HKUST Business School [SBM] Newsletter (Issue 14)

Abstract

[evdate 2001-08-15] HKUST Business School Newsletter Issue 14 Best MBA school in Asia and Australia page 2 Class gift from EMBA KH-03 page 4 Top author in finance research page 3 1HKUST Business School Acting Dean: K.C. Chan Associate Deans: Gary Biddle, Steve DeKrey, Kar Yan Tam Newsletter Editors: Elaine Chu, May Hung Sub-editor: Virginia Unkefer Contact us: bmpr@ust.hk Fax: (852) 2358 1467 Website: www.bm.ust.hk (c) 2001 by the School of Business and Management, the Hong Kong University of Science and Technology. All rights reserved.

From the Dean We are thus far having a rewarding year at HKUST and the School. During the past few months, the School has been accorded a number of significant recognitions. Altogether there have been three number 1 s from April to August, including number 1 in Asia-Inc 2001 business school survey, top honors in accounting research globally and first in finance research in the Asia Pacific. Details are reported elsewhere in the newsletter. In addition to bringing our faculty and programs some much-welcomed encouragement, such recognition also attests to the high quality of management education available in Hong Kong. Candidates who aspire to receive world-class management education need look no further than HKUST. The community at large should feel proud of the achievements of the School because community support has been instrumental in reaching our goals. We look forward to continued support from all fronts. The new undergraduate program BBA in Global Business has been a hit with secondary school graduates. Overall, our entering undergraduate students have stronger academic results than last year on both important local examinations, namely the Hong Kong Certificate of Education and Hong Kong Advanced Level Examinations. Our newsletter, which has been in print for almost four years, has adopted a new look with this issue. We hope this full-color version will enable us to capture

more effectively the varied activities of the School. The newsletter will appear

three times a year and be continued to be sent to you through the post. As before, we welcome your comments and suggestions. If you have any good stories or photos to share, send them to our editors. Happy reading! K.C. Chan Acting Dean Contents From the Dean 1 News 2-7 {????}No.1 in Asia-Inc Survey {????}Rankings Achievements {????}Students Recognized As Goldman Sachs Global Leaders {????}University Honors S.C. Liu {????}Graduation Time for EMBA KH-03 {????}One Gift for Two Recipients from KH-03 {????}MBA Student Awarded AmCham Scholarship {????}Ten Hours in Hong Kong {????}Advisors Meeting Sparks Ideas for Future Development {????}Distinguished Lectures & Symposiums to Mark the University s 10th Anniversary Research 8-10 {????}Four Steps to a Better IS Strategy {????}Close Ties with Banks Facilitate Shareholder Wealth Maximization Briefly 11 {????}Facilities Upgrade {????}Summer Study Program Attracts the Best and Brightest People 12 Main photo on cover and this page courtesy of Robert Lendrum / HBL Network 2The School has been ranked number one in Asia-Inc list of top MBA schools in Asia and Australia, up from its

number five position in the last survey in 2000. This is the first time a Hong Kong institution has been ranked

first in any regional/international business school ranking. In announcing the results, the magazine noted that the Hong Kong University of Science and Technology (HKUST)

Business School has rocketed to the top after only ten years of operation the depth of HKUST s academic

resources and the caliber of the students it attracts emerged as important strengths in the Asia-Inc survey.

The survey evaluates a school based on three criteria: faculty resources, student quality and academic reputation.

It included 36 prominent business schools from Asia and Australia in its survey.

HKUST placed first in both faculty resources and student quality and second in academic reputation. Asia-Inc

survey notes that HKUST is a truly global academy and that the global-standard intellectual capital that HKUST possesses is its real advantage. Professor Paul Chu, president of HKUST, said: I am very pleased to see that the School has enjoyed a period of great accomplishment and progress since the beginning of the year. The ranking attests to the quality of our faculty and

students who are extraordinarily dedicated and accomplished, and it validates our beliefs that HKUST continues to be recognized as the leading business school in the region. Acting Dean K.C. Chan said: It is very gratifying to see our School rated so highly by other Asian business school deans. The fact that two Hong Kong business schools have made the top four in the survey is a strong testimony to the high quality of management education available in this city. Steve DeKrey, director of HKUST MBA program said: We are the youngest of the top ten business schools and are competing with the very best in the region, so we are truly proud of what we have achieved here. In addition to the number one business school ranking that the School has been accorded by Asia-Inc, the School s individual academic disciplines have also attained significant recognition within their own areas. The accounting faculty was ranked first in the world in research articles published in the top five accounting journals in 2000, while HKUST s finance research output also came first in the Asia Pacific in a separate survey. Accounting Research In 2000, the accounting faculty at HKUST ranked first in the world in research articles No. 1 in Asia-Inc Survey Picture shows accounting professors reviewing their recent work. From left are Associate Professors T.J. Wong and Chul Park, Professor and Department Head Gary Biddle and Professor Kevin Chen. published in the top five accounting journals, namely Journal of Accounting Research (University of Chicago), Journal of Accounting and Economics (University of Rochester), The Accounting Review (American Accounting Association), Contemporary Accounting Research (Canadian Academic Accounting Association), and Review of Accounting Studies (UC Berkeley). The first three journals were used by the Financial Times in their recent global ranking of business programs. HKUST accounting faculty also published in the leading journals of other fields, including American Economic Review, Journal of Economic Theory, Journal of Finance, Journal o f Financial Economics, and Management Science. HKUST is one of only seven accounting programs worldwide to rank consistently among the top ten over the past three years. The other top-ranked programs were Chicago, Columbia, Michigan, Pennsylvania, Stanford, and UC Berkeley. The most widely accepted method for counting publications is author weighted, where each coauthor of a study receives a proportional share of credit. By this count, HKUST accounting achieved a score of 4 in the top five journals in 2000, topping the list along with UC Berkeley. Runners up were Cornell (3.75 points), Indiana (3.67 points), and Columbia (3.5 points). Comparison of Research Output in Top 5 Accounting Journals - Author Weighted (Year 2000) Rank University Publications 1 HKUST 4 1 UC Berkeley 4 2 Cornell 3.75 3 Indiana 3.67 4 Columbia 3.5 5 Stanford 3 6 USC 2.83 7 Colorado 2.67 7 North Carolina 2.67 8 Pennsylvania 2.5 9 Chicago 2.42 10 London Business School 2.33 10 Michigan 2.33 Finance Research HKUST was ranked the top university in finance research among Asia-Pacific universities, according to a recent study published in the widely quoted Pacific-Basin Finance Journal (June 2001). Kalok Chan, professor of finance at HKUST, was named the top author in terms of research productivity in the whole region. The finance research ranking was based on the Asia-Inc s Top 10 Business Schools of 2001 Rank Business School Points 1 HKUST 78 2 Australian Graduate School of Management 74 3 National University of Singapore 73 4 Chinese University of Hong Kong 71 5 Melbourne Business School 69 6 Indian Institute of Management Ahmedabad 67 7 Nanyang Technological University, Singapore 63 8 Asian Institute of Management, Manila 59 9 International University of Japan 56 10 Monash University, Australia 55 Asia-Inc website: www.asia-inc.com RANKINGS ACHIEVEMENTS News 3Two second-year students, Angel Chu (ACCT) and Timothy Tsui (ECON & FINA), are among only 100 students worldwide who were selected as Goldman Sachs Global Leaders this year. Tsui is also one of the 50 to receive top honors , from this innovative program. The Goldman Sachs Global Leaders Program is a new initiative of the Goldman Sachs Foundation to inspire and prepare brilliant students from all disciplines to serve society and their future professions. The Institute of International Education, in partnership with the Foundation and educational organizations in 16 countries, makes its selection from 54 of the world s most prestigious universities each year to identify 100 of the most accomplished second-year university students as Goldman Sachs Global Leaders. Participants are evaluated based on their academic achievement, leadership potential and communication skills. In Hong Kong, eight students have been chosen as Goldman Sachs Global Leaders. Three of them, including Chu and Tsui, are business students. Tsui is among four from Hong Kong to receive the top honors . The Goldman Sachs Foundation awarded each of the 100 winners US$2,000 and publicly recognized their outstanding achievements. The top 50 winners further received the distinction of top honors and an additional US$3,000, a laptop computer, and an invitation to participate in the Goldman Sachs Global Leaders Institute held in New York City, 19-28 July. Both Chu and Tsui are very pleased to have participated in the competition. Says Chu, I found this program very meaningful. It helped us to widen our horizons, to recognize our potential, and to develop as young leaders worldwide. Students Recognized As Goldman Sachs Global Leaders total page counts, standardized to the average page length in the Journal of Finance (JF-equivalent pages) by individual authors and their affiliated universities in a set of 17 leading finance journals over the period 1990-1999. A total of 97 universities were ranked, including all universities in Asia, Australia and New Zealand, the Indian sub-continent, and the South Pacific. Pacific-Basin Finance Journal s Top 10 List in Finance Research Rank University Weighted JF pages 1 HKUST 408.63 2 National University 338.57 of Singapore 3 City University 311.01 of Hong Kong 4 Chinese University 306.06 of Hong Kong 5 University of 291.62 New South Wales, Australia 6 University of Sydney, 258.13 Australia 7 Nanyang Technological 204.05 University, Singapore 8 University of Auckland, 172.21 New Zealand 9 Hong Kong Polytechnic 154.90 University 10 University of Melbourne, 150.83 Australia Congratulations to S.C. Liu, corporate advisor and one of the inaugural MBA students of the School, who has been named Honorary Fellow of the University in a ceremony in June. The award was presented by Pro-Chancellor the Honorable Sze-Yuen Chung and Council Chairman Vincent Lo, Professors Paul Ching- Woo Chu (HKUST president from July 2001) and Chia-Wei Woo (HKUST president until June 2001). Describing his receipt of the award as stuff as dreams are made on , Liu said he felt excited and privileged and thanked the University for the honor that it bestowed on him. The award ceremony, held at the University Center, was attended by members of the Court and Council of the University, faculty representatives and guests invited by Liu. Born and educated in Hong Kong, S.C. Liu is recognized in his citation as a self-made man, an inspiring, home-grown success story . He began his career in the real-estate profession in 1977 and had since then worked with some of the largest companies in Hong Kong before setting up his own company, Hang Cheong Surveyors in 1992. In 1993, he established Guangzhou Pearl River-Hang Cheong Real Estate Consultants in the Chinese Mainland. His Guangzhou business has been very successful and has become the only non-local company to be awarded, for six consecutive years, the prestigious class-A property consultancy/ agency status in Guangzhou since the annual grading system was implemented in 1996. Business aside, Liu is actively involved in public service and contributes his expertise in the real estate profession to educational institutions both locally and overseas. He also provides advice to local and Guangzhou governments on property-related issues. The researchers of the study, Kam C. Chan, Carl R. Chen and Thomas L. Steiner of the University of Dayton also compared the research productivity in the Asia Pacific with that in North America. They noted that the top ten Asia-Pacific universities have achieved a research productivity that is comparable with major public and private universities in North America. For the period 1995 - 1999, HKUST was placed in the same league as Yale University and University of Iowa, placed 26th and 27th respectively, outscoring other major institutions such as Princeton University and Dartmouth College. Professor Kalok Chan Top author in finance research in the region. UNIVERSITY HONORS S.C. LIU S.C. Liu, second from left, 1994 MBA alumnus, poses for a photo with (from left) Professor Paul Chu, president of HKUST, Honorable Sze-Yuen Chung, HKUST pro-chancellor, Dr Vincent Lo, HKUST council chairman, and Professor Chia-Wei Woo. Newsletter Issue 14 Timothy Tsui (front, center) and fellow Goldman Sachs Global Leaders in New York City. 4One Gift for Two Recipients from KH-03 Graduation Time for EMBA KH-03 It was the first time an EMBA graduation ceremony was held on a weekday evening instead of a Sunday afternoon. These breaks from tradition were done for very good reasons. The EMBA KH-03 graduation ceremony took place on the first Friday in April to coincide with the School s Advisory Board Meeting, which also allowed the participation of Professor Donald Jacobs, dean of Kellogg Graduate School of Management. Together with Jacobs, Acting Dean K.C. Chan, Associate Dean Steve DeKrey, and Erica Kantor, assistant dean of Kellogg, presided at the ceremony. Professor Chia-Wei Woo attended the ceremony for the last time in his role as university president. The speaker for that evening was Lawrence Wong, chief executive of the Hong Kong Jockey Club. Graduating students carried on with the tradition from the previous class and organized the Top Professor Award to show their appreciation for the high quality teaching during the program. Gary Biddle, professor and head of accounting was selected for the award. The ceremony, although held on a weekday evening, saw enthusiastic participation from the family members and friends of the graduating students, alumni of the program, and guests from the corporate sector and also from within the University. Following the ceremony, guests were invited to a buffet dinner in the academic concourse, which thanks to professional lighting and decoration arrangement, was transformed into a spectacular semi-outdoor eatery. It was the last time that Jacobs attended the ceremony as Kellogg s dean. He retired at the end of June and returned to a teaching role at Kellogg. Dipak Jain, then associate dean for academic affairs, succeeded Jacobs starting July. (Related story Ten Hours in Hong Kong on page 5.) The class gift from EMBA KH-03 to the School and Kellogg on their graduation has

two recipients the EMBA program itself and Wuding village in Yunnan. Grateful for what they have and eager to help others achieve their aspirations, the third

EMBA class decided to build an elementary school for kids in Wuding, a remote countryside in Yunnan Province on the Mainland where education is a luxury for most of

the inhabitants. The elementary school was designated as a graduation gift to the Kellogg-

HKUST partnership program in April this year. We feel that we are privileged to be able to receive education at HKUST and Kellogg.

When we thought about giving something back to thank the two schools that put together

such a great program for us, the idea of bringing education to some underprivileged

children in Yunnan seemed very befitting, said Thomas Chan (KH-03), CEO of World

Vision China who is a doctor-turned-executive, and also the class coordinator of the

initiative. The class started to raise funds in March and within the space of a month, the HK$150,000

target was reached. We found a very receptive audience, said Chan. Some family members

and employers of the class also chipped in to support us in this worthy cause. By the end of

April, the class raised a total of HK$210,000, which was subsequently donated to World

Vision China to support the building of an elementary school in Wuding. I m motivated as I see the immediate impact this project will bring. During our corporate

job, although we may be dealing with larger size projects, often times, we still feel quite

removed from its impact. That is not the case with this. Maybe it has to do with my living

in China for the past three years and my understanding how bad things can be, said

Polly Mak (KH-03), senior tax counsel Asia Pacific operations of General Motors Corporation, who has been working closely with Chan in coordinating the project.

After the donation, class members and some of their family members visited Wuding to

see for themselves life in a hillside village. The village was about a 3-hour jeep ride from

the province s capital city Kunming, said Mak. We went to visit a villager s home, which

was basically built from dirt, with a fireplace in the center room. In the upstairs, we saw

slaps of pig fat hung over a line. We found out that this was a more well off family who

could afford to kill a pig during Chinese New Year. The pig served as the meat and fat

for the rest of the year. The average income of the village was about RMB300 (less than

USD40). About 4-5 months a year, people have no food. Instead of candy, we realized

that we should buy something else next time when we visit chickens and pigs! It is no surprise that many children are left out of school because their families cannot

afford it. The annual tuition fee is about RMB70 for a child but it is a big sum considering

how much an average household earns each year. Many families can only support one child to attend school. Due to a lack of teaching facilities there, sometimes the

children have to trek hours on rugged hillside each day to attend a school in a neighboring

village, explained Chan. The new school will accommodate 60 students from the local and neighboring villages and will start its first class in September. In November, class members will visit Wuding again for the school s opening ceremony. For more information about World Vision, please visit www.worldvision.org.hk. To make a contribution to support World Vision s poverty alleviation projects, please call their donation hotline: 2394-2394. News One Gift for Two Recipients from KH-03 5Advisors' Meeting Sparks Ideas for Future Development Ten Hours in Hong Kong The School held its second Joint Board Meeting, involving external advisors from both the academic and corporate sectors, in April, with Development in the Second Decade as the theme. Hosted by Acting Dean K.C. Chan, the meeting focused on issues pertaining to the School s strategic development in view of the various challenges to its operating environment in both local and regional contexts. Sixteen advisors attended the meeting. Five of them are academic advisors from the business schools of major universities including the New York University, University of British Columbia, Washington University a t S t . Louis, Northwestern University and University of California, Los Angeles. The School currently has six academic advisors. The 11 corporate advisors who attended the meetings are senior corporate executives from leading corporations with operations in Hong Kong. There are a total of 16 corporate advisors, two of them now work in New York. The meeting was attended by senior faculty members and administrators of the School. Professor Chia-Wei Woo, founding president of HKUST, attended a luncheon for the joint group as a special guest. MBA Student Awarded AmCham Scholarship Carissa Chen, MBA (full-time) final-year student, has been selected to receive the 2000/2001 AmCham Charitable Foundation s Scholar Award. She was awarded a check for HK$25,000 and a Certificate of Merit at an AmCham Financial Services Committee luncheon on 28 May 2001. Chen was recognized for her outstanding academic achievement and extra-curricular activities. Last fall, she spent a semester at Indiana University as an exchange student. She earned her bachelor s degree at the Imperial College, University of London. Newsletter Issue 14 Kellogg' s new dean, Dipak Jain, visited Hong Kong for ten hours at the end of June to show his

support for the Kellogg-HKUST partnership. The Hong Kong trip was an add-on leg to his Indian tour scheduled months ago for the opening of

a business school in Hyderbad. The addition was made following the appointment of Jain as Kellogg s

dean. One of the most important things on my agenda as the dean is to make sure that we keep

our focus on our strengths and develop them. The alliances that we have globally, such as the one

with HKUST, are certainly one of our key strengths, said Jain. His ten hours in Hong Kong started with a lunch with a senior education official, corporate executives

and alumni of the Kellogg-HKUST EMBA program, followed by interviews with regional media. The

visit ended with a reception for current students of the EMBA program. Echoing Jain s message, Acting Dean K.C. Chan, said the continued success of the Kellogg- HKUST

partnership was of utmost importance to both schools. We welcome Dean Jain s visit to Hong

Kong. His presence here in June speaks for itself about the level of support the Kellogg-HKUST

partnership has from Kellogg, he said. Dipak Jain took the reins from former dean Donald Jacobs, who retired from his post after 26 years

to return to a teaching role within Kellogg, with effect from 1 July 2001. He was selected from 120

candidates evaluated by executive search firm Spencer Stuart following an exhaustive national

search in the US. Dean Jain received his education up to the master s level in India before pursuing a PhD in the US.

He is the only Asian to hold the position of dean in the country s top 20 business schools.

Carissa Chen (far left) receives the award from Richard Kahler (center), chairman, AmCham Charitable Foundation. Pictured with current EMBA students are Dipak Jain (front row, center), Acting Dean K.C. Chan and

Associate Dean Steve DeKrey (center right). 6Distinguished Lectures & Symposiums to Mark the University's 10th Anniversary Summer Symposium on Accounting Research In its ninth year, the Summer Symposium on Accounting Research, held from 18 -21 June, once again brought to HKUST the world s leading accounting scholars to examine the development of cutting-edge research topics. The theme of the 2001 Summer Symposium was Market-based Research: The Road Ahead and covered an array of topics related to capital market research, both analytical and empirical. The symposium started with a two-day lecture by distinguished scholars, Professor S.P. Kothari of MIT and Professor Charles Lee of Cornell University. Following the lecture were two days of presentations on market-based research. Also included in the conference was a panel discussion among academic participants, leading professionals, and regulatory authorities from the Chinese Mainland, Hong Kong and the US. More than 80 participants attended the 2001 Summer Symposium. Regional Conference of International Telecom Society The Sixth Asia-Pacific Regional Conference of International Telecommunications Society took place from 5 -7 July 2001 amid strong winds brought by Typhoon Utor. Billed as the premier telecommunications Throughout the summer months, the School played host to a series of conferences both on and off campus. The events were among a series of activities slated to celebrate the tenth anniversary of the University. Hidenori Fuke (second from right), conference co-chair and Xu Yan (far right), organizing co-chair

and the four keynote speakers (from left) : M.H.Au, Chung-Kai Sin, Alan Siu and Paul Lee.

News event in the Asia-Pacific region, the conference provided access to a diverse gathering of over

150 top-flight researchers, industry leaders, and policy makers from across Asia, Australia,

Europe and the US. This year s sessions, under the theme of Information Infrastructure and

Sustainable Development: Challenges to Government Policy and Corporate Strategies ,

addressed a wide spectrum of topics including intellectual property rights in a digital world,

spectrum regulations and 3G licensing, information economy measurement, e-commerce policy

and strategy, and many more thought-provoking issues. The conference featured four keynote speakers including Alan Siu, deputy secretary for information

technology and broadcasting, HKSAR Government; Chung-Kai Sin, legislative councilor (information

technology); M.H. Au, senior assistant director (regulatory), Office of Telecommunications Authority;

and Paul Lee, professor and director of journalism and communication at Chinese University of

Hong Kong. 7Berkeley), spoke at HKUST at a Distinguished Lecture on 6 June 2001. In his talk, Leland presented a theory of optimal portfolio management and showed how costs and taxes should influence trading and asset positions. Compared with current techniques, optimal portfolio management techniques can reduce required trading by 50 percent or more. The talk was attended by over 100 faculty members, students, alumni and business executives. Leland joined UC Berkeley in 1974. He is a fellow of the American Finance Association (2000) and was its president in 1998 and vice-president in 1997. He has been awarded the Graham and Dodd Award (1999) and the Roger Murray Prize from the Institute for Quantitative Research in Finance (1997). In 1987, he was named one of 12 Businessmen of the Year by Fortune magazine. Financial Market Development Conference The Third Annual Conference on Financial Market Development in Emerging and Transition Economies was held on the HKUST campus from 28 -30 June 2001. The conference was organized by the HKUST Business School and supported by the Office of Telecommunications Authority and the Internet and Telecom Association of Hong Kong. Noted Expert Speaks on Optimal Portfolio Implementation Hayne Leland, Arno Rayner professor of finance and management and director of the Berkeley program in finance at the Haas School of Business, University of California, Berkeley (UC Professor Gary Biddle, head of accounting, introduces speakers at the Panel Discussion during the

Accounting Symposium. Seated are, from left, Dr Marc Faber, managing director, Marc Faber Ltd;

Richard Margolis, first vice president, head of planning and strategy, Merrill Lynch Asia Pacific; Philip

Segal, markets and finance editor, Asian Wall Street Journal; and David Webb, editor, Webb-site.com.

The conference is a small gathering of researchers focusing on the evolution of financial markets and corporate finance practices i n emerging and transition economies. This year, 17 local and overseas scholars gathered to present their latest research findings on liberalization and corporate governance of newly privatized firms, decentralization in financial institutions, corporate financial policies, trade credits and financial intermediary development. East Asian Seminar on Economics The 12th East Asian Seminar on Economics was held from 28 -30 June 2001 at the Renaissance Harbor View Hotel in Wanchai. The annual event provides a premier platform for scholars and policy makers to share ideas and develop insights into the economic issues important to Asian countries. This year, the seminar featured a keynote speech by Denise Yue, secretary of treasury, HKSAR Government, and five sessions of paper presentations addressing the theme Privatization, Corporate Governance and Transition Economies . As in past years, proceedings of the seminar will be published by the University of Chicago Press. These volumes, refereed by the National Bureau of Economic Research (NBER) and the University of Chicago Press, have become the most popular NBER series. The seminar was hosted by the Center for Economic Development, HKUST. Third Chinese Management Scholars Research Workshop The Third Chinese Management Scholars Research Workshop was held on campus from 18 -26 July. Participants included 33 scholars from the Chinese Mainland, three scholars from Taiwan and four PhD students from the department of management of organizations at HKUST. An annual event organized by the Hang Lung Center for Organizational Research, the workshop aims to develop and promote high quality management research in China, to identify future core research agendas and f a c i l i t a t e cross-border collaboration opportunities. This year, the workshop was structured into 21 sessions including ten lectures, eight sample research discussions and three work group sessions. Hayne Leland and Acting Dean K.C. Chan Newsletter Issue 14 8The chief information officer (CIO) is required to be master of a balancing act, entertaining needs for new information systems (IS) at both the strategic and tactical levels. Both types of projects can be critically important to the firm. Some of the firm s most important projects are likely to be strategic systems that change important aspects of the business. Smaller projects that call for training, user support, or incremental system improvements may also provide enormous opportunities to improve the organization s effectiveness. The most valuable projects may come from all around the firm, from the executive suite to the lowest ranking new worker and even beyond, from customers and suppliers. But while ideas for new IS are very plentiful, few of them are worth building, so identifying the most valuable project ideas is a seemingly intractable task. Can the CIO make use of knowledge from across the organization to identify new IS that might be important for the firm? FOUR STEPS TO A BETTER IS STRATEGY The answer is Yes , according to Ken Peffers, who recently moved permanently to Hong Kong from Texas to join the HKUST Business School and his research partner, Charles Gengler, from the City University of New York. The answer comes from a concept that they have developed called the Critical Success Chain (CSC). CSC extends Critical Success Factors (CSF), a theory already widely used for IS planning, with a practical analysis method used in marketing research, called laddering . CSF is a top-down planning approach designed to help executives define the firm s strategic needs. Laddering, on the other hand, focuses on discovering product features that are preferred by users and the reasons behind such preferences. CSC combines these concepts to allow managers to understand the IS features that employees and customers think would be most important to the firm and the reasons why. At the same time, it keeps the focus on project ideas that are potentially most important to the firm. In the CSC concept, shown graphically in Figure 1, every person has his or her own ideas about what system attributes would be important to the firm, how these attributes would affect performance, and how this performance is related to the goals of the firm. In a CSC study, the objective is to collect data from study participants about their individual ideas and then combine those ideas across many people to construct models of what is important to the firm. The CSC method has four steps. In the first three steps, analysts work with participants to develop an aggregate picture of what IS product features they prefer and why. In the fourth step, the analysts work with technical personnel to generate feasible ideas for IS projects. Step 1: Pre-study Preparation Determine the focus of the study. The study scope should be limited to a single line of business, a narrow product line, or even a single facility or division within an organization. The focus can be further narrowed to supply chain, marketing channels or operations systems. About 20 - 60 participants should be selected according to this focus to include representative employees, managers, customers and/or suppliers. Step 2: Participant Interviews In a one-on-one interview, present the projects and have the participant rank-order them in terms of their importance to the organization. For the higher ranked stimuli, ask the participant why would this project be important to the organization? to elicit expected performance impacts. Then, ask a series of why is that important to the organization? questions to collect data on associated concepts ending with the organization s goals. Finally, ask a series of what about this system makes you think it would do that? questions to elicit associated concepts ending with specific attributes of the system. Record the responses as linked chains, several of which can be obtained from each participant. Adapted from Peffers, K. and Gengler, C., dentifying High-Impact IS Projects, Communications of the ACM (forthcoming).

Research (c) copyright 2001 by ACM, Inc. See full copyright notice at http info.acm.org/pubs/toc/CRnotice.html. Posted by permission of the ACM. May not be redistributed.

Ken Peffers Figure 1. Critical Success Chain (CSC) System Attributes CSF Performance Firm Goals Firm Goals 9Step 3: Analysis Every participant uses unique terms, so the first step in the analysis is to interpret the participant statements so that similar statements have the same label across participants. Next, the analyst clusters the data so that similar chains of ideas across participants are clustered together. These clusters are transformed into network CSC models, with concepts in the chains represented by nodes linked by the relationships expressed in the chains. Figure 2 shows a CSC network map in the case of a seafood wholesaler. In this example, specific system attributes (delivery ordered packing list) are shown on the left. These attributes are expected to affect performance (earlier deliveries, fresher seafood/produce) shown in the middle. Organizational goals affected are shown on the right. These CSC models are rich with information, not only about what users want, but why. Step 4: Ideation Workshops In ideation workshops, technical professionals use their expertise to generate ideas for feasible projects to accomplish objectives implicit in the CSC models. Workshop participation includes a selection of technical experts with diverse technical skills, e.g., analysis and design, software engineering, telecommunication, and database management. In the workshop, the analyst shows the CSC models to the technical experts, one at a time. Participants use their technical expertise to identify feasible project ideas that address the relationships identified in the models. The experts describe their ideas briefly so as to come up with many ideas. Later, a management committee screens the resulting ideas to determine which are sufficiently interesting to warrant full feasibility studies. Conclusion CSC increases the chance that the firm has identified the most important new IS projects because it makes good use of the knowledge of people throughout the organization, while keeping the focus on what is important to the firm. Selected customers and/or suppliers can also participate, if desired. Figure 2. A sample CSC network map CSC has been successfully used in field tests. It is an excellent way to identify potential e-commerce and supply-chain integration projects, said Peffers. Recently, CSC was used by a major firm in Europe to develop ideas for new mobile commerce applications, some of which are to be rolled out in Spring 2002. In a new project with partners in Finland, Peffers will help a telecommunications firm to develop features for mobile commerce applications development software. IS planning is expensive, so managers like the economy and lack of disruption from the CSC method. A CSC study isn't difficult to conduct, although the data gathering and analysis is most easily done by bringing in a skilled consultant, at least for the first time, according to Peffers. A complete pre-publication version of the article can be seen at http peffers.com. Professor Peffers can be reached in the information and systems management department at HKUST, tel. 2358 7639 or email peffers@ust.hk or k@peffers.com. Newsletter Issue 14 10 When it comes to looking for a well-governed firm, shareholder rights activists usually advise shareholders to pay attention to things like the clarity of a firm s financial disclosures, or the inclusion of independent directors on the board. But they may want to consider adding one more aspect the existence of a main bank with which a firm has a long-standing and close relationship, as a recent study, published in the prestigious Journal of Finance shows. The study, a joint effort by Jun-Koo Kang, Michigan State University, Anil Shivdasani, University of North Carolina at Chapel Hill, and Takeshi Yamada, Hong Kong University of Science and Technology, analyses the role of Japanese banks in investment choices by examining a comprehensive sample of Japanese domestic mergers from 1977 to 1993. The role of banks in Japan provides a very good example to illustrate close ties between banks and client firms. Traditionally, each Japanese firm has a main bank . These main banks provide the largest proportion of debt financing for and are involved with the routine financial transactions of their client firms. As a result, main banks are generally thought to be well informed about their client firms prospects. Some firms may even have their main banks executives or representatives on their boards. Other studies have also shown that firms with close bank ties experience high levels of director appointments, CEO turnover and asset restructuring in times of poor performance, indicating the monitoring role of main banks. Kang, Shivdasani and Yamada collected information on acquisitions made by non-financial firms over the 17- year period spanning 1977 to 1993. A total of 154 acquisitions were included in the study. The acquiring firms were all listed on the Tokyo Stock Exchange while some 70 percent of the targets were privately held firms. The researchers then investigated the market s response to the acquisitions around their announcement dates. (The announcement, rather than the effective dates of the acquisition, was used as the market generally reacts more to the former. The time between announcement and actual acquisition could be a gap of up to three years.) A positive response, indicated by favorable share price movements, was interpreted as shareholders perceiving such acquisitions as creating value for them, and vice versa. The results indicate that all bidders experienced a statistically significant average positive stock price response to merger announcements. Firms with higher levels of loans from the main banks (closer ties) experienced higher stock price returns (favorable shareholder perception) at the acquisition announcements. Other tests in the same study show that the results are robust regardless of other factors such as whether payment was made in cash or by exchange of common stocks, if the acquirer and the target were in related industrial sector, and if the acquisition was to rescue a target. The results are also independent of firm size or the level of cash reserves held by a firm. According to Yamada, assistant professor of finance, this evidence shows that contrary to what many skeptics think, significant bank influence does not put a strain on shareholder wealth but in fact enhances it. He explained that, in Japan, a traditional main bank resembles a typical informed creditor who has a long-standing relationship with a firm. In some cases, the bank and the firm may belong to a common industrial group known as Keiretsu. A main bank sometimes plays a lead role in arranging syndicated loans to raise capital for its client firms or acts as a guarantor for other creditors in times of financial distress. As a result, a main bank has a high stake in the firm s business and therefore is not likely to take a short-term approach. So, if a firm with close main bank ties goes ahead with an acquisition, shareholders would take the endorsement from the bank as a signal of a good investment decision, and react positively. This impact is even more profound if a firm is performing poorly, according to Yamada. However, following the burst of the economic bubble in Japan in the early 1990s, there have been some structural changes to the country s economy. One noticeable difference is the role of the main banks, which Yamada described as being much weaker than it used to be. In that sense, the results of our survey may not represent the current situation in Japan because you may not find main bank relationships as profound as they were back a couple of decades ago. But the theory still holds and, for shareholders, it is always helpful to know that the firm that they invest in has good and long-standing bank ties, Yamada remarked. Original research The Effect of Bank Relations on Investment Decisions: An Investigation of Japanese Takeover Bids by Jun-Koo Kang, Anil Shivdasani, and Takeshi Yamada, Journal of Finance vol.LV, No. 5, October 2000 Close Ties with Banks Facilitate Shareholder Wealth Maximization Close Ties with Banks Facilitate Shareholder Wealth Maximization Research Takeshi Yamada 11 Briefly One hundred and twelve sixth formers with an average of at least 2As on the Hong Kong Certificate of Education Examination attended the School s Summer Study Program in July. First launched in 2000, the program aims to offer bright young students a glimpse of campus life and introduce to them the various business subjects offered by the School. All participants were admitted based on their school principal s recommendation. In addition to academic scores, personal aspiration, leadership skills and involvement in extra-curricular activities The Business School has been able to upgrade its lab facilities and expand its software resources, thanks to support from leading

companies in the IT field. Microsoft Hong Kong has committed to supporting the renovation of the Wireless Lab. The lab will be reconfigured and fitted with computing

facilities to run the latest of Microsoft software. The renovation began in July and is expected to complete by mid September. The refurbished lab

will have 60 seats and be available to all programs run by the School. Broadbase Software has recently provided the School with its E-Marketing suite and training services on a complimentary basis. Broadbase is the leading provider of Intelligent Customer Interactions Software (tm) and its E-Marketing suite is recognized as the best of the eCRM

(electronic customer relationship management) technology. The software will be used as a teaching tool in all of the School s eCRM

courses and will support liaison functions of the HKUST Business School. Additionally, the Center for Electronic Commerce will use the

application for research purposes. Meanwhile, the School also has plans for renovating the Simulation Lab with the intention of enhancing its design to make it a more versatile classroom. FACILITIES UPGRADE SUMMER STUDY PROGRAM Attracts the Best and Brightest were also important considerations for admission to the program. The five -day program featured seminars on topical issues led by the School s professors, company visits to Bloomberg and Mass Transit Railway Corporation, and a video-conferencing session with the faculty and students of Peking University, during which participants discussed education and financial issues pertaining to the two cities. Veteran businessman and former chairman of the Liberal Party, Allen Lee, was invited as the guest speaker to share his life experiences and first-hand information on the development of Hong Kong and China. The highlight was a debate at the finale that showcased the depth and breadth of the reasoning and presentation skills of all participants. The program was co-organized by the dean s office, and the economics, finance, and information and systems management departments, with active involvement from the Business Students Union and the three relevant departmental student societies. Francis Lui, professor of economics and Angela Ng, assistant professor of finance, served as advisors to the program. 12 People Faculty Promotion and Appointment The School is pleased to announce the following new appointments and promotions, with effect from 1 July 2001. Accounting Guochang Zhang has been promoted to associate professor of accounting. Zhang was a faculty member at the University of Waterloo, Canada before joining HKUST as an assistant professor in 1993. His main areas of research include accounting information and equity valuation; financial disclosure and capital markets; the roles of accounting and finance in resolving a firm s agency conflicts; and management accounting in China. Economics Siu Fai Leung, associate professor of economics, has been appointed acting head of the department of economics for the period 1 July to 31 December 2001. He succeeds Professor Leonard Cheng who has stepped down and returned to a faculty position after serving six years as department head. Leung came to HKUST in 1995 as associate professor. He has been a research associate at the Rochester Center for Economic Research since 1988 and was on the faculty of the University of Rochester from 1988-1998. His research focuses on microeconomics; economics of human behavior; labor economics; and econometrics. Changqi Wu is named adjunct associate professor of economics and associate director of undergraduate programs. Wu joined HKUST in 1991 as assistant professor. Prior to that, he was a visiting scholar at Northwestern University. His research areas are industrial economics; economics of R&D; competitive strategy; and China s industries. Larry Qiu and Susheng Wang have been promoted to associate professors of economics. Qiu held the appointment of assistant professor at HKUST since 1993. His research interests include international trade; industrial organization; and China f o r e i g n t r a d e and investment. Wang joined HKUST in 1993 as assistant professor. He was a member of the f a c u l t y of Concordia University, Canada, from 1991-1993. His main research focus is information theory and agency models. research interests focus on industrial organization; incentive theory; and health economics. Finance Jiang Luo, assistant professor of finance, received his PhD at the University of California, Los Angeles in 2001. His research interests are information in financial markets; asset pricing; and corporate finance. Yilin Wu, assistant professor of finance, completed her PhD in 2001 at the University of Chicago. Her research areas are corporate governance; corporate control; private equity markets; corporate finance in small firms; business law and regulation; and managerial remuneration. Jin Zhang, assistant professor of finance, came from the City University of Hong Kong where he was assistant professor of economics and finance from 1997-2001. Prior to that, he was an associate at Morgan Stanley & Co. in New York. His research areas are derivatives and real options. Information and Systems Management Albert Ha, associate professor of information and systems management, was on the faculty of the Yale University from 1992-2001. His current research interests are coordination of product and process development; stochastic models for production and inventory control; incentives in operations; and supply chain management. Qing Li, assistant professor of information and systems management, received his PhD at the University of British Columbia. His research areas include supply chain management; manufactory/ marketing interfaces; production and inventory control. Management of Organizations Jaepil Choi, assistant professor of management of organizations, completed his PhD in 2001 at Rutgers University. His research focuses on the effect of cultural values on organizational justice perceptions; procedural justice; compensation system fairness; individualism-collectivism; leadership; and joint-venture management. Ellick Wong, assistant professor of management of organizations, received his PhD at the Chinese University of Hong Kong in 2000. His research areas include managerial decision making; human judgement and decision processes; language processing; and human attention. Marketing Ying Zhao, assistant professor of marketing, received her PhD at the University of California, Berkeley in 2001. Her research interests are empirical modeling of competitive strategies; impact of the internet on marketing strategies; pricing; consumer choice models and consumer decision making. Rongrong Zhou, assistant professor of marketing, completed her PhD at Columbia University. Her research interests are consumer behavior and decision making; financial decision making; social influences; and customer satisfaction. Larry Qiu Susheng Wang AV Muthukrishnan Dilip Soman Finance Surendra Mansinghka has been named adjunct professor of finance. He served the faculties of San Francisco State University from 1975-2000 and University of California at Riverside from 1970- 1975. His research interests are financial analysis and valuation; corporate governance; and entrepreneurial finance. Management of Organizations Katherine Xin has been promoted to associate professor of management of organizations. Xin came to HKUST as visiting assistant professor in 1997. She has been an assistant professor since 1999. From 1995-1999, she was on the faculty of the University of Southern California. Her research focuses on leadership; organizational culture; and international jointventure management. Marketing AV Muthukrishnan and Dilip Soman have been promoted to associate professors of marketing. Muthukrishnan came to HKUST in 1995 after serving as assistant professor at Fairleigh Dickinson University for two years. His main research area is consumer decision making. Soman has been an assistant professor at HKUST since 1999. He was a faculty member at the University of Colorado at Boulder from 1996-1999. His research interests include consumer and managerial choice and decision processes; mental accounting; inter-temporal choice; behavioral economics; and consumer credit usage. New Faculty The School welcomes the following new faculty members. Accounting Clive Lennox, assistant professor of accounting, joined HKUST from the University of Bristol where he was reader in accounting and economics. He was a lecturer at the University of London from 1997-1998. His research areas are auditing; financial distress; and econometric methodology. Economics Jang-Ok Cho, associate professor of economics, was on the faculty of Sogang University, Korea for seven years before coming to HKUST. He was assistant professor at Queen s University, Canada from 1990-1993. His research areas include macroeconomics; monetary economics; and labor economics. Albert Ma, professor of economics, was a faculty member at Boston University from 1987 -2001. His School of Business and Management, the Hong Kong University of Science and Technology

Clear Water Bay, Kowloon, Hong Kong