) STATISTICS OF THE OIC COUNTRIES BY
GEOGRAPHICAL REGIONS
TABLE III
CORRELATION AMONG FINANCIAL DEVELOPMENT INDICATORS WITH ECONOMIC
DEVELOPMENT AND PERCENTAGE MUSLIM POPULATION
V. CONCLUSION
Nearly 75% of the Muslim adult population is unbanked. In other words, the fraction of adults with an account
in any financial institution in the OIC member countries is about 26%. This implies that access to financial
services is still a privilege in the Islamic world, confined to only wealthier and more connected segments of
society. However, in advanced countries, the issue of financial exclusion has been eradicated from the public
sphere, like malaria and tuberculosis of the past. The level of financial access is 100% in Netherland, 99% in
Sweden, 97% in Germany and 96% in France and Canada. The average inclusion in the OECD countries is over
90%. However, the OIC members are lagging behind the world in almost all financial development statistics,
in terms of both depth and breadth.
The state of finance in Islamic world should certainly be recorded and further studied to determine its causes
and draw some lessons for the future. Recent theoretical and empirical literature shows that financial
development (depth) and financial access (breadth) are not only pro-growth but also pro-poor in both absolute
and relative terms. The countries with more developed financial systems both in terms of depth and breadth
tend to have higher growth rates, alleviate poverty, and mitigate income inequality faster.
If examined from a fine angle, the excluded represent forgone opportunities to expand the economic pie and
individual slices for everyone, including the included. So, what can be done to broaden access to financial
services and raise opportunities for all in the Islamic world? Before answering this vital question and outlining
policy prescriptions, one first should ask another vital question. What are the reasons for the financial
exclusion?
We need to remember that use of financial services is distinct from access to financial services. Non-users of
formal financial services are either voluntarily or involuntarily excluded. Some people may opt out using such
services voluntarily although they have no access issues. Voluntarily excluded people may choose not to use
financial services for cultural or religious reasons or simply they may refuse to use them due to lack of need
or demand. On the other hand, some people are involuntarily excluded; i.e., they wish to use financial services
but they cannot access them for various reasons.
Some people are screened out by banks because they do not qualify due to high risk or insufficient income.
In some extreme cases, people are refused by lenders for no other reason than their ethnic background, gender,
religion or age. Sometimes, financial institutions may lack adequate transaction technology or infrastructure to
accommodate the people at the fringes, as serving them now may be prohibitively costly and risky. Lastly,
some people simply cannot afford financial services due to high minimum balances/fees, or current services
may not be tailored to their needs. Thus, policymakers who wish to expand financial access probably may not
be able to do much if certain people are rightly excluded due to their high chance of default. However, they
can certainly take some actions against discrimination, insufficient informational and contractual
infrastructure, and high provisional costs of financial services.
In this study, we examine the state and determinants of financial development in the OIC countries.
Specifically, what excludes three out of four Muslims from accessing financial services? For involuntary
exclusion, four possibilities may exist: affordability, insufficient income and high-risk profile of potential
clients, discrimination, or weak contractual and informational frameworks. To answer the question, we must
trace the flow of money. Total assets of banks in the Islamic world are only half of their GDP. The OIC
members lag most countries in financial depth. Either financial institutions or financial markets channel monies
of modern societies. The financial markets in the Islamic world do not seem to be the secondary address for
the money. One cannot help but ask then, if money is not kept in banks or markets in these countries, where is
it? The subsequent critical question is why money is escaping from the system?
Part of the flight from banks may spring from socio-economic reasons. Religious or cultural concerns may
still keep away some groups from the ‘mundane’ financial institutions; despite the fact that the spread of zero-
interest financial institutions in the world in recent years has notably shrunk this unbanked segment of the
society. More can be done on this front by introducing more financial services and products compatible with
religious concerns.
Islamic jurists could be called into service to mitigate the theological concerns of the pious and help invent
new products to domesticate still untapped funds. As for discrimination, there are some concerns in certain
circles that rural money is collected and loaned in urban areas. Moreover, holding banking structure is still a
prevalent organizational form in the OIC members. Various major banks are under the control and ownership
of business holdings and conglomerates or state.
Many Muslim entrepreneurs are complaining that some banks turn them down, if they have projects to enter
a business line or industry where the parent company of the bank is doing business as well. As for injustices
on the basis of religion, gender, age, or ethnicity, it is hard to judge without concrete evidence. We need more
investigation. However, the bureaucracy of opening an account or obtaining a loan at the OIC members is
much more problematic as compared to other countries (Isik, 2009).
The red tape observed in many Muslim countries could be some, albeit weak, sign of discriminatory
tendencies. Legislations in the U.S., like the Community Reinvestment Act, which bars red-lining certain
regions, and the Equal Credit Opportunities Act, which prohibits discrimination, could be enacted in the
Muslim world to protect the innocent. Also, employing bank clerks speaking local dialects, or representing
some ethnicities could help. Alternatively, the real problem could be a matter of poverty or financial illiteracy,
not access, for certain groups. Then, financial or general education policies gain importance.
The large capital drain from the financial system at the OIC countries also signifies the trust issues inflicting
their societies. Cash is still the most prominent payment instrument. Check payments are not common. Thus,
people carry big stacks of cash around to settle daily transactions. Furthermore, bank failures; economic crises,
social unrest and security issues do not help. Hence, the severe anorexia of Muslim citizens to deal with banks
may be engraved in their psyche after a number of very costly and frequent mass bank failures, resulting
mainly from outright fraud of bank owners and managers.
The lack of an effective legal and contractual system that will timely resolve conflicts between economic
agents may be keeping many Muslims at bay. Market frictions like information asymmetries and agency
problems can only be overcome by constructing a credible legal system, effective oversight, prudent
regulations, transparent government and corporations, reliable accounting and auditing practices, and market
discipline.
Moreover, inflationary fears of the past could still be in the public subconscious, which might be encouraging
the holding of outside money like gold. Then, prudent macroeconomic policies become instrumental. There are
also some signs that many banking services are not affordable for an average Muslim citizen. Fees charged on
savings accounts, mortgage, business, and SME loans are considerably above world medians. This can be the
result of weak competition among the banks at the OIC members.
According to many pundits of financial development and access, public efforts in the long run should be
geared towards improving the enabling institutional environment, where all agents would feel safe to play and
deal with strangers. However, for those who are impatient and suffering from reform fatigue, the best medicine
in the short run is a stiff competitive environment, which encourages self-discipline in everyone.
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University Press Essays in International Finance, No: 211, November.
MULTI-CRITERIA DECISION MAKING AND THE CHOICE OF
HOTELS IN TOURISM SECTOR
Bahadır Gülsün*,Sena Yıldız**, Betül Yılmaz***

*Bahadır Gülsün, Yıldız Technical University, İstanbul, Turkey
E-Mail: bahadir2548@gmail.com
**Sena Yıldız, Industrial Engineering, Yıldız Technical University, İstanbul, Turkey
E-Mail: senayildzz@gmail.com
***Betül Yılmaz, Industrial Engineering, Yıldız Technical University, İstanbul, Turkey
E-Mail: betulyilmaz94@hotmail.com
ABSTRACT
In recent years, the choice of hotels for the holidays, has become more important to people. Therefore, a
rapid change and improvements lived in tourism sector for achieving the increasing level of customer needs.
In this paper, firstly decision theory and decision types are explained and the main features of multiple
criteria decision making (MCDM) problems are summarized followed by a list of typical techniques used in
MCDM analysis. Then the subject of MCDM is briefly demonstrated with an example which is the choice of
hotels in tourism sector. In this example, five different hotels in Antalya, Balıkesir and Aydın cities were
estimated by using three different multi criteria decision- making methods: Analytic Hierarchy Process
(AHP), TOPSIS and VIKOR which are the most widely used MCDM methods. The main purpose of this
study is to determine the optimum hotel alternative by expressing the weighting grades of selection criteria
and the relationship between criteria and alternatives. Surveys are made with hundred people for weighting
the criteria. Also five criteria for the selection of hotels are specified which are room fee, food diversity,
cleaning service, security service and proximity to the sea. Finally relevant references are listed.
Keywords—Criteria, MCDM methods, selecting a hotel alternative
INTRODUCTION
In today's rapidly changing, increasingly difficult living and working conditions are forced to people,
institutions or businesses constantly "good" and "success" to make a decision. To survive in such an
environment, gain competitive advantage and making healthy decisions is a necessity to maintain it.
Traditionally, in arriving at a decision, collected data related to the decision-making process and by
analyzing the results intiutively. But now in many cases, to be able to succeed decisions an alternative way of
behavior are evaluated with the support of scientific decision-making techniques. Multiple criteria decision
making (MCDM) refers to making decisions in the presence of multiple, usually conflicting, criteria. MCDM
problems are common in daily life. In personal context, a house or a car one buys may be characterised in
terms of price, size, style, safety, comfort, etc. In business context, MCDM problems are more complicated
and usually of large scale. For example, many companies in Europe are conducting organisational self-
assessment using hundreds of criteria and sub-criteria. Purchasing departments of large companies often need
to evaluate their suppliers using a range of criteria in different area, such as after sale service, quality
management and financial stability. The development of the MCDM discipline is closely related to the
advancement of computer technology. In one hand, the rapid development of computer technology in recent
years has made it possible to conduct systematic analysis of complex MCDM problems. On the other hand,
the widespread use of computers and information technology has generated a huge amount of information,
which makes MCDM increasingly important and useful in supporting business decision making. There are
many methods available for solving MCDM problems as reviewed by Hwang and Yoon [1981]. There were
calls in early 1990s to develop new methods that could produce consistent and rational results, capable of
dealing with uncertainties.
SECTION 1 DECISION THEORY
Decision theory is theory about decisions. The subject is not a very unified one. To the contrary, there are
many different ways to theorize about decisions, and therefore also many different research traditions. This
text attempts to reflect some of the diversity of the subject. Its emphasis lies on the less (mathematically)
technical aspects of decision theory. Modern decision theory has developed since the middle of the 20th
century through contributions from several academic disciplines. Although it is now clearly an academic
subject of its own right, decision theory is typically pursued by researchers who identify themselves as
economists, statisticians, psychologists, political and social scientists or philosophers. There is some division
of labour between these disciplines. A political scientist is likely to study voting rules and other aspects of
collective decision-making. A psychologist is likely to study the behaviour of individuals in decisions, and a
philosopher the requirements for rationality in decisions. However, there is a large overlap, and the subject
has gained from the variety of methods that researchers with different backgrounds have applied to the same
or similar problems. [1]
SECTION 2 MULTI – CRITERIA DECISION MAKING
Multi-criteria decision making is a sub-discipline of operation research that explicitly considers multiple
criteria in decision-making environments. Whether in our daily lives or in professional settings, there are
typically multiple criteria that need to be evaluated in making decisions. Structuring complex problems well
and considering multiple criteria explicitly leads to more informed and better decisions. There have been
important advances in this field since the start of the modern multiple-criteria decision-making discipline. [2]
2.1 MCDM Problems

Multi-criteria decision-making problems can be examined under three main headings. These are choice,
sorting and ranking problems. [2]
Choice Problems: Purpose of choice problems is to determine the best alternative or to be compared with
each other that many alternatives available is to make a good choice in a difficult group. [2]
Sorting Problems: In this type of problems, alternatives are classified according to certain criteria or
preferences. The main aim in here is to reunite the alternatives show similar characteristics and behavior. [2]
Ranking Problems: In ranking problems, alternatives are classified from good to bad in measurable or
identifiable manner. [2]
2.2 MCDM Methods – An overview

Today, there are many techniques used in solving the current multi-criteria decision-making problems,
thanks to advancing technology for the implementation of these techniques developed computer programs to
solve problems trying to researchers, managers and decision-makers are quite bring great convenience. The
MCDM methods used according to the types of problems are as follows ; [2]
Table 1
Classification of MCDM Method
Choice Problems Sorting Problems Ranking Problems
Method AHP ELECTRE III AHP Sort
Method ANP TOPSIS UTADIS
Method MAUT/UTA PROMETHEE ELECTRE-Tri
Method PROMETHEE AHP FlowSort
2.2.1 ANALYTIC HIERARCHY PROCESS (AHP) METHOD

AHP can be described as a multi-criteria decision making and forecasting method that is used at decision
hierarchy and it gives the percentage distribution of decision points in terms of factors that affect the
decision. AHP is based on comparisons that are used to define the importance value of the decision points in
terms of the factors that affect the decision using a predefined comparison scale. [3]
To make comparisons, we need a scale of numbers that indicates how many times more important or
dominant one element is over another element with respect to the criterion or property with respect to which
they are ompared. [4]
Table 2
Evaluation Scale in AHP
Importance Levels Value Definitions
1 Both factors have equal value.
3 1.factor is more important than the 2.factor.
5 1.factor is much more important than the 2.factor.
7 1.factor has a very strong importance when compared the 2.factor.
9 1.factor has a superior importance when compared the 2.factor.
2,4,6,8 Intermediate values
The main purpose is to determine how much the importance values (relative priority) reflect the reality. In
order to consider AHP valid, matrices must be consistent. [3]
2.2.2 TOPSIS METHOD (Technique of Order Preference by Similarity to Ideal Solution)

TOPSIS is a multiple criteria method to identify solutions from a finite set of alternatives. The basic
principle is that the chosen alternative should have the shortest distance from the positive ideal solution and
the farthest distance from the negative ideal solution. [5]
A positive ideal solution maximizes the benefit criteria or attributes and minimizes the cost criteria or
attributes, whereas a negative ideal solution maximizes the cost criteria or attributes and minimizes the
benefit criteria or attributes. [6]
2.2.3 VIKOR METHOD

The VIKOR method was developed for multi-criteria optimization of complex systems. It determines the
compromise ranking-list, the compromise solution, and the weight stability intervals for preference stability
of the compromise solution obtained with the initial (given) weights. [7]
This method focuses on ranking and selecting from a set of alternatives, and determines compromise
solution for a problem with conflicting criteria, which can help the decision makers to reach a final solution.
[8]
SECTION 3 THE HOTEL SELECTION IN TOURISM SECTOR
Nowadays, with the development of the tourism sector, the expectations and demands of customers are
changes. Customers have the choice of accommodation businesses have started to act more prudently. These
developments have led to a rapid increase in competition in terms of accommodation establishments. In
particular, the hospitality industry, offering alternative services is a sector that is experiencing the intense
competition. [9]
In this study, with the help of AHP, TOPSIS and VIKOR methods, the hotel can provide the highest
satisfaction to our customers, that is to determine the most suitable hotel. In this context, in Antalya,
Balıkesir, Bodrum and Aydın regions five hotels operating in the basement were discussed by decision
makers because the five regions are important touristic city in Turkey. It was also considered that the
decision makers should have experience about these hotels which are chosen due to evaluating the criteria.
Hotels under investigation were evaluated for five different criteria. These criteria are room fee, food
diversity, security service, cleaning service and proximity to the sea. For identifying these criteria and their
importance, there is a survey which includes over hundred people’s suggestions. Especially, these people
who spend their summer vacations in hotels regularly were chosen. In the following table, we can see the
hotel alternatives and criteria.
Table 3
Hotel Alternatives and Criteria
HOTEL CRITERIA
S1 LIONA RESIDENCE BODRUM K1 ROOM FEE FOR ONE NIGHT (TL)
S2 CAPRICE PALACE AYDIN K2 CLEANING SERVICE
S3 SAH-INN PARADICE ANTALYA K3 FOOD DIVERSITY
S4 TITANIC BEACH LARA ANTALYA K4 SECURITY SERVICE
S5 SUNLIGHT HOTEL BALIKESIR K5 PROXIMITY TO THE SEE (m)
3.1 Solutıon with AHP Method

Firstly, the decision matrix which has the five alternatives and five criterias was created and the best
values were determined in the decision matrix.
Table 4
Decision Matrix and Normalized Decision Matrix
COST BENEFIT BENEFIT BENEFIT COST COST BENEFIT BENEFIT BENEFIT COST
K1 K2 K3 K4 K5 K1 K2 K3 K4 K5
S1 82 6 3 5 20 1,000 0,667 0,333 0,556 0,500
S2 235 6 5 8 10 0,349 0,667 0,556 0,889 1,000
S3 303 9 9 9 50 0,271 1,000 1,000 1,000 0,200
S4 394 8 7 9 100 0,208 0,889 0,778 1,000 0,100
S5 136 5 4 4 300 0,603 0,556 0,444 0,444 0,033
Comparing the criterias with each other can provide more specific and accurate solution. Because of that,
the five criterias were evaluated by over a hundred people and according the results comparison matrix was
created and criteria weights were calculated.
The weighted matrix was created with multiplying criteria weights and normalized decision matrix and it
was decided which hotel should be chosen. Consequently, it was found that the first hotel alternative is the
most appropriate option that is LIONA RESIDENCE (BODRUM).
Table 5
Weighted Matrix
K1 K2 K3 K4 K5 Average Normalization Nominal Value
S1 0,515 0,224 0,027 0,015 0,020 0,160 0,271 1,356
S2 0,180 0,224 0,045 0,024 0,040 0,103 0,174 0,868
S3 0,139 0,336 0,082 0,027 0,008 0,118 0,200 1,002
S4 0,107 0,299 0,064 0,027 0,004 0,100 0,169 0,847
S5 0,311 0,187 0,036 0,012 0,001 0,109 0,185 0,926
0,591 1,000 5,000
3.2 Solutıon with TOPSIS Method

First of all, ideal and negative ideal alternatives should be determined in normalized matrix and then
maximum matrix and minimum matrix are created with determining the difference between every value and
maximum or minimum value in every column.
Table 6
Maximum and Minimum Matrix
MAXIMUM MINIMUM
S1 0,000 0,112 0,055 0,012 0,020 S1 0,408 0,037 0,000 0,003 0,019
S2 0,335 0,112 0,036 0,003 0,000 S2 0,073 0,037 0,018 0,012 0,038
S3 0,032 0,149 0,055 0,015 0,007
S3 0,376 0,000 0,000 0,000 0,032
S4 0,000 0,112 0,036 0,015 0,003
S4 0,408 0,037 0,018 0,000 0,036
S5 0,203 0,000 0,009 0,000 0,000
S5 0,205 0,149 0,045 0,015 0,038
Lastly, the total values of every row are found in minimum and maximum matrix. Ratio ofow totals gives
us the best solution. Here, the first alternative has the maximum rate. Because of that first alternative that is
LIONA RESIDENCE (BODRUM) should be chosen according to this method.
Table 7
Ratio of Row Totals
ROW ROW
TOTAL TOTAL MIN/MAX
(MAX) (MIN)
0,198 0,467 2,353
0,487 0,178 0,367
0,408 0,258 0,632
0,499 0,166 0,332
0,453 0,213 0,469
3.3 Solutıon with VIKOR Method

The best and worst values are determined in the first step of VIKOR Method from decision matrix.
Table 8
The Best and Worst Values of Decision Matrix
BEST (fj ) WORST (fj )
K1 82 394
K2 9 5
K3 9 3
K4 9 4
K5 10 300
In second step, by substracting from best values to decision matrix values dividing by substracting from
best value to worst value in decision matrix and normalization decision matrix is created by using rij
variables. Also criteria weights are calculated according to criteria comparison matrix that compose of
between one to ten values between criteria. Moreover, by multiplying the criteria weights and rij values
weighted normalization matrix is obtained. Then in the fourth step, Si and Ri value are calculated. These
values demonstrate the average and worst group scores for alternatives. Si value is calculated by sum of the
weighted normalization matrix elements that are vij values. Ri value is maximum of the vij values.
Table 9
Weighted Normalization Matrix and Si-Ri Values
Sİ (AVARAGE) Rİ (WORST GROUP)
K1 K2 K3 K4 K5
S1 0,000 0,342 0,111 0,046 0,003 0,502 0,342
S2 0,144 0,342 0,074 0,011 0,000 0,572 0,342
S3 0,208 0,000 0,000 0,000 0,011 0,219 0,208
S4 0,294 0,114 0,037 0,000 0,025 0,470 0,294
S5 0,051 0,456 0,093 0,057 0,082 0,738 0,456
In step 5, to calculate the Qi values firtly min Si, max Si, min Ri and max Ri values are found. Another
parameter q that use to calculate Qi values shows maximum group benefit. Then, Qi values of each alternative
are calculated by using the different q values.
Table 10
Calculation of Qi Values
CALCULATING Qİ VALUES S* 0,219

Sİ Rİ (q= 0) (q= 0,25) (q=0,5) (q=0,75) (q= 1) S- 0,738
S1 0,502 0,342 0,540 0,541 0,542 0,543 0,544 R* 0,208
S2 0,572 0,342 0,540 0,575 0,609 0,644 0,679 R- 0,456
S3 0,219 0,208 0,000 0,000 0,000 0,000 0,000
S4 0,470 0,294 0,346 0,380 0,415 0,449 0,483
S5 0,738 0,456 1,000 1,000 1,000 1,000 1,000
Table 11
Ordering The Alternatives
(q= 0) (q= 0,25) (q=0,5) (q=0,75) (q= 1) Sİ Rİ
S1 3 3 3 3 3 3 3
S2 3 4 4 4 4 4 3
S3 1 1 1 1 1 1 1
S4 2 2 2 2 2 2 2
S5 5 5 5 5 5 5 5
In sixth step, by aligning Si, Ri and Qi values from small to large, three ranking list is obtained. Then, to
test the accuracy of the ranking, alternative with a minimum value is checked whether it meets two
conditions. Condition 1 is acceptable advantage condition and condition 2 is acceptable stable condition.
Their formulas are given in below table.
Table 12
Monitoring Conditions and Accuracy Test
Q (A )
2
0,346 0,380 0,415 0,449 0,483
Q (A1) 0,000 0,000 0,000 0,000 0,000
Q (A2) - Q (A1) 0,346 0,380 0,415 0,449 0,483
DQ 0,25 0,25 0,25 0,25 0,25
CONDITION 1 CORRECT CORRECT CORRECT CORRECT CORRECT
CONDITION 2 CORRECT CORRECT CORRECT CORRECT CORRECT
RESULTS AND ASSESSMENTS
The change in customer demands are increasing due to hard competition conditions of global world and it
affects hotel businesses profoundly. For the hotels to be able to stand out in the competitive environment, it is
necessary for them to satisfy their customers’ expectations by offering high quality services and even by
making further improvements in their service design. Those hotels that adopt such styles are able to achieve
customer loyalty and satisfaction through meeting and considering their expectations which in turn in brings
along profitability.
In this study, three MCDM methods (AHP, TOPSIS, VIKOR) were described and used for hotel choice in
tourism sector. First of all, it was considered about the important criteria which are used in hotel sector and
they are identified as room free, cleaning service, food diversity, security service and proximity to the see by
decision makers. Criteria weights are also necessary for importance level. They are calculated with a survey
which has over hundred people. Moreover, five hotel alternatives are chosen in different places. They are
LIONA RESIDENCE in Bodrum, CAPRICE PALACE in Aydın, SAH-INN PARADICE and TITANIC
BEACH LARA in Antalya and SUNLIGHT HOTEL in Balıkesir.
According to AHP and TOPSIS method, LIONA RESIDENCE is found the most appropriate alternative
when it is focused on the criteria weights. However, VIKOR method did not give any result for choosing the
most available hotel since all alternative hotels provided on two conditions which are acceptable advantage
condition and acceptable stable condition. Therefore VIKOR method is not relevant with this study that is
hotel choice in tourism sector. As a result, when all methods are evaulated , the recommended alternative that
is LIONA RESIDENCE in Bodrum should be chosen according to all determined criteria.
REFERENCES
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Vol. 1, No. 1, pp. 83-98.
[8] Sayadi M. K. , Heydari M. and Shahanaghi K. (2008). “Extension of VIKOR method for decision
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[2] Yıldırım F. (Ed.) , Onder E. (Ed.) (2015). “Cok Kriterli Karar Verme Yontemleri” (2. Edition), Bursa.
[7] Zormpa D. , Τzimopoulos C. , Evangelides C. and Sakellariou M. (2015). “Multiple Criteria Decision
Making Using VIKOR Method. Application in Irrigation Networks in the Thessaloniki Plain”
University of Thessaly, Greece.
CASH CONVERSION EFFICIENCY, DAYS OF WORKING
CAPITAL IMPACT ON FIXED CAPITAL AND WORKING CAPITAL
INTENSIVE FIRMS
OSCAR BRIONES, DBA (c)
UNIVERSIDAD DE ESPECIALIDADES ESPIRITU SANTO

GUAYAQUIL, ECUADOR
oscarfbriones@hotmail.com
VERÓNICA NAVAS
UNIVERSIDAD DE ESPECIALIDADES ESPIRITU SANTO

GUAYAQUIL, ECUADOR
veronavas@uees.edu.ec
ABSTRACT
Working capital management performs a key role on companies. However, firms still ignore its importance
because it involves only short term periods; management sometimes is more oriented toward long term
investment financial decisions, which might seem more relevant to increase profitability. However, research
about working capital impact on profitability has been developed in several industries and countries. Only
few studies have been conducted on a dollarized developing economy in the twenty first century. Our
research attempts to explain this relationship, examining the effect of Cash Conversion Efficiency (CCE),
Debt Ratio (DR), Days of Accounts Receivables (DAR), Days of Inventory (DI), Days of Working Capital
(DWC), Net Current Assets/Total Assets (NCA/TA) and Ln of Total Assets (Ln TA), on profitability measured
by Return on Assets (ROA). The study employed cross-sectional methodology to analyze four hundred and
sixty companies selected from Superintendence of Companies 2013 database. The sample was divided in two
groups according to current assets ratio: Working Capital Intensive and Fixed Capital Intensive group. The
research revealed that CCE, DR, DAR, DI, DWC influenced ROA, in Working Capital Intensive group.
However, Fixed Capital Intensive group analysis demonstrated that only CCE, DI and DWC had an impact
on profitability. Additionally, we developed a proposition with a different combination of variables in an
attempt to better explain the dependent variable in the Fixed Capital Intensive group.
Keywords:, cash conversion efficiency, working capital intensive, fixed capital intensive.
INTRODUCTION
Working capital management and its impact on profitability has been discussed by several authors
throughout the years: Shin and Soenen (1998), Lazaridis and Tryfonidis (2006), Pimpaplur and Kulkarni
(2011), Malik and Bukhari (2014), Ofunya (2015) and others. They have proposed different models to identify
the relationship between the components of working capital and profitability measures. However,
management’s main concern is usually long term investment financial decisions, which might represent
higher revenues. These lead firms to ignore the relevance of working capital and its components in business
operations. According to Samiloglu and Dermigunes (2008), despite positive returns, bankruptcy is caused by
inappropriate management of working capital, which indicates that companies should have a balance
between liquidity and profitability. Genoni and Salvador (2004) argue that working capital is not only a
measure to be considered, but also a strategic decision within a company. Its management not only affects
profitability and risk, but also market value (Deloof, 2003; Howorth & Westhead, 2003; Jayarathnea, 2014).
Companies’ owners consider that working capital management is only a concern for the financial
manager. This practice, extended over Latin American companies, ignores that finance departments do not
control all the decisions that influence working capital needs, but also depends on the industry where the
company operates. It is a responsibility that concerns all managers, in order to keep all working capital
components at an optimal level, avoiding negative effects in liquidity (Sanz, 2012). Still, these decision
makers have a lack of knowledge about which is the ideal level of liquidity or current assets to maximize
companies’ value (Brealey, Myers, & Allen, 2008). We believe that liquidity is linked with working capital.
On the latter, Harris (2005) considers that financial managers’ view of working capital is to find resources to
fund the gap between current assets and current liabilities. Hall (2002) expands on the previous suggesting
that a more complete approach for working capital management should exist, covering activities that involve
product, customer and vendor.
An appropriate working capital management involves eliminating the risk of not meeting short term
commitments as well as avoiding excess of investment in current assets (Eljelly, 2004). Ganesan (2007)
expands on the latter as he mentions that it demands an optimum level of all its components, receivables,
inventory and payables in the daily activity of the company. However, there are several factors affecting
working capital level, for instance managers can decide to dispose of liquid assets if there is a need of
resources for an investment. This could include pushing inventory levels to their lowest point, adopting an
aggressive working capital policy (Palombini & Nakumara, 2012). This decision may lead to stockouts,
liquidity issues and therefore, problems for the company to operate normally. In another scenario, a
conservative approach can be taken by managers, keeping high levels of current assets, which can cause
adverse effects in profitability (Van Horne & Wachowicz, 2004).
This topic has been studied across industries and countries. Among these studies there has been a
consensus about the importance of proper working capital management practices and its impact on
company’s performance and profitability (Pitt, 2014). Some economies such as the United States (Belt &
Smith, 1991), Australia (Gill, Biger, & Mathur, 2010), Canada (Khoury, Smith, & MacKay, 1998), Brazil (De
Almeida & Eid, 2014) and Malaysia (Hassim, Kadir, Lew, & Sim, 2003) have been analyzed. However, this
topic has not been explored deeply enough in Ecuador to provide a clear view of working capital behavior
and its components in local companies in the twenty first century. Extant research is limited to the mutual
interaction of taxes and accounting practices (Villacreses & Jara, 2011) and the influence of working capital
on the insurance industry (Vásquez & Quisiguiña, 2016). Therefore, our research aims to provide a wider
view of working capital’s effect on profitability, showing results across industries and segmenting the sample
depending on the percentage of current assets. Working capital is measured by Cash Conversion Efficiency
(CCE), Debt Ratio (DR), Days of Accounts Receivables (DAR), Days of Inventory (DI), Days of Working
Capital (DWC), Net Current Assets/Total Assets (NCA/TA) and Ln of Total Assets (Ln TA) and profitability is
expressed by Return on Assets (ROA).
LITERATURE REVIEW
Cash conversion cycle theory
Richards and Laughlin (1980) suggest that the traditional view of common static liquidity analysis
provided by current ratio is limited and insufficient to explain liquidity and working capital position of a
firm. Also, in an attempt to compensate the short comings of the previous ratio, quick ratio was developed,
purposefully isolating inventory to provide a more liquid metric, measuring the righteous firms’ liquidity
capabilities to cover short term liabilities. Nevertheless, authors firmly believe that both ratios are
unsatisfactory to properly explain the financial position of a firm. They proposed a cash conversion cycle as
an improved tool, due to its dynamic vision.
A cash conversion cycle establishes the existing time frame to convert a dollar outflow into a dollar
inflow in the normal course of operations in a firm. Working capital availability is subjected to this inflow or
outflow of money, influenced by a firm’s credit terms, collection policy and payables turnover. Cash
conversion cycle theory provides a wider view of liquidity and combines outflow and inflow components.
Contemporary models of working capital
Mousavi and Jari (2012) tried to determine the relationship between working capital and corporate
performance, in order to address the discussion of whether working capital management affected financial
variables or not. They used correlation coefficients to determine the relation between different variables, as
well as central indexes and dispersion for data analysis. The sample selected from Tehran Stock Exchange
from 2004-2007 helped develop a model. This demonstrated that there is a significant relationship between
corporate performance and components of working capital, as it showed that there is a significant
© ICBTS Copyright by Author(s) The 2017 International Academic Research Conference in Munich 99
relationship among Net Liquidity Balance (NLB), the dependent variable and Return on assets (ROA), Return
on equity (ROE) and Price to Book ratio (P/B) as the independent variables.
Nazir and Afza (2009) formulated a model where the dependent variable was Working capital
requirements deflated by total assets (WCR_TA). The independent variables included Operating cycle (OC),
operating cash flows deflated by total assets (OCF_TA), economic activity (EA), sales growth (Growth),
ROA, Tobin’s q (Q), Leverage (Lev), logarithm of total assets as proxy of size of the firm (LN Size) and
industry dummy (IndDum). Panel data was applied with the information from nine years, using Ordinary
Least Square (OLS). This study selected one hundred and thirty two companies from fourteen industrial
groups listed in Karachi Stock Exchange from 2004 to 2007. It showed that the factors affecting working
capital vary from industry to industry. Operating cycle has a positive significant relationship with Working
capital requirement, as well as Tobin’s q. Debt has a strong negative correlation with the dependent variable.
This study also demonstrated that operating cash flow has a positive relationship with working capital.
However, there is no significant relationship between economic activity and size with the dependent
variable. These findings agree with Chiou and Cheng (2006) and Lamberson (1995), whose studies support
results of Nazir and Afza research, except for operating cash flow, which shows a negative relationship with
the dependent variable in Chiou and Cheng’s research.
According to Shahzad, Fareed and Zulfiqar (2015) in Pakistan, the strongest industry is cement.
Authors collected information from twelve listed firms from the Karachi Stock Exchange (2007-2013), OLS
used ROA as the dependent variable and current ratio (CR), Quick ratio (QR), Net current assets to total assets
(NCA/TA), Working capital turnover (WCT) and inventory turnover (ITR) as the control variables. The
findings of the model revealed a positive effect of NCA/TA, CR and ITR on ROA. However, the model
exposed a negative outcome of WCT and QR on ROA.
Singhania, Sahrama and Rohit (2014) conducted a study which explored the relationship between
working capital and profitability of eighty two Indian manufacturing companies in the BSE-500 index, from
2005 to 2012. The authors divided the time period in three phases: 2005-2006, 2007-2008 and 2009-2010,
prior, during and after the global recession. They intended to depict the impact of macroeconomic events on
working capital. Four models were used with panel data analysis, where Gross Operating Profit (GOP) was
considered as the dependent variable. These four different models aimed to identify the relationship between
the regressand and each the four main exogenous variables: Cash Conversion Cycle (CCC), Receivables
Collection Period (RCP), Inventory Conversion Period (ICP) and Payment Deferral Period (PDP) respectively.
Additionally, other independent variables such as firm size, sales growth, debt ratio, current ratio, quick ratio
and dummies variables were added for each of the four equations. The results showed that there is a negative
relationship between CCC and RCP with profitability. The third model revealed that there is no significant
relation between GOP and ICP. The fourth model showed there is a positive relationship between GOP and
PDP.
Song, Liu and Chen (2012) developed a study of the manufacturing industry, with a sample of
companies listed in Shanghai and Shenzhen stock exchange from 1996-2009. The model used sales growth as
the dependent variable and working capital turnover capacity and liquidity as independent variables.
Working capital turnover capacity is measured by liquid assets turnover, inventory turnover and cash
conversion cycle. Liquidity is represented by liquidity ratio and quick ratio. Other factors such as size, sales
costs and product market performance were considered by the authors. Linear regression based on panel data
analysis was used for this study. The research concluded that liquid assets turnover and inventory turnover
have a positive relationship with the dependent variable. However, the model demonstrated that CCC
negatively affects market competition performance (sales growth).
Shin and Soenen (1998) researched the influence efficient management of working capital has on
profitability. The authors employed four models using the following dependent variables: IA (operating
income + depreciation/total assets), IS (operating income + depreciation/net sales), Jensen’s Alpha and Treynor
Index1. The independent variables included Net trade cycle, current ratio, debt ratio and sales growth. The
sample they selected covered the period 1975-1994. Authors used panel data; the results demonstrated that
1
Profitability is expressed by the variables IA and IS.
Jensen’s alpha and Treynor index are used to measure risk-adjusted stock returns.
Net trade cycle has a negative relationship with profitability and risk-adjusted stock returns, as well as
current and debt ratio. However, results showed that sales growth has a positive relationship with both
measures.
Ching, Novazzi and Gerab (2011) conducted a study across industries, about the relation between
corporate profitability and working capital management in Brazilian listed companies. The sample was
divided in two groups of sixteen companies each: Working Capital Intensive, with current assets higher than
50% of the total assets, including textile, clothing footwear, retail, chemical and distribution sector and fixed
capital intensive with current assets lower than 50% of total assets; this group included steel, petrochemical
and refining industries. The independent variables used for this study were Cash conversion efficiency (CCE),
debt ratio (DR), days of receivables (DAR), days of inventory (DI) and days of working capital (DWC). The
dependent variable was profitability, measured in terms of Return on sales (ROS), Return on assets (ROA)
and Return on equity (ROE). The results of this study in Working Capital Intensive group showed that cash
conversion efficiency has a positive relation with ROS. However, debt ratio, days of inventory, and days of
working capital have negative relationship with this dependent variable. There is no relationship between
days of receivables and ROS. Concordantly with this model, CCE has a positive relationship with ROA.
Nevertheless, the other four variables have a negative relationship with ROA.
The analysis of fixed capital intensive group used the same dependent and independent variables as
Working Capital Intensive group. The results showed that CCE, DR, DI, DWC have a negative relationship
with ROS. The regressand ROA, had a negative relationship with CCE, DR and DI. However, DAR and
DWC showed a positive relation. The authors did not find significant statistical evidence to demonstrate a
relationship between the independent variables and ROE, neither in the Working Capital Intensive nor Fixed
Capital Intensive group.
METHODOLOGY
The study used Superintendence of Companies database, where 1000 of the best Ecuadorian
companies are rated according to their assets, equity, sales and profits and classified by industries. The
sample was divided in two groups according to current assets ratio2, using Ching, Novazzi and Gerab (2011)
methodology.
Variables:
The research considered Return on Assets as the exogenous variable for both: Working Capital
Intensive and Fixed Capital Intensive. This is a ratio of profitability that represents the efficiency of the
assets in relation with profits. Specifically for Working Capital Intensive group, the control variables were
cash conversion efficiency (CCE), debt ratio (DR), days of inventory (DI), days of accounts receivables (DAR)
and days of working capital (DWC). The aforementioned variables were tested for Fixed Capital Intensive
group, revealing that only three CCE, DI, and DWC, were statistically significant to explain ROA. However,
in this group there is a high correlation (ρ = 0.94) between explanatory variables: CCE and DWC. Since,
Ching, Novazzi and Gerab (2011) literature uses the previously mentioned variables we incorporated them in
equation (1b).
Proposition I
In addition to Ching’s Fixed Capital Intensive model, we developed our own proposition, where
variables from Shahzad, Fareed and Zulfiqar (2015), Pervan and Visic (2012) and Ching, Novazzi and Gerab
(2011) were tested statistically. Consequently, for this group, the independent variables were Net current
assets/Total assets (NCA/TA), Ln of total assets (LN TA), debt ratio (DR) and days of inventory (DI),
respectively and the dependent variable was Return on Assets (ROA).
𝑅𝑅𝑅 = 𝑅0 + 𝑅𝑅𝑅𝑅1 + 𝑅𝑅 𝑅2 + 𝑅𝑅𝑅 𝑅3 + 𝑅𝑅 𝑅4 + 𝑅𝑅𝑅 𝑅5 (1a)
𝑅𝑅𝑅 = 𝑅0 + 𝑅𝑅𝑅𝑅1 + 𝑅𝑅 𝑅2 + 𝑅𝑅𝑅 𝑅3 (1b)
𝑅𝑅𝑅
𝑅𝑅𝑅 = 𝑅0 + 𝑅1 + 𝑅𝑅 𝑅𝑅 𝑅2 + 𝑅𝑅 𝑅3 + 𝑅𝑅 𝑅4 (2)
𝑅𝑅
Equations (1a), (1b) and (2) were developed using cross sectional methodology since data availability
from Superintendence of Companies only permitted information disclosure from one year: 2013. Similarly,
2 current assets
total assets
other authors such as Lazaridis and Tryfonidis (2006), Al-Shubiri (2010), Nyamao, Lumumba, Odondo and
Otieno (2012) have applied cross sectional models to study working capital management.
RESULTS
Following Ching study, our research was divided in two groups. Table 1 shows Ching’s model
results for Working Capital Intensive group (1a) and Fixed Capital Intensive group (1b). Proposition I for
Fixed Capital Intensive group (2) is exhibited in Table 2. These tables demonstrate the independent variables
and the most relevant of the combinations3 exhibited in Tables 7, 8 and 9, corrected for heteroscedasticity and
autocorrelation, using HAC Newey West for Working Capital Intensive and Fixed Capital Intensive,
including 340 and 120 firms, respectively.
3 The models were chosen due to the significance level of their variables.
Table 1: Ching’s model. Results matrix – Table 2: Proposition I. Results matrix
Working Capital Intensive group (column 1a) Fixed Capital Intensive group
and Fixed Capital Intensive group (column 1b).
(1a) (1b)
Cash Conversion 0.64851*** 0.51247***
Efficiency [0.16073] [0.17673]
0.132746*** (2)
Debt ratio
[0.03053] Net Current Assets/ Total
Assets 0.37057***
Days of Accounts 0.000739***
[0.12953]
Receivables [0.00018]
LN of Total Assets 0.02988***
Days of Inventory 0.000895*** 0.000506***
[0.00871]
[0.00017] [0.00017]
Debt Ratio -0.13883***
Days of Working 0.001198*** 0.001061***
[0.04671]
Capital [0.00033] [0.00038]
Days of Inventory -0.00072***
Constant 0.193947*** 0.02742
[0.00013]
[0.01688] [0.01725]
Constant -0.51033***
Observations 340 120
Degrees of freedom 334 116 [0.17406]
R-squared 0.267384 0.07873 Observations 120
Adjusted R-squared 0.256417 0.054904 Degrees of freedom 114
R-squared 0.261319
Robust and standard errors in brackets.
Adjusted R-squared 0.235626
*Significant at 10% **Significant at 5%
Robust and standard errors in brackets
***Significant at 1%
*Significant at 10% **Significant at 5%
***Significant at 1%
The Working Capital Intensive group featured in Table 3 has eight combinations using twelve variables. The
chosen model includes five variables at 1% significance level and the model’s R-squared is 26.74%. Even
though Table 3 shows that models from (2) to (8) have a stronger R-squared, the variables did not pass the t –
test.
Equation (3) suggests that in the Working Capital Intensive group for every unit debt ratio increases, ROA
decreases by 0.132746; for every unit days of receivables increases, ROA decreases by 0.000739; for every unit days
of inventory increases, ROA decreases 0.000895 and for every unit days of working capital increases, ROA decreases
0.001198. However, for every unit cash conversion efficiency increases, ROA increases 0.648512.
Table 4 shows ten combinations for Ching’s Fixed Capital Intensive model, where twelve variables were
regressed against ROA. The model includes three variables at 1% significance level and its R-squared is 7.87%.
Table 3: Ching’s results and combination matrix – Working Capital Intensive group
(1) (2) (3) (4) (5) (6) (7) (8)
Cash Conversion Efficiency 0.648512*** 0.648526*** 0.648693*** 0.635425*** 0.619337*** 0.597202*** 0.600202*** 0.601854***
[0.160731] [0.160999] [0.160445] [0.160624] [0.159233] [0.107837] [0.157112] [0.159315]
Debt Ratio -0.132746*** -0.132663*** -0.143047*** -0.150325*** -0.195587*** -0.192159*** -0.191027*** -0.191502***
[0.030533] [0.030732] [0.031868] [0.033351] [0.037255] [0.03132] [0.038515] [0.038747]
Days of Accounts -0.000739*** -0.000739*** -0.000742*** -0.000666*** -0.000685*** -0.000684*** -0.000698*** -0.000786***
Receivables
[0.000180] [0.000181] [0.00018] [0.000202] [0.000204] [0.00015] [0.000206] [0.000211]
Days of Inventory -0.000895*** -0.000895*** -0.000894*** -0.000987*** -0.001028*** -0.001089*** -0.0010982*** -0.001127***
[0.000170] [-0.000895] [0.000171] [0.000177] [0.000176] [0.000177] [0.000206] [0.000213]
Days of Working Capital -0.001198*** -0.001198*** -0.001188*** -0.001178*** -0.001131*** -0.001082*** -0.001096*** -0.001099***
[0.000334] [0.000334] [0.000333] [0.000331] [0.00033] [0.000217] [0.000329] [0.000334]
Working Capital Turnover -0.000000549 -0.00000052 -0.000000733 -0.000000467 -0.000000817 -0.00000211 -0.00000239
[0.00000141] [0.00000142] [0.00000141] [0.00000123] [0.0000103] [0.00000214] [0.00000203]
Current Ratio -0.003729 0.00845 0.006693 0.005383 0.00633 0.007949
[0.003857] [0.008681] [0.008893] [0.011191] [0.009264] [0.010354]
Quick ratio -0.020423 -0.027276 -0.024753 -0.026128 -0.029297*
[0.016616] [0.017543] [0.017179] [0.017905] [0.020215]
Current Assets/ Total Assets 0.097292*** 0.094235*** 0.100062*** 0.100908***

[0.028278] [0.029628] [0.030046] [0.029976]
Inventory Turnover -0.000891 -0.000802 -0.000768
[0.001048] [0.000919] [0.000921]
LN of Total assets 0.003648 0.004172
[0.003638] [0.003597]
Receivables Turnover -0.001157
[0.001519]
Constant 0.193947*** 0.193935*** 0.206316*** 0.214636*** 0.183546*** 0.194963*** 0.128404* 0.13569*
[0.016883143] [0.020914] [0.0235] [0.024354] [0.027049] [0.028969] [0.07634] [0.079985]
Observations 340 340 340 340 340 340 340 340
Degrees of freedom 334 333 332 331 330 329 328 327
R-squared 0.267384 0.26739 0.268722 0.271883 0.295276 0.296821 0.2981 0.300017
Adjusted R-squared 0.256417 0.25419 0.253304 0.254286 0.276056 0.275448 0.274561 0.274329
*Significant at 10% **Significant at 5% ***Significant at 1%
Table 4: Ching’s results and combination matrix – Fixed Capital Intensive group
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
Cash Conversion Efficiency 0.51247 *** 0.41899 ** 0.60457*** 0.60554*** 0.63495*** 0.63678*** 0.67086*** 0.63439*** 0.51783*** 0.50587***
[0.176732] [0.161949] [0.172551] [0.172785] [0.17488] [0.181009] [0.201656] [0.196601] [0.16601] [0.175181]
Days of Inventory -0.00050 *** -0.00037** -0.00058* -0.00058* -0.00063** -0.00061* -0.00098*** -0.00111*** -0.00138*** -0.00141***
[0.000174] [0.000189] [0.000297] [0.0003] [0.000281] [0.000288] [0.000221] [0.000238] [0.000262] [0.000261]
Days of Working Capital -0.00106 *** -0.0009** -0.00115** -0.00115*** -0.00127*** -0.00127*** -0.00130*** -0.00118 -0.00088** -0.00087**
[0.000385] [0.000377] [0.000342] [0.000343] [0.000367] [0.000365] [0.000416] [0.000411] [0.00035] [0.000361]
Debt Ratio -0.09211** -0.07629 -0.07654 -0.01946 -0.01872 -0.10766 -0.09599 -0.0995 -0.10348
[0.041477] [0.051298] [0.051682] [0.062844] [0.065244] [0.07603] [0.076101] [0.073232] [0.074546]
Days of Acc. Receivables -0.00050 -0.00050 -0.00049 -0.00050 -0.00060 -0.00069 -0.00071 -0.00035
[0.000441] [0.000442] [0.000426] [0.000459] [0.000444] [0.000449] [0.000435] [0.000599]
Working Capital Turnover -0.0000040 -0.0000089 -0.0000093 -0.000015 -0.00001 0.000042 0.000050
[0.0000528] [0.000044] [0.0000442] [0.0000646] [0.0000655] [0.0000668] [0.0000629]
Current Ratio 0.03007** 0.02634 0.00671 -0.01473 0.01661 0.02165
[0.015052] [0.026718] [0.019736] [0.024682] [0.023084] [0.023621]
Quick ratio 0.00500 -0.00734 0.02605 -0.01970 -0.02499**
[0.03706] [0.028025] [0.032287] [0.037175] [0.037991]
Current Assets / Total Assets 0.33325** 0.30191* 0.37802 0.39456
[0.14086] [0.152699] [0.160033] [0.165722]
Inventory Turnover -0.00229 -0.00111 -0.00100
[0.001634] [0.001511] [0.001573]
LN of Total assets 0.02850*** 0.02979***
[0.009258] [0.009412]
Receivables Turnover 0.00260
[0.001734]
Constant 0.02742 0.078878*** 0.088861*** 0.088855*** 0.021438 0.020801 0.002753 0.040644 -0.478665** -0.551152***
[0.02123] [0.023776] [0.020886] [0.020993] [0.047111] [0.049056] [0.052702] [0.071607] [0.19307] 0.200768
Observations 120 120 120 120 120 120 120 120 120 120
Degrees of freedom 116 115 114 113 112 111 110 109 108 107
R-squared 0.07873 0.109654 0.128655 0.128663 0.154815 0.154878 0.252913 0.263668 0.330691 0.342564
Adjusted R-squared 0.054904 0.078686 0.090438 0.082397 0.101991 0.093968 0.191788 0.196114 0.262521 0.268833
Table 5: Proposition I results and combination matrix – Fixed Capital Intensive group
(1) (2) (3) (4) (5) (6) (7) (8) (9)

Current Assets / Total Assets 0.370575*** 0.369318*** 0.386403*** 0.390647*** 0.390907*** 0.389531*** 0.395545*** 0.378028*** 0.394561
[0.129534] [0.131136] [0.130587] [0.12774] [0.127597] [0.141773] [0.137525] [0.160033] [0.165722]
LN of Total Assets 0.029887*** 0.029929*** 0.033454*** 0.028102*** 0.028552*** 0.028548*** 0.029601*** 0.028506*** 0.029793***
[0.00871] [0.008805] [0.00994] [0.008562] [0.008588] [0.008651] [0.008603] [0.009258] [0.009412]
Debt Ratio -0.138832*** -0.133861*** -0.120332** -0.1028** -0.10014** -0.098864 -0.105066 -0.0995 -0.103481
[0.046716] [0.047658] [0.053534] [0.050274] [0.05059] [0.067167] [0.067759] [0.073232] [0.074546]
Days of Inventory -0.000721*** -0.000776*** -0.001025*** -0.001148*** -0.001157*** -0.001157*** -0.001334*** -0.001385*** -0.001412***
[0.000138] [0.000153] [0.000259] [0.000251] [0.00025] [0.00025] [0.000254] [0.000262] [0.000261]
Cash Conversion Efficiency 0.020703 0.1326 0.559475*** 0.547675*** 0.548007*** 0.530335*** 0.517839*** 0.505878***
[0.041979] [0.08308] [0.164551] [0.164348] [0.164009] [0.15815] [0.16601] [0.175181]
Days of Acc. Receivables -0.000561 -0.000758* -0.000753* -0.000753* -0.000677 -0.000718* -0.000354
[0.000417] [0.000401] [0.000404] [0.000401] [0.000411] [0.000435] [0.000599]
Days of Working Capital -0.000951*** -0.000926*** -0.000928*** -0.000927*** -0.000882** -0.000871**
[0.000353] [0.00035] [0.000342] [0.000324] [0.00035] [0.000361]
Working Capital Turnover 0.0000416 0.0000415 0.000046 0.0000428 0.0000502
[0.0000681] [0.0000681] [0.0000656] [0.0000668] [0.0000629]
Current Ratio 0.000603 0.027808* 0.016619 0.021657
[ 0.01221] [0.01647] [0.023084] [0.023621]
Quick Ratio -0.037013 -0.019705 -0.024998
[0.027044] [0.037175] [0.037991]
Inventory Turnover -0.001112 -0.001005
[0.001511] [0.001573]
Receivables Turnover 0.002608
[ 0.001734]
Constant -0.510332*** -0.513504*** -0.561705*** -0.493457*** -0.501206*** -0.502143*** -0.516265*** -0.478665*** -0.551152***
[0.174067] [0.174319] [0.189727] [0.173082] [0.172985] [0.167706] [0.165878] [0.19307] [0.200768]
Observations 120 120 120 120 120 120 120 120 120
Degrees of freedom 115 114 113 112 111 110 109 108 107
R-squared 0.261319 0.262016 0.286345 0.324078 0.324907 0.324915 0.328262 0.330691 0.342564
Adjusted R-squared 0.235626 0.229649 0.248452 0.281833 0.276251 0.269681 0.266635 0.262521 0.268833
Equation (4) shows that for every unit CCE increases ROA increases in 0.512475. For every unit
days of inventory increases, ROA decreases 0.000506 and for every unit days of working capital increases,
ROA decreases 0.001061. Nevertheless, Ching’s original model for Fixed Capital Intensive uses debt ratio
and days of account receivables. These variables did not pass the t-test.Proposition I has four variables at 1%
significance level and its R-squared is 26.13%. This model was selected from the nine combinations in Table
5, as a result of regressing the same twelve variables, from the previous group, against ROA. Equation (5)
𝑅𝑅𝑅
𝑅𝑅𝑅 = −0.510332 + 0.370575 + 0.029887 𝑅𝑅 𝑅𝑅 − 0.138832 𝑅𝑅 − 0.000721 𝑅𝑅 (5)
𝑅𝑅
[0.129534] [0.00871] [0.046716] [0.00138]
shows that for every unit of net current assets/total assets increases, ROA increases in 0.370575 and for every
unit Ln Total assets increases, ROA increases 0.029887. In concordance with the results of working capital
intensive group, debt ratio and days of inventory have a negative relationship with ROA. For every unit debt
ratio increases, ROA decreases in 0.138832. For very unit days of inventory increases, ROA decreases
0.000721.
DISCUSSION
The low volatility of the standard error of the main regressor (CCE), shown in Table 3, demonstrates
that there is a correlation between the regressors and the endogenous variable. Concordant with Ching,
Novazzi and Gerab, the present study revealed the same relationship between the five variables and the
dependent variable ROA, in Working Capital Intensive group. The selected independent variables only
explain 26.74%, implying that there should be other control variables explaining the dependent variable.
Furthermore, the chosen econometric model, cross sectional only captures a fraction of local companies’
reality. We believe that if more yearly data was available, panel data could have been used instead, rendering
more accurate results. However, the R-squared obtained in our research is greater than Ching’s study, whose
model explains only the 18.4% of the dependent variable.
Nevertheless, Fixed Capital Intensive group relationship between the dependent and independent
variables of this model differ from Ching’s. In contrast to Ching’s model, the present study revealed a
positive relationship between Cash conversion efficiency and ROA. Ching found a negative relationship
between debt ratio and days of inventory. The current research concurs with the behavior of days of
inventory. However, debt ratio did not pass the t-test. Unlike Ching, this study found a negative relationship
between days of working capital and ROA. Moreover, the statistical test demonstrates that days of account
receivables do not explain the dependent variable. Nevertheless, Ching’s results revealed a positive
relationship between both variables and the dependent variable. In Fixed Capital Intensive group,
independent elected variables only explain 7.87% of the ROA. However, Ching’s model showed that the
combination of these variables explain 16% of the regressand. Table 4 demonstrates that there is a correlation
among ROA and the independent variables, since it is observed that there is fluctuation in the standard error
of the main regressor (Cash conversion efficiency).
The variables for Proposition I were chosen according to the characteristics intrinsically embraced
on the Ecuadorian economy and the industrial classification. For instance, sixty companies out of one
hundred and twenty, were categorized as Fixed Capital Intensive, belong to the manufacturing industry,
where inventory (average time) and size of the company (assets) perform an important role in its operations.
These factors are measured through variables, days of inventory and LN of total assets. Furthermore, debt
ratio is included within the variables to be measured in this group, due to the relevance it has on Ecuadorian
companies; since we have observed relevant levels of indebtedness on local companies. Nevertheless, we
believe that current assets ratio engulfs a comprehensive metric to manage current assets and liquidity.
According to Shahzad, Fareed and Zulfiqar (2015), this ratio encompasses a prolific measure of working
capital as a fraction of total financial resources.
The standard errors of the variables, shown in Table 5, demonstrate that there is a correlation
between the dependent variable and the regressors. The direction of the dependent and independent variables
of our model in the Fixed Capital Intensive group are in accordance with Shahzad, Fareed and Zulfiqar
110
(2015), Pervan and Visic (2012) and Ching, Novazzi and Gerab (2011). Specifically, Net current assets/Total
assets has a positive relationship with ROA (Shahzad, Fareed, & Zulfiqar, 2015). Furthermore, the results of
our model revealed a positive relationship between Ln of Total Assets and the dependent variable, consistent
with the results obtained by Pervan and Visic (2012). Proposition I also concurs with Ching’s model, showing
a negative relationship between debt ratio and days of inventory with ROA. The independent variables
selected for Fixed Capital Intensive group explain 26.13% of ROA.
CONCLUSION
Financial literature and research have largely focused on long term investment, but it is currently
turning into working capital analysis. It is necessary to discuss working capital drivers and components
deeper, in order to develop an appropriate approach for its management, according to the structure and
industry of the companies. This research contributes to the study of working capital in Ecuador, to broaden
the theoretical framework under which local managers support their financial decisions in companies’ daily
activities.
Our research exhibits a categorization of industries and companies depending on the level of current
assets (Working Capital Intensive and Fixed Capital Intensive group), using a sample of four hundred and
sixty companies. Cross-sectional methodology, used for this study, aimed to show the effects of working
capital components on profitability, represented by Return on Assets. Our study revealed that the variables
from Ching’s model, cash conversion efficiency, debt ratio, days of account receivables, days of inventory
and days of working capital, explain the 26.74% of ROA, in Working Capital Intensive group. The results
showed an interesting behavior of the variables. Even when they worked for the WCI, they do not explain
Fixed Capital Intensive group. Ching’s model showed a low R-squared and the analysis of the correlation
matrix demonstrated multicollinearity. This forced us to explore an enhanced model where other variables
better explain the regressand. We conclude that for the Fixed Capital Intensive group, net current assets/total
assets, Ln of total assets, days of inventory and debt ratio, better describe the dependent variable, than
Ching’s model did. Moreover, the results showed the regressors did not have multicollinearity and explained
26.13% of ROA. The results for both groups concur with other authors who used these control variables to
describe the regressand. Moreover, the standard errors showed in the combinations matrix demonstrate that
there is a correlation among the regressors and the dependent variable.
The study demonstrates that working capital components do not behave in the same way for all
companies, even when they belong to the same industry. In this case, the factor that determined this
difference was current assets ratio.
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A CHILD WITH DOWN SYNDROME: BURDEN OR BLESSING
Jonas Feliciano C. Domingo, Jean Ryan A. Bernal, Kyle Anikehn A. Bernal,

Carol Ann M. Gonzales, Carl Justine K. Regudo,
Manila Science High School
Taft Avenue Corner Padre Faura St, Ermita, Manila
ABSTRACT
Abstract. Children with Down syndrome are often singled out by the community due to their abnormalities,
though they are not given the chance to be seen as who they truly are. Having a child with a genetic disorder,
Down syndrome, brings the parents to an unusual journey full of struggles and joy. This qualitative research
used case study as its method and an in-depth interview was conducted to gather essential data. The purpose
of this study is to give light and inspire communities with the lived experiences of the parents with a child
having Down syndrome. Furthermore, this study aims to lead the communities in gaining empathy for every
parent with a child having Down syndrome. This study revealed that the child with Down syndrome is neither
only a burden nor only a blessing. With both the child's special needs and humble love, the parents see the
child as both a burden and a blessing.
Keywords: Lived Experiences, Parents, Down Syndrome, Case Study
LIVING WITH BLUR:
Struggles and Hurdles of Alzheimer Patients through the Eyes of their Kin
Mary Grace V. Buñi, Jherome Gabriel M. Carpila,
Laura Christine C. Katapang, Kyle M. Sante
Manila Science High School, Manila, Philippines
ABSTRACT
Abstract. In the Philippines, Alzheimer’s disease is considered one of the least priorities in relation with the
mental disorders prevalent in the country. Knowing this, the researchers attempt to dispel the social stigma
assigned to Alzheimer patients in the country and expound the knowledge of society regarding the disease.
This phenomenological study ventured the lived experiences of patients with Alzheimer’s disease through
stories shared by their loved ones. As the patients live with the disease, struggles and hurdles arise as part of
their everyday routine which are distinctly observed by their relatives. A Phenomenological approach was
used to comprehensively understand the effects of the disease on the lives of the patients through the shared
experiences of their kin. In-depth interviews were conducted to the family members of (3) persons with
Alzheimer’s disease. At the end of the study, the researchers identified several common manifestations
between the patients and discovered “acceptance” as a key trait essential for the family to move further even
after one of them was already diagnosed.
Key Words: Lived Experiences, Alzheimer’s Disease, Alzheimer Patients, Phenomenology
AN EVALUATION OF DISARMAMENT, DEMOBILIZATION AND
REINTEGRATION FRAMEWORK OF PRESIDENTIAL AMNESTY
PROGRAMME IN NIGER DELTA, NIGERIA
Imoukhuede Benedict Kayode
Department of Public Administration
Rufus Giwa Polytechnic Owo, Ondo State, Nigeria
E-mail; imoukay@yahoo.com
ABSTRACT
The activities of oil exploration by the multinational oil-companies for over five decades in the Niger Delta
has led to underdevelopment, environmental degradation and thus given rise to militancy, oil pollution,
deepening poverty and sundry other challenges in the region. Militancy in the Niger Delta has been having
damaging effect on the economy of Nigeria and it has taken its tolls on the accrual from crude oil. In a bid to
address this perennial problem, the federal government instituted presidential amnesty programme with its
core elements of disarmament, demobilization and reintegration to solve if not all the fall out of militancy in
the region. This study adopted Marxist political economy approach as its framework of analysis, it is an
approach with an holistic view point on the contradictory nature of relationships that underlie social
formation, the social law of distribution and production in the society. This work evaluated the presidential
amnesty programme with a view to determining how far its implementation in the Niger Delta. It concluded
that the presidential amnesty programme implemented in the Niger Delta just like other previous
government”s interventionist programmes has not adequately fulfilled its stated objectives due to inherent
flaws in the implementation process. The work made recommendations for the creation of more employment
opportunities for the millions of jobless youths, feasible poverty reduction scheme and adoption of human
security framework that is people- centred in the Niger Delta.
Keywords: Niger Delta, Crude Oil, Underdevelopment, Militancy, Amnesty, Evaluation.
INTRODUCTION
The Niger Delta is an oil and gas rich region that is also well endow in bio-diversity and located in
the southern part of Nigeria, the region account for about 90% of Nigeria’s annual income, thus, revenue
from crude oil from the region remains a centrality to Nigerian federation economic survival. Dafinone
(2008) laid credence to the strategic economic importance of the region, he posited that; whatever happens in
the Niger Delta has a direct impact on the world’s energy supply.
In spite of its economic position as the treasure base of Nigeria, the region could be aptly described
as environmental degraded, underdeveloped and violence-prone. Thus, in an attempt to break the cycle of
violence, economic sabotage and also to protect oil facilities located in the region ,the federal government
under the administration of Late Yaraduah Umaru in 2009 decided to implement presidential amnesty
programme in the region. The questions arising and which may be explore as background of this study are as
follows: Apart from desire to halt militancy, what are the other reasons why the amnesty was adopted? What
are the elements of the presidential amnesty programme? What are the objective/targets of each elements?
The presidential amnesty programme was a conflict transformation and management policy that
was adopted by the Nigerian government in 2009 as interventionist measure to stop the acts of violence,
insecurity, oil-economic sabotage and militancy been perpetrated by the restive youths in the Niger Delta
because all these various acts have crippling effects on the national economic and its survival due to its oil-
driven nature.
In addition, the amnesty programme was adopted by the Nigerian government with the aim to
address inherent and persistent developmental and environmental challenges in the region since the
commencement of oil exploration in Oloibiri in 1958. Also, it was adopted as a socio-economic policy to
harness the potentials and boost manpower development of the youths and people of the Niger Delta.
The major elements and the objectives or targets of each element are encompased within
disarmament, demobilization and reintegration (DDR) framework which forms the core of the presidential
amnesty programme. Several scholars and organizations have acknowledge the imperative of disarmament,
demobilization and reintegration framework as cardinal elements of amnesty. United Nations (2005),
Immigration and Refugee Board of Canada (2011), Imorgan (2015), United Nations (2000), Berdal (1996)
Humprey and Winsten (2009), Muggah (2009), and Achodo (2015) have all explicitly stated it in their
various literatures.
Disarmament was the starting phase and an integral element of the presidential amnesty programme
that lasted between 6th August, 2009 till 4th October, 2009. It was an element that had objective of
collection, control and disposal of weapons willingly submitted by the ex-militants to the armed forces
representatives of the federal government.
Demobilization and rehabilitation phase was another essential element of the presidential amnesty
programme that lasted for twelve months. It is an element that had objectives of debriefing, guidance and
counseling of ex-militants in order to facilitate and enhance their adoption back into the Nigerian society.
Reintegration phase is an element that supposedly marked the concluding aspect of the amnesty programme
which was stated to last for a period of five years, that is 2010-2015. Reintegration has targeted objectives
which includes acquisition of educational, technical and entrepreneurial skills by the ex-militants, thus, this
is to enable the ex-militants fit in socially and economically, be productive and serve as change facilitators in
their various oil-producing communities in post-amnesty Niger Delta.
In the course of the discourse, the aforementioned reasons, elements and the objectives of each
element would be evaluated vis-à-vis the implementation of amnesty programme in Nigeria.Oil wealth
derived from the various oil fields in the Niger Delta has enhanced the prosperity and socio-economic
development attained by the Nigerian-state in the last five decades, paradoxically, it has unfavourable
impacts in the well being and the development of the oil-producing communities in the Niger Delta. Several
scholars and researchers in the field of political science, peace and conflict studies, sociology and
development studies have identified various problems especially underdevelopment, environmental pollution
as a result of oil production, militancy, the struggle for resource control and self determination by the people
of the Niger Delta. Ikelegbe (2005), Obi (2010), Oluwaniyi (2011).
Inaddition, the various interventionists programmes embarked upon by the Nigerian state to provide
remedy and lasting solutions to the various insecurity, environmental and socio-economic problems
confronting the people of the Niger Delta have not provided the expected dividend to the people as a result
of corruption, misplaced priority and the inability to generate feedback through effective evaluation of such
programmes by the federal government. Thus, without feedback mechanism such programmes could not be
properly evaluated for the benefits of the oil-producing communities in the region.
Key and Phillips (2007), explicitly stated that 1.5 million tons of oil has spilled into the Niger Delta
over the pass fifty years, making the region one of the five most polluted locations on earth. It is unarguable
that exploration of crude oil and gas in commercial quantities has been more of a curse than a blessing to the
people of Niger Delta.
Figure 1: Conflict and Underdevelopment: The Vicious Interaction
Harmed conflict and Underdevelopment

Violence
Heightened Vulnerability Indirect Impact Economic
To civil war, terrorism and Disruption, disease,
ecological stress ecological damage
Sources: Baylis J.S,S and Owens, P. (2008) The Globalization of World Politics: An Introduction to
International Relations, Oxford University Press, Oxford.
Objectives of the Study

The study seeks to achieve the following objectives:
(i) To find out the reasons for setting up of the presidential amnesty programme by the federal
government as interventionist policy in the Niger Delta.
(ii) To assess the impacts of disarmament, demobilization and reintegration elements of the presidential
amnesty programme between 2009-2015.
(iii) To identify the challenges faced by the presidential amnesty programme in the Niger Delta.
Theoretical Framework
The political economy approach by Karl Marx and Friedrich Engels remains a reference point and
the classical basis of analyzing the nature of society and politics. According to Marx and Engels (1848),the
history of all hitherto society existing society is the history of class struggles. Inaddition, they postulated
that human actions and social institutions are economically determined would serve the basis of theoretical
framework of this research study. It is an approach which is based on historical materialism and takes into
consideration of the social relations, class struggle and the relationship between the economy and politics.
Several scholars have further buttressed the Marxian Perspective of the Political economy, Lange
(1974), Ihonvbere (1989), Anifowose and Enemuo (1999), all theses scholars takes into consideration the
interconnection of social relations, class conflict and the organic relationship between the sub-structure
(economy) and the superstructure (politics) and concluded that it’s the economy which determines the
politics.
The pattern of social relations, underdevelopment and agitation for resource control by the people
of Niger Delta and the over-centralized and dominant nature of the federal government coupled with the
explotative tendency of the oil-multinational companies in the region can be situated within the political
economy analysis.
The political economy approach provides theoretical underpinning of Nigerian state over
dependency on oil-driven and rentier economy, oil-related conflicts, militancy and the neglect suffered by
the oil-producing communities in the region within the framework of Nigerian federation.
SUMMARY OF PREVIOUS FEDERAL GOVERNMENT INTERVENTIONS

IN THE NIGER DELTA
Prior to the implementation of the presidential amnesty programme in 2009 in the Niger Delta, the
federal government of Nigeria had earlier implemented various socio-economic, environmental and
sustainable interventionist policies in the region as panacea to address the myriads of developmental
challenges in the Niger Delta.
Ajibola (2015), and Imoukhuede and Akinkurolere (2011), identified the various development-
oriented interventionists efforts in the Niger Delta by successive administrations in Nigeria such as,Willink’s
Commission of 1958, the 1960 Niger Delta River Basin Development Authorities of 1980, the Oil Mineral
Producing Areas Development Commission of 1992, the Niger Delta Development Commission of 2000 and
the creation of the Niger Delta Ministry by the federal government in 2009.
It is unarguable that all theses previous interventionists programmes by the federal government
have failed to allay the fear of domination of the minorities oil producing ethnic groups in the Niger Delta,
they were unable to provide lasting solutions to the neglect, underdevelopment, poverty, environmental
degradation, violence and militancy in the region. These failures and policy inadequacies could be attributed
to insincerity, corruption and superficial nature of such programmes which ultimately in reality do not
achieve stated objectives. Also, Okonta (2000), acknowledged that previous attempt at tackling the problems
of the Niger Delta region are conciliatory stop-gap measures that address the symptoms of the malady and
do not begin to tackle the fundamental demands of resource control and political autonomy for all geo-
political stable and prosperous Niger Delta.
Nigeria’s Presidential Amnesty Programme in the Niger Delta: 2009 – 2015
Amnesty refers to a pardon for a wrong doing or willingness by government of a nation to overlook
and forgive an offender. Bryan (2009), conceptualized amnesty as a pardon extended by the government to a
group or class of persons usually for a political offence or as the act of a sovereign power officially forgiving
certain classes of persons who are subject to trial but have not yet been convicted.
In an attempt to provide a non-violent counter insurgent policy as a solution to the economic
sabotage, bunkering, insecurity, crisis of poverty and underdevelopment in the Niger Delta, Late Musa
Yaradua granted sixty days unconditional amnesty period between 6th August to 4th October 2009 to
militants who are willing to lay down their arms, eschew militancy and embrace amnesty programme of the
federal government.
Ibaba (2011), acknowledge that the United Nations and other similar bodies have applied amnesty
as an instrument for achieving sustainable peace. The presidential amnesty programme in Nigeria has its
basic goal to contribute to security and stabilization in the Niger Delta through disarmament, rehabilitation
and sustainable re-integration of ex-militants as a precondition for medium and long-term development in
the region.
The presidential amnesty programme in the Niger Delta was based on disarmament, demobilization
and reintegration agenda. Thus, it was patterned along the United Nations conflict transformation
programme according to the United Nations (2005), the three key aspect of disarmament, demobilization and
reintegration are as follows;
Disarmament: Is the collection, documentation, control and disposal of small arms, ammunition, explosives
light and heavy weapons of combatants and often from civilian population;
Demobilization: Is the formal and control discharge of active combatants from armed forces or other armed
groups
Reintegration: Is the process by which ex-combatants acquire civilian status and gain sustainable
employment and income.
Table 1: Disarmament, Demobilization and Reintegration Agenda of Amnesty Programme in the

Niger Delta
Disarmament Demobilization Reintegration

Duration: August 6 th
– Rehabilitation Duration: Up to 5 years
th
October 4 , 2009. Duration: 6 – 12 months
Key Activities Key Activities Key Activities
Collection of Arms and Ex-militants reports to camp Knowledge and skills acquisition
Ammunition, explosives etc.
Documentation and Verification and Documentation Financial empowerment
Biometrics
Transformational training Micro-credit
Peace building and conflict resolution Reconciliation with local community
Counseling Conflict resolution framework
Key Activities Key Activities Key Activities

Career guidance Mechanism
Wellness assessment Monitoring and evaluation
Reintegration classification Exit of amnesty
Education and vocational placement
Graduation and demobilization
Key Enablers Key Enablers Key Enablers
Disarmament camps Transformational training centres Partnering government agencies,
NGOs and private organizations
Massive campaign Rehabilitation camps Tracking and support framework
Source: Office of the Special Adviser to the President on Niger Delta, www.osapnd.gov.ng/index/ndap.
retrieved on 4th August, 2016.
Table II: Participants Demography of Ex-Militants
SN STATES MALE FEMALE REGISTERED
1 AkwaIbom 155 8 163
2 Bayelsa 6500 61 6961
3 Cross River 159 1 160
4 Delta 3361 - 3361
5 Edo 450 - 450
6 Imo 297 3 300
SN STATES MALE FEMALE REGISTERED
8 Rivers 6958 39 6997
9 NDDC 571 19 600
Total 20049 113 20192
7 Ondo 1198 2 1200
Source: Imoukhuede and Akinkurolere (2011), Emerging from Global Economic Crisis: Developmental
Issues, A Book of Readings, 7th National Conference, The Federal Polytechnic Ilaro, Jombright Publishers,
Ilaro with additional data from www.nigerdeltaamnesty.org
Table III: Ex-Militants Trained in Vocational Skills

SN SKILLS NUMBERS
1 Agriculture 239
2 Automobile 207
3 Welding and Fabrication 2204
4 Entrepreneurship 2998
5 Capentry and Plumbing 298
6 Oil drilling and Marine 916
7 Electrical Installation 89
8 Information Communication Technology 273
9 Crane and Heavy Duty Machine 1030
10 Boat Building 299
11 Pipe fitting 250
12 Entertainment 60
13 Others 618
TOTAL 9192
Source: Ikelegbe and Umokoro (2014).
Retrieved from Imongan (2015). Revisiting the Peace-Building Efforts in Post-Conflict Niger Delta, Nigeria:
A Case Study of Amnesty Programme. Mediterranean Journal of Social Science Vol. 6 No 6.
Chart I: Nigeria Presidential Amnesty Budgetary Allocation 2010 – 2014
700000000
600000000
500000000
SPENDING ($)
400000000
300000000
200000000
100000000
0
2010 2011 2012 2013 2014
YEAR Budgetary Allocation since inception. This Day
Source: Kuku, K (2014). Press Briefing on the Amnesty
Live Newspaper Publication, Tuesday, February 18. www.thisdaylive.com.
One of the major merits of the presidential amnesty programme is stability in the money accrued
from oil and gas as against the conflict-prone and the pre-amnesty period which caused decreased in the
revenue. Imongan (2015), and Ojione(2013),agreed that there were seris of attacks on oil facilities by
militants which brouhht down oil production to 700,000 barrels per day in 2009 but the post-amnesty
production level has significantly risen to about 2.6 million barrels per day.
Evaluation of the Presidential Amnesty Programme in the Niger Delta, Nigeria
Evaluation is the major aspect or theme of the research work, it is an attempt to appraise through
the systematic and objective assessment of the presidential amnesty programme in the Niger Delta between
2009-2015. United Nations Office on Drugs and Crime, UNODC (2016), defined evaluation as a systematic
and objective assessment of on-going or completed project, programme or policy, its design, implementation
and results.
Evaluation is highly imperative in nature and it allows for the opportunity to enable the government
to get a feedback about the success or failure of the socio-economic programme implemented by the
government. Adelabu (2016), acknowledged the imperative of evaluation, according to him; an essential
ingredient in the measurement of a nation’s development, it is the ability to get every process evaluated
objectively to ensure relevance in terms of content and delivery system.
The presidential amnesty program is unique in nature and a pragmatic effort by the Nigerian
government towards conflict transformation through non-violent measure. Ushie (2013), viewed the amnesty
programme as a sharp departure from the typical use of state violence to suppress dissent and signified a
realization that the Niger Delta crisis required a democratic, participatory solution and not one that
legitimized militarization and brutal oppression of impoverished maritime communities. Over twenty
thousands of ex-militants that laid down their arms and embraced peace within the sixty days ultimatum of
surrendering willingly were given unconditional pardon as freemen under the presidential amnesty
programme in the Niger Delta.
In addition, the Nigerian government earmarked for ex-militants amount of sixty five thousand
naira monthly for three months of post-amnesty period for their sustenance in order to realize the stated
objectives of the presidential amnesty programme in the Niger Delta, the ex-militants were engaged in a
DDR Programme, which implies disarmament, demobilization and reintegration. These process were
imperative towards debriefing, retraining and reintegration of the repentant militants back to the civil society
which they have hitherto turned their back on. Thus, they were major preconditions of addressing socio-
economic challenges in the region.
In furtherance of the implementation of the presidential amnesty programme, the ex-militants were
also trained in areas of vocational skills such as oil drilling and marine, welding and fabrication, agriculture,
plumbing, information communication and technology. Also, some of the ex-militants that were
academically inclined were given the opportunity of full schooling through amnesty scholarship in overseas
tertiary institutions in South Africa, United Kingdom, Russia, Malaysia, Singapore etc.
In evaluating the implementation of the presidential amnesty programme in Nigeria since its
inception in late 2009, the programme has contributed towards relative peace till 2015 in the region. It led to
reduction in bombing, kidnapping, destruction of oil facilities in the Niger Delta. Scholars like Ojione
(2013), Imongan(2015),agreed that there were series of attacks on oil facilities on oil facilities and
installations by militants which drastically brought down oil production to 700,000 barrels in 2009 but the
post amnesty production level has significantly risen to about 2.6 million barrels per day.
Thus, the amnesty programme has enhanced stability in oil production in Nigeria.
Anatsui and Fagbemi (2014) further identified the strengths of the amnesty programme in the Niger
Delta, the two scholars noted that; the amnesty promoted active listening, assertive communication and
affirming environment of dialogue, circulation of illegal weapons was reduced, if not eliminated and also
promoted reconciliation between the militants and the offended residents who want peace to reign .Thus, the
presidential amnesty programme by its implementation has immensely paved way for relative peace,
reduction in the destruction of oil facilities and militancy in the Niger Delta. The presidential amnesty
programme allowed room for communication and negotiation among the various stakeholders boosted the
hope for a peaceful and prosperous Niger Delta.
However, the presidential amnesty programme in its implementation in the Niger Delta suffered
policy inadequacy at addressing holistically the issue of insecurity, environmental and socio-economic
challenges confronting the oil producing communities in the Niger Delta.
In addition, the amnesty programme failed to fulfilled its vision statement of a Niger Delta region
populated with modern cities with leading edge environmental management practices, economic prosperity,
health people and social harmony because the region remains poverty stricken and environmentally
degraded.
Several critics were raised against the poor impact of the amnesty programme in the Niger Delta.
Oluwatoyin (2011), observed that major critical issues such as the roots of alienation, marginalization,
exploitation, corruption, unemployment, poverty, youth and women’s issues are still not dealt with and they
jeopardize the possibility of future peace, security and development in the Niger Delta region.
The presidential amnesty programme in its approach and implementation was unable to bring all
stakeholders on board especiallythe Movement for the Emancipation of the Niger Delta (MEND) one of the
major militant group in the region. This scenario constitutes serious threats to peace and security in the
region. Also, it heightened fears that the amnesty programme had only secured temporary peace which may
not be enduring in the region.
The presidential amnesty programme in its implementation in the Niger Delta suffered policy
inadequacy and was unable to address holistically the challenges of environmental pollution and socio-
economic problems confronting the oil producing communities in the Niger Delta.
Several criticisms were raised against the poor implementation of the presidential amnesty
programme in the region. Oluwatoyin (2011), observed that major critical issues such as the roots of
alienation, marginalization economic exploitation, unemployment, corruption, poverty, youth and women’s
issues are still not dealt with and they jeopardize the possibility of future peace, security and development in
the Niger Delta region.
Another inherent weakness of the presidential amnesty programme is the fact that it was a top-down
approach by the Nigerian government and the militant commanders, while the majority of ex-militant foot
soldiers were cut off in the sharing formula of juicy contracts and monetary compensation. This scenario
provoked anger among the ex-militant and further pose as threats to peace and security in the Niger Delta.
Another major flaw of the presidential amnesty programme in its implementation is the inability of
the representative of the federal government to bring all stakeholders on board especially the movement for
the Emancipation of the Niger Delta (MEND) one of the major militant group in the region. This scenario
constitutes serious threats to peace and security in the region. This error of omission heightened fears of the
people that the amnesty programme had only secured temporary peace which may not be enduring in the
Niger Delta.
CONCLUSION
In the course of the study, it is deducible that the problems of militancy, violence, insecurity,
underdevelopment and environmental pollution in the Niger Delta arose due to the collective failure and
compromise of the Nigerian state, the ruling elites in the oil producing states and the multinational oil
companies to address with sincerity the socio-economic challenges in the Niger Delta.
Also, it is obvious that the availability of abundant crude oil and gas and its exploration and
production has not been of immense benefits to the people in the Niger Delta and the previous efforts of the
federal government at providing interventionist programme has not achieved its stated objective in the
region.
Recommendations
In the light of the findings of the study, the following feasible policy options are hereby been
recommended as a way forward at complimenting the efforts of the presidential amnesty programme in the
Niger Delta. It is imperative that the Nigerian government need to implement and not isolate the
recommendations of the Ledum Mitee’s Technical Report which was the road map for the presidential
amnesty programme. The Ledum Mittee’s Technical Report which was submitted in 2009 to the federal
government which was holistic in nature and aimed to provide lasting solution to development challenges in
the Niger Delta.
In addition, the issue of security of all stakeholders in the region should remain paramount, that is
oil-producing communities, people and oil facilities in the region. It is imperative to enhance security, thus
the Nigerian government must implement human security framework in the Niger Delta. This is in tandem
with Deepayan cited in Imoukhuede (2013), which posits that human security is people-centered,
multidimensional, interconnected and universal in nature.
Efforts should be made to approach diplomatically and bring on board all other aggrieved militants
and stakeholders and accommodate them within an extended amnesty programme with a definite time-frame.
This approach will make those that are aggrieved to embrace peace and work towards security and
development of the Niger Delta.
The presidential amnesty programme must be successively built on to continually address the
challenges of governance in the Niger Delta region; Thus, without addressing and providing solutions to the
challenges of governance in the region, the federal government of Nigeria would only be at risk of re-
escalation of violence, insecurity and militancy in the Niger Delta.
On a final analysis, opportunities for entrepreneurship scheme and employment both at private and
public enterprises should be provided for the beneficiaries of the presidential amnesty programme. This
approach should be targeted those ex-militants that have gained both vocational empowerment and
educational training through the amnesty programme, this is in order to allow their empowerment to have
positive linkages and value.
The presidential amnesty programmed must be successively built on to continually address the
challenges of governance in the Niger Delta region; Thus, without addressing and providing solutions to the
challenges of governance in the region, the federal government of Nigeria would only be at risk of re-
escalation of violence, insecurity and militancy in the Niger Delta.
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DEVELOPMENT OF TOURISM AFFECTED BY CULTURE

Tourism Industry technician, Tehran, Tehran

Keywords: tourism Industry, Culture, Development.

From cultural to creative production

Cultural Heritage Tourism

Entrepreneurial orientation is conceptualized as a three dimensional construct namely product innovation

Table 1. Descriptive Statistics for Dimensions of Variables

Table2. Pearson Correlation

Technological .78(**) 1.0

** Correlation is significant at 0.01 level (2 tailed)

Table 3. Regression Analysis

Independent Coefficient B SEB

Entrepreneurial .67** .31 .08

Diego Mauricio Mazo-Cuervo,

CEIPA’s educational model

“A thematic nucleus represents a theoretical-practical group of learning experiences where conceptualization,

Problem-based Nuclei in the CEIPA Curriculum

The AACSB Accreditation for CEIPA

Implementation and actions

CONCLUSIONS AND RECOMMENDTIONS

AACSB (2017). Retrieved from www.aacsb.edu on March 18, 2017.

CEIPA (2017). Retrieved from http://www.ceipa.edu.co/ceipa/institucional/plataforma-estrategica/#principios-

Observatorio Laboral de la Educación. (2014) Encuesta de seguimiento. Instituciones de Educación Superior.

Silva, L. y Domínguez, F. Currículo-expert. Diseño de un Sistema basado en el conocimiento para currículo.

Ihsan Isik, Ph.D.

Professor of International Banking and Finance, Department of Accounting and Finance,

II. THE LEVEL OF FINANCIAL DEVELOPMENT IN MUSLIM WORLD

III. WHAT EXPLAINS FINANCIAL DEVELOPMENT?

IV. INCOME, GEOGRAPHY & FINANCE IN THE MUSLIM WORLD

Bahadır Gülsün*,Sena Yıldız**, Betül Yılmaz***

SECTION 1 DECISION THEORY

SECTION 2 MULTI – CRITERIA DECISION MAKING

2.1 MCDM Problems

2.2 MCDM Methods – An overview

2.2.1 ANALYTIC HIERARCHY PROCESS (AHP) METHOD

3 1.factor is more important than the 2.factor.

5 1.factor is much more important than the 2.factor.

7 1.factor has a very strong importance when compared the 2.factor.

9 1.factor has a superior importance when compared the 2.factor.

2,4,6,8 Intermediate values

2.2.2 TOPSIS METHOD (Technique of Order Preference by Similarity to Ideal Solution)

2.2.3 VIKOR METHOD

SECTION 3 THE HOTEL SELECTION IN TOURISM SECTOR

3.1 Solutıon with AHP Method

3.2 Solutıon with TOPSIS Method

3.3 Solutıon with VIKOR Method

CALCULATING Qİ VALUES S* 0,219

RESULTS AND ASSESSMENTS

OSCAR BRIONES, DBA (c)

UNIVERSIDAD DE ESPECIALIDADES ESPIRITU SANTO

UNIVERSIDAD DE ESPECIALIDADES ESPIRITU SANTO

𝑅𝑅𝑅 = 𝑅0 + 𝑅𝑅𝑅𝑅1 + 𝑅𝑅 𝑅2 + 𝑅𝑅𝑅 𝑅3 (1b)

(1) (2) (3) (4) (5) (6) (7) (8)

Current Assets/ Total Assets 0.097292*** 0.094235*** 0.100062*** 0.100908***

(1) (2) (3) (4) (5) (6) (7) (8) (9)

[0.129534] [0.00871] [0.046716] [0.00138]

Eljelly, A. (2004). Liquidity-profitability tradeoff: an empirical investigation in an emerging market.

Ganesan, V. (2007). An analysis of working capital management efficiency in telecommunication equipment

Hall, C. (2002). "Total" Working Capital Management. AFP Exchange, 26-32.

Jayarathnea, T. (2014). Impact of Working capital management on profitability, reshaping management

Bahadır Gülsün,Sena Yıldız, Betül Yılmaz

Current Assets/ Total Assets 0.097292* 0.094235* 0.100062* 0.100908*