APPLICATIONS 1BESTARINET MINISTRY OF EDUCATION MALAYSIA (MOE)

Proceedings of 3rd

International Conference on Management, Finance and Entrepreneurship

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Proceedings

3rd International Conference on Management, Finance and

Entrepreneurship

Penang, Malaysia

13 -14, December 2014

ISSN 2311-6269

Organized by

International Foundation for Research and Development (IFRD)

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Preface Dear Distinguished Delegates and Guests, The Conference Committee warmly welcomes our distinguished delegates and guests to the 2014 International Conference on Management, Finance and Entrepreneurship (ICMFE-2014) held on December 13-14 in Penang, Malaysia. The ICMFE-2014 is organized by International Foundation for Research and Development (IFRD). The conference is aimed at discussing with all of you the wide range of problems encountered in present and future issues in economies and Societies. The ICMFE-2014 is organized in collaboration with Yildirim Beyazit University, Turkey, Shinawatra International University, Thailand, PERTRE ANDERI of IASI, Romania and National Academy of Management, Ukraine where researchers from around the world presented their work. The conference committee is itself quite diverse and truly international, with membership around the world. The proceeding records the fully refereed papers presented at the conference. The main conference themes and tracks are Management, Finance and Entrepreneurship. The conference aims to bring together researchers, scientists, engineers and practitioners to exchange and share their experiences, new ideas and research results about all aspects of the main conference themes and tracks and discuss the practical challenges encountered and the solutions adopted. The main goal of the event is to provide a scientific forum for exchange of new ideas in a number of fields that interact in depth through discussions with their peers from around the world. The conference has solicited and gathered technical research submission related to all aspects of major conference themes and tracks. All the submitted papers have been peer reviewed by the reviewers drawn from the scientific committee, external reviewers and editorial board depending on the subject matter of the paper. Reviewing and initial selection were undertaken electronically. After the rigorous peer-review process, the submitted papers were selected based on originality, significance, and clarity for the purpose of the conference. The conference program is extremely rich, featuring high-impact presentations. The high quality of the program guaranteed by the presence of an unparalleled number of internationally recognized top experts. The conference will therefore be a unique event, where attendees will be able to appreciate the latest results in their field of expertise, and to acquire additional knowledge in other fields. The program has been strutted to favor interactions among attendees coming from many diverse horizons, scientifically, geographically, from academia and from industry. We would like to thank the program chairs, organization staff, and members of the program committee for their work. We are grateful to all those who have contributed to the success of ICMFE-2014 especially our partners. We hope that all participants and other interested readers benefit scientifically from the proceedings and find it stimulating in the process. Finally, we would like to wish you success in your technical presentations and social networking. We hope you have a unique, rewarding and enjoyable time at ICMFE-2014 in Penang. With our warmest regards, Conference Committee December 1314, 2014 Penang, Malaysia.

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ICMFE-2014

Conference Committee Conference Chair Dileep Kumar, M., Ph. D., University Utara Malaysia, Malaysia Conference Convener Nek Kamal Yeop Yunus, Ph. D., Univerisiti Pendidikan Sultan Idris , Perak, Malaysia Members John Walsh, Ph. D., Shinawatra International University, Bangkok, Thailand Sisira R. N. Colombage, Ph. D., Monash University, Victoria, Australia Nek Kamal Yeop Yunus, Ph. D., Univerisiti Pendidikan Sultan Idris , Perak, Malaysia R K Uppal, Ph. D., DAV College, Punjab, India Rishidaw Balkaran, Ph. D., Durban University of Technology, South Africa Ayhan Kapusuzoglu, Ph. D., Yildirim Beyazit University, Turkey M. Saman Dassanayake, Ph. D., University of Colombo, Colombo, Sri Lanka Katalin Jackel, Ph. D., Budapest Business School, Budapest, Hungary Wei-Bin Zhang, Ph. D., Ritsumeikan Asia Pacific University, Japan Susantha Herath, Ph. D., St. Cloud State University, USA Chandana Prasad Withana, Ph. D., Charles Sturt University, Sydney, Australia Chux Gervase Iwu, Ph. D., Cape Peninsula University of Technology, South Africa Somnath Sen, Ph. D., University of Birmingham, United Kingdom Johan de Jager, Ph. D., Tshwane University of Technology, South Africa Kevin Feeney, Ph. D., American University in Bulgaria Ahasanul Haque, Ph. D., International Islamic University Malaysia (IIUM), Malaysia Izah Mohd Tahir, Ph. D., University Sultan Zainal Abidin, Terengganu, Malaysia Pratibha Samson Gaikwad, Ph. D, Shivaji University of Pune, India

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International Conference on Management, Finance and Entrepreneurship (ICMFE-2014)

Table of Contents

Description Pages

Preface Ii

Conference Committee iii

Table of Contents iv

Papers vi

The Impact of Manufacturing Factors towards on-Time Delivery (A case study in PT LG Elektronik Indonesia), Rianovel, FildaRahmiati, Irfan Zafir Habsjah

1

Life Satisfaction and Religiosity among College Teachers, Yousaf Jamal, Sayyeda Taskeen Zahra 13

Scoring model for venture capitalists: Iran, Payam Mansour Hosseini, Siamak Tahvildar, Alireza Babazadeh

15

Sharia Based (Islamic Banking) Financing and its Relevance to Sultanate of Oman, Yasmeen Ali Al-Balushi

23

Social Infrastructure as a Determinant of Entrepreneurship Development in Nigeria, Obasan Kehinde, A

36

Developing a Theoretical Model for Marketing Tourism Small Businesses, Hamed Al-Azri, Liping Cai

43

Competitiveness of Thai Entrepreneurs: Key Success Factors of Logistics Business Operations, Adisak Suvittawat

54

Model of Entrepreneurship Learning in Growing New Entrepreneur (case study in centre of business incubator, West Java, Indonesia), Sri Hartati, Wawan Dhewanto, Rendra Chaerudin, Lenny Martini

60

Working Capital and Firm Financial Performance, Sree Rama Murthy Y 68

Leadership Style Analysis of contingency and Demographics Map of Indonesia chose Jokowi public interest, in the election of the President of the Republic of Indonesia Term of Office 2014 - 2019 (Case Study in Jakarta Special Capital Region), Rr Dyah Eko Setyowati, A. Yani Antariksa, Sri Purwati

72

Influence Tourism Motives, the Tourism Component of the Interest of Foreign Tourists Visiting the Beach in Indonesia, (2014), RR Dyah Eko Setyowati, Sri Kartika Sari Antariksa

80

Determinants of Effective Financial Risk Management in Small Business: A Theoretical Framework, Nurulhasanah Abdul Rahman, Zulnaidi Yaacob, Rafisah Mat Radzi

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Job Satisfaction and Organizational Commitment among Teachers of Vocational Colleges: A Case Study on Malaysia Southern Zone Vocational Colleges, Mohamad Zaid Mustafa, Yahya Buntat, Ali Suradin, Fatimah Affendi, Abdul Rasid Abd Razzaq, Rosnee Ahad

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Fostering Rural Entrepreneurship through Community Based Tourism (CBT), Nor Haniza Mohamad, Abdul Rasid Abdul Razzaq, Mohamad Zaid Mustafa, Ali Suradin

103

Structuring Modelsand Characteristics of Informal Sector Traders in Indonesia (Case Study in Informal Sector Jakarta City, Indonesia), Sri Hartati, Rukmi Juwita,Edwin Karim,Kartib Bayu

111

Characteristics and Role of Women at Small Industries Manufacturing Leading in Sumedang-Indonesia and gender inequality are felt, Umi Zuraida, Ahmad Trias, Sri Herliana, Sri Hartati

119

Applications 1bestarinet Ministry of Education Malaysia (MOE), Mohd Hafez Kamarudin, Nek 126

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Kamal Yeop Yunus Critical Determinants of Technological Innovation: A conceptual framework and a case study from Iraq, Abdul Qadir Rahomee, Ahmed Aljanabi, Nor Azila Mohd Noor

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Z-Theory Foundation and Frame, Allan Zade 143

Forecasting returns on a stock market using Artificial Neural Networks and GARCH family models: Evidence of stock market S&P500, Nadhem Selmi, Samira Chaabene, Nejib Hachicha

149

The Carry Trade Returns and Decomposed Foreign Exchange Market Volatilities, Wenna Lu, Woon Wong

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International Conference on Management, Finance and Entrepreneurship (ICMFE-2014)

PAPERS

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The Impact of Manufacturing Factors towards on-Time Delivery (A case study in PT LG Elektronik Indonesia)

Rianovel, FildaRahmiati, Irfan Zafir Habsjah

President University, Bekasi, Indonesia [email protected]

Abstract: This research aims to improve the performance of PT LG Elektronik Indonesia in terms of their supply chain activity. It is very crucial to examine the relationship between the exposures on their supply chain which will be represented by the manufacturing factors towards the on-time delivery. Therefore, the objective of this study is to determine the correlation between SPCR, POR, and PCR toward OTD. Data collected from January 2013 through November 2013 biweekly with total observed week are 46 weeks. This research is using Multiple Linear Regression to analyze the correlation of SPCR, POR, and PCR toward OTD. The result shows that SPCR and POR have negatively significant impact toward OTD and PCR has negative yet not significant impact towards OTD. Recommendations explained are useful and applicable for PT LG Elektronik Indonesia. PT LG Elektronik Indonesia should develop the shipment scheduling for every production batch. Creating a proper and efficient scheduling will make the container fully occupied. Furthermore, in order to minimize the production observant rate, PT LG Elektronik Indonesia should develop the EOQ (Economic Order Quantity) to determine the proper order to the supplier. Keywords: Shipment Plan Change Rate, Production Observant Rate, Production Change Rate, On-time Delivery

1. Introduction Background of the Study: According to Ministry of Industry in the published Industry Facts and Figures 2012, the manufacturing industry in Indonesia contributes 24.3% to the Gross Domestic Products (GDP). It forced the business player to create a new business processes model to maintain their flow of supply. Therefore, supply chain management is a very useful concept to accommodate the needs of the industry to maintain their flow of supply. However, there is a huge challenge that the industry needs to face which is the uncertainty of the supply chain itself (Bernard, 2011). Figure 1: Supply Chain Management Figure (Simplified) Source: Self-constructed by researchers The Supply Chain was firstly initiated by Keith Oliver, a consultant from Booz & Company (was Booz Allen Hamilton), used in an interview for the Times Financial in 1982. Supply chain operation become more complex when it comes to the global supply chain which includes the operation of export and import among countries. Global supply chain gives the companies a source of competitive advantage (Manuj and Mentzer, 2008). However, Manuj and Mentzer added that global supply chains are more risky than domestic supply chains due to numerous links interconnecting a wide network of rms. These links are prone to disruptions, bankruptcies, breakdowns, macroeconomic and political changes, and disasters leading to higher risks and making risk management difcult. This research will be done in PT LG Elektronik Indonesia. LG is a South-Korean Multinational Corporation. LG Electronic is also a second largest electronic company in South-Korea and the third largest electronic company worldwide.Thus, the supply chain operation of LG will goes along several countries or in another word, using import and export procedure. In order to acquire competitive advantage, PT LG Elektronik Indonesia is applying Just-In-Time (JIT) Manufacturing. According to Garoma (2004), the JIT manufacturing discipline is to work in every facet of the value stream by eliminating waste in order to reduce cost, generate capital, bring in more sales, and remain competitive in a growing global market. The value stream is defined as "the specific activities with in a supply chain required to design, order and provide a specific product or value".Besides applying Just-In-Time Manufacturing, in terms of supply chain, PT LG Elektronik Indonesia is also using responsive business model. In responsive business model, the

Supplier Tier

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Supplier Tier

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Manufacturer Wholesaler Retailer

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manufacturers are assembles products to customer order (see Figure 2). This model allows LG Elektonik Indonesia to not to make any sales forecasting since the production are based on the order from the customer. Figure 2: Responsive Business Model

This responsive business model is the theory that then being employed by researchers to determine the theoretical framework. The manufacturing factors are the aspect inside the manufacture, and how it will affect the fourth aspect of this theory which is delivery which will be represented by on-time delivery. The responsive business model is a narrower concept of supply chain exposure and performance. Therefore, researchersare using this model as the theoretical framework. However, they will also facing the supply chain risk or exposure in the global supply chain.In this research, researchers would like examine the factors in manufacturing activities and how it affects the supply chain performance that is represented by the on-time delivery in LG Indonesia. Statement of the Problem: Based on some discussions that have been made by researchers and LG supply chain stakeholders, researchers identified three main manufacturing factors that could affected the performance of the supply chain in LG which are shipment plan change rate (SPCR), production observant rate (POR), and also production change rate (PCR). Hence, the paper will examine how those manufacturing factors will affect the performance of the supply chain in LG Indonesia. Because of the problem that has been identified in the problem identification, the research question that needs to be answered is; Is there any impact of manufacturing factors towards on time delivery in PT LG Elektronik Indonesia?

Research Objective: The objective of this research based on above mentioned research question are; a. To examine the impactof Shipment Plan Change Rate (SPCR) to the On -Time Delivery (OTD). b. To examine the impact ofProduction Observant Rate (POR) to the On-Time Delivery (OTD). c. To examine the impact of Production Change Rate (PCR) to the On-Time Delivery (OTD). 2. Literature Review Supply Chain Management: Siagian (2007) stated that supply chain involved the whole interaction among suppliers, distributors, and customers. This integration could occur in the form of transportation, information, scheduling, and even the transfer of raw materials among involved parties.According to Rahmasari (2011), every company in the supply chain has the purpose to satisfy the customer by creating a product with low-cost, on-time delivery, and good quality. Those purposes can be accomplished by measuring the performance of the supply chain management with the following measurements: 1. Quality (customer satisfaction, customer loyalty, on-time delivery) 2. Time ( total replenishment time, business cycle time) 3. Cost (total delivery cost, value-added efficiency) 4. Flexibility (amount and specifications) Supply Chain Exposure: According to Manuj and Mentzer (2008), the risk or exposure in the supply chain comes from three sources. Those three sources are demand exposure, supply exposure, and operational exposure. Demand Exposure: Demand exposure relates to potential or actual disturbances to flow of product, information, and cash, emanating from within the network, between the focal company and the market. This

Sell

Buy components

and materials

Manufacture Deliver

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demand risk can be a failure on either the high or low side to accurately accommodate the level of demand. Manuj and Mentzer then added that demand risk may come in the form of demand variability, forecast errors, competitor moves, and risk affecting customers. The demand variability means changes in customer order over a range of time. The forecast error may occur and affecting the inventory level, it can either goes too high or too low; too high forecast may lead to the over production and too low forecast may lead to the company to face difficulties to cope the demand. Competitor moves may affect the demand both positively and negatively, the increasing competitors performance may give thread and decreasing competitors performance may give opportunity to the company. And the other risk that affecting customer may come from the external issue and other unexpected event that may change the customer perception towards the company. Supply Exposure: Supply exposure is the upstream equivalent of demand exposure, it relates to potential or actual disturbances to the flow of product or information emanating within the network, upstream of the focal company. Therefore, it is exposure associated with a company's suppliers, or supplier's suppliers being unable to deliver the materials the company needs to effectively meet its production requirements/demand forecasts. Manuj and Mentzer added that the supply exposure may come in the form of supplier opportunism, inbound product quality, transit time variability, and other risk affecting the suppliers. The supplier opportunism occurs when the supplier tries to increase the price due to the limited supply and the significance of the goods that being supplied. The inbound quality product will disturb the production process of the company itself, the low quality product can either be returned or reworked. Transit time variability is the time that spent during the shipment of supplied goods to the company; it is varied based on the shipper and the bureaucracy, especially for import or export activities. And the other risk affecting the supplier may come in form of the decreasing of supplier capability due to the machineries performance or natural disaster that affecting the supplier production.

Operational Exposure: The operational exposure relates to the disturbance during the production and any activities that are still under the company responsibility. Thus, the exposure is associated with the activity from the storage of the raw materials until the shipment of the finished goods to the customer. Manuj and Mentzeralso added that the operational exposure may come in the form of inventory ownership, assets and tools ownership, product quality and safety; and outbound shipment uncertainty. The inventory ownership means that the risk or exposure may affect the quality or the security of the inventory, the highest inventory risk may come to lasting inventory such as plant and meats. The assets and tools ownership generally has the same issue with the inventory ownership which is the security issue and quality issue. The product quality and safety risk may come in the form of the workers safety since the accident in the workplace will affect the productivity of a company. And the outbound shipment uncertainty can be included in the operational exposure since mostly, in the shipment process, the products is still under the company responsibility, and the shipment schedule is also a part of the risk in the outbound shipment. Supply Chain Performance: Supply chain should be close to their end customers to form a cooperative relationship in demand planning. While companies compete through product customization, high quality, cost reduction, and the speed reaches the market, is given extra emphasis on the supply chain. A design of supply chain activity, production planning, and operational decision making will determine the success rate of an organization (Chopra and Meindl, 2007). Additionally, according to Bernard (2011), supply chain performance is very important in the company, if the supply chain performance improved, then the company is getting closer to the goal that wanted to be achieved.

Theoretical Frameworks: Variables that will be used in this research consist of two kinds of variables which are independents and dependent variable. The independent variables in this research are shipment plan change rate (SPCR) representing operational exposure, production observant rate (POR) representing supply exposure, and production change rate (PCR) representing demand exposure. In the other side, the dependent variable in this research is on-time delivery (OTD) representing the supply chain performance. Figure 3 of Theoretical Framework will be show below.

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Figure 3: Theoretical Framework 3. Methodology

Operational Definitions a. Shipment Plan Change Rate (SPCR): Shipment Plan Change Rate is a tool that being occupied in PT LG

Elektronik Indonesia to measure the ratio changes between shipment plan and the actual shipment. The unit for this measurement is percentage.

b. Production Observant Rate (POR): Production Observant rate is one of the parts in the production plan in LG. In the production plan, POR is used to measure the accuracy of the production plan that has been developed. Production Observant Rate is a tool that being occupied in PT LG Elektronik Indonesia to measure the ratio between the production plan and the actual production. The unit for this measurement is percentage.

c. Production Change Rate (PCR): Production Change rate is one of the parts in the production plan in LG. In the production plan, PCR is used to measure the accuracy of the production plan that has been developed. The Production Change Rate is a tool that used in PT LG Elektronik Indonesia to measure the ratio of changes in customer order. The unit for this measurement is percentage.

d. On-Time Delivery: On time delivery is one of the key performance indicator of the supply chain in PT LG Elektronik Indonesia. In some literatures, on time delivery also considered as the supply chain reliability. The unit for this measurement is percentage.

Research Design: The method that researchers use in order to conduct this thesis is quantitative analysis by using secondary data in which researchers will give some statistical treatment to all of the data got from the PT LG Elektronik Indonesia. Researchers will also using the deductive approach in which researchers develop a hypothesis in the beginning and proof it by a series of calculation. Hypotheses H1: Shipment Plan Change Rate (SPCR) has a significant impact towards On Time Delivery H2: Production Observant Rate (POR) has a significant impact towards On Time Delivery H3: Production Change Rate (PCR) has a significant impact towards On Time Delivery H4: Shipment Plan Change Rate (SPCR), Production Observant Rate (POR), and Production Change Rate (PCR), has a significant impact toward On-Time Delivery.

SPCR (X1)

POR (X2)

PCR (X3)

OTD (Y)

H1

H2

H3

Manufacturing Factors Delivery

H4

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Data Collecting Method: As researchers mentioned above that in this research, researchers is using secondary data from PT LG Elektronik Indonesia. Therefore, the data will be taken directly from its plant in MM2100 Cibitung, Jawa Barat. In order to answer the research questions in this research, researchers using the linear multiple regressions. The regression model in this research is applied to determine the impact of the independent variables which are Shipment Plan Change Rate (X1), Production Observant Rate (X2), and Production Change Rate (X3) towards the On Time Delivery (Y).

The mathematical model for above regression model is as follows: Y = a + 1X1 + 2X2 + 3X3 + e Descriptions: Y = On Time Delivery a = Constanta 1 = Coefficient between Shipment Plan Change Rate toward On Time Delivery 2 = Coefficient between Production Observant Rate toward On Time Delivery 3 = Coefficient between Production Change Rate toward On Time Delivery X1 = Shipment Plan Change Rate X2 = Production Observant Rate X3 = Production Change Rate e = Error disturbance

Another test used in this research is t-test and F-test. The t-test is a test to determine the effect of the independent variables could individually affect the dependent variable (Ghozali, 2001). The t-test can be used to determine if two sets of data are significantly different from one another, and is most commonly applied when the statistic test follow the normal distribution. F-test, hence, used to determine whether the independent variables could simultaneously or collectively affect dependent variable. Researchers use confidence interval at 95%, and the 5% significance ( = 0.05) outside the confidence level will leads to the rejection of null hypothesis. The R2 test is a test to determine how far the independent variables could describe the dependent variable. The determination coefficient value goes around zero to one. Low R2 value means that the ability of the independent variables to describe the dependent variable is limited. If the value of R2 goes near one, it means that the independent variables give almost all information that needed to predict the dependent variable (Ghozali, 2009).

Analysis and Interpretation: Original dataare taken from PT. LG Elektronik Indonesia. The data that will be used in this research is taken from Week 1 of production until Week 46 of production in the year of 2013. The data will be shown in the Table 1.

Table 1 SPRC, POR, PCR, and OTD Data

Week Shipment Plan Change Rate (SPCR)

Production Observant Rate (POR)

Production Change Rate (PCR)

On Time Delivery (OTD)

W1 0.00% 16.74% 0.00% 89.45% W2 0.31% 7.22% 0.00% 96.21% W3 2.61% 4.39% 0.00% 94.90% W4 1.80% 5.99% 0.38% 94.26% W5 1.90% 9.01% 0.05% 94.53% W6 0.17% 9.85% 0.03% 90.33% W7* 0.03% 178.52% 100.00% 85.42% W8* 0.21% 74.74% 76.62% 84.68% W9* 0.08% 71.10% 7.69% 85.57% W10 1.71% 22.05% 0.18% 88.05% W11 0.57% 8.23% 0.04% 83.90% W12 2.08% 8.91% 0.00% 89.14% W13 1.58% 10.68% 0.20% 93.96% W14 1.88% 8.26% 0.00% 89.18% W15 0.92% 11.87% 0.00% 85.39%

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W16 10.47% 7.63% 0.62% 81.49% W17 6.07% 4.12% 0.00% 90.10% W18 1.69% 9.56% 0.49% 85.29% W19 1.86% 7.16% 0.00% 89.56% W20 3.52% 5.63% 0.73% 88.21% W21 1.07% 4.35% 0.02% 90.83% W22 1.58% 11.19% 0.21% 93.93% W23 1.46% 4.13% 0.16% 94.38% W24 0.78% 4.51% 0.00% 97.38% W25 0.95% 3.18% 0.00% 98.45% W26 2.04% 4.89% 0.47% 98.19% W27 0.31% 3.38% 0.00% 97.51% W28 0.91% 6.61% 0.00% 95.71% W29 1.54% 4.57% 0.00% 98.95% W30 3.27% 3.68% 0.00% 98.96% W31 2.68% 2.00% 0.05% 99.01% W32 2.73% 1.31% 0.19% 94.67% W33 0.13% 4.60% 0.06% 95.59% W34 0.29% 3.07% 0.00% 96.07% W35 0.69% 4.72% 0.26% 96.24% W36 0.00% 1.92% 0.00% 95.99% W37 0.22% 1.99% 0.03% 95.92% W38 0.57% 4.09% 0.02% 97.09% W39 0.44% 12.62% 0.00% 97.26% W40 0.52% 2.92% 0.04% 91.15% W41 1.97% 8.03% 0.10% 94.79% W42 4.73% 4.86% 0.01% 95.48% W43 0.55% 5.56% 0.03% 95.26% W44 1.00% 5.96% 0.00% 94.92% W45 1.74% 2.53% 0.00% 97.16% W46 1.17% 0.49% 0.00% 99.04% * will be eliminated Source: Self-constructed by researchers with Ms. Excel 2010 based on the data given by PT LG Elektronik Indonesia (2013) However, PT LG Elektronik Indonesia confirms that there is an error in the Production Calendar System from February 10th, 2013 until March 2nd, 2013. This error affects the invalid record to the PCR and POR in week 7 of production until week 9 of production. Therefore, researchers will eliminate the data from Week 7 (W7) of production until Week 9 (W9) of production since it is not valid. Hypothesis Testing H1: Shipment Plan Change Rate (SPCR) has a significant impact towards On Time Delivery H0: Shipment Plan Change Rate (SPCR) has no significant impact towards On Time Delivery Ha: Shipment Plan Change Rate (SPCR) has a significant impact towards On Time Delivery H2: Production Observant Rate (POR) has a significant impact towards On Time Delivery H0: Production Observant Rate (POR) has no significant impact towards On Time Delivery Ha: Production Observant Rate (POR) has a significant impact towards On Time Delivery H3: Production Change Rate (PCR) has a significant impact towards On Time Delivery H0: Production Change Rate (PCR) has no significant impact towards On Time Delivery Ha: Production Change Rate (PCR) has a significant impact towards On Time Delivery H4: Shipment Plan Change Rate (SPCR), Production Observant Rate (POR), and Production Change Rate (PCR), has a significant impact toward On-Time Delivery.

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H0: Shipment Plan Change Rate (SPCR), Production Observant Rate (POR), and Production Change Rate (PCR), has nosignificant impact toward On-Time Delivery. Ha: Shipment Plan Change Rate (SPCR), Production Observant Rate (POR), and Production Change Rate (PCR), has a significant impact toward On-Time Delivery. Multiple Regressions: Table 2 below shows the regression equation for predicting the dependent variable from the independent variables: OTD (Y) = a + (-0.720) SPCR + (-0.540) POR + e Table 2.Manufacturing Factors toward On-time Delivery

Dependent variable On-time Delivery (Y)

Independent variables Shipment Plan Change Rate (SPCR) Production Observant Rate (POR) Production Change Rate (PCR) R2 0.441 Adjusted R2 0.398 Std Error 0.03447 F 10.260 N 43 Indvar b Beta t Sig. Constant .987 89.990 .000 SPCR -.720 -.301 -2.199 .034 POR -.540 -.509 -4.197 .000 PCR -4.445 3.412 -.179 .200

The multiple-linear regression used in this research to determine the correlation between more three independent variables which are Shipment Plan Change Rate, Production ObservantRate, and Production Change Rate, toward On-Time Delivery as a dependent variable. The statistical operation in this regression will be done by SPSS for Windows (version 16.0). The summary of the regression result by SPSS can be seen in Table 2 above. From the data above Table we can conclude that: a. Shipment Plan Change Rate variable: From the result by SPSS, the t-value of shipment plan change rate

is -2.199 with significance value of 0.034. With using 0.05 as a significant factor, the significance value is less than 5% or 0.05, thus H0 is rejected and Ha is accepted. Therefore, the first hypothesis (H1) is proven.

b. Production Observant Rate variable: From the result by SPSS, the t-value of shipment plan change rate is -4.197 with significance value of 0.000. With using 0.05 as a significant factor, above significance value is less than 5% or 0.05, thus H0 rejected is and Ha is accepted. Therefore, the second hypothesis (H2) is proven.

c. Production Change Rate variable: H0 : 3 0 : Production Change Rate has significant affect towards On-Time Delivery.

d. Ha : 3 = 0 : Production Change Rate does not has significant affect towards On-Time Delivery. From the result by SPSS, the t-value of shipment plan change rate is -1.303 with significance value of 0.200. With using 0.05 as a significant factor, above significance value is greater than 5% or 0.05, thus Ha is rejected and H0 is accepted. Therefore, the third hypothesis (H3) is not proven. The F value that shows in the Table 3 is 10.260 greater than zero, and the significance is 0.000 which is less than 0.05. This condition means that H0 is rejected and Ha is accepted. Therefore, the shipment plan change rate, production observant rate, and production change rate simultaneously have impact to the on-time delivery. Hence, the fourth hypothesis (H4) is proven. From the result of R2 test by the SPSS, the value of R2 test which is adjusted R square is 0.398. In this case, it means that 39.8% of the On-Time Delivery can be described by the variable of shipment plan change rate, production observant rate, and production change rate. And the rest which is 61.2% was affected by other variables in which not examined and mentioned in this particular research.

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4. Conclusion Based on the research about the impact of supply chain exposure (shipment plan change rate, production observant rate, and production change rate) towards supply chain performance (on-time delivery) that conducted in PT LG Elektronik Indonesia which is located in Cibitung, some points can be concluded: a. From the multiple linear regressions calculation can be concluded that only two variables which is

shipment plan change rate and production observant rate that has a significant impact towards on-time delivery and the production change rate has no significant impact towards the on-time delivery.

b. The variable shipment plan change rate has the negative impact towards on-time delivery. It shown in the t-test which shown the t value for -2.199 which shows that is has negative impact towards on-time delivery and the significance value of 0.034 which is less than 0.050. It is happen because the changes in shipment plan will postpone or delay the shipment to the customer. Shipment plan change rate occurs because there are not-full containers. The not-full containers cannot be shipped because there will be inefficient in the shipment cost. Therefore, LG Indonesia will decide to postpone the shipment to minimize the shipping or delivery cost.

c. The variable production observant rate has also negative and significant impact towards on-time delivery. It shown in the t-test which shown the t value for -4.197 which shows that is has negative impact towards on-time delivery and the significance value of 0.000 which is less than 0.050. It is happen because the observant rate mostly affected by the number of defect product and reworks of the product. High observant rate means there are more unfinished order. It makes LG Indonesia should delay the shipment or delivery. That is the reason why the production observant rate has the negative towards the on-time delivery.

d. The variable production change rate has also the negative impact towards on-time delivery, yet the impact was not significant. It shown in the t-test which shown the t value for -1.303 which shows that is has negative impact towards on-time delivery and the significance value of 0.200 which is greater than 0.050. It could happen because the number of appearance of production change rate in LG Indonesia is only several times, and only in a few times. However, in some occasion the PCR appears, it will affect the on-time delivery. It is only if the customer adding more to their order. If the customer decreasing their order it will not really affecting the on-time delivery.

e. Overall, the variables that being examined in this research is only 39.8% coefficient of determination. It means that there is 61.2% more aspect that could affect the on-time delivery that has not been discussed in this research. This number may come up since there is more measurements and indicators in LG Indonesia that could be affecting on-time delivery and not used by researchers.

From above summarized result of the research, it can be concluded that the research question in the beginning of this research has been answered. This research has proven that the supply chain exposure has significant impact towards the supply chain performance. This conclusion can be made because from the three independent variables, there is only one variable that does not have the significant impact towards the independent variable. Recommendations: PT LG Elektronik Indonesia can use this research as basic information for decision making about the supply chain activity for their production. This research shows that shipment plan change rate and production observant rate has a significant negative impact towards the on-time delivery. Therefore, it is important to PT LG Elektronik Indonesia to minimize the changes in shipment plan and production observant rate so that the on-time delivery could be reach. PT LG Elektronik Indonesia should develop the shipment scheduling for every production batch. Creating the proper and efficient scheduling for the shipment of the product will make the containers is fully occupied. It will decrease the changes in the shipment plan. By decreasing the changes in shipment plan, the on-time delivery will be improved. To minimize the production observant rate, LG Indonesia could develop the EOQ (economic order quantity) to determine the proper order to the supplier. LG could consider or anticipate the defect from the supplier by ordering additional products. Therefore, the defect product could be overcame and not affecting the on-time delivery.

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References Bernard, Simplisius. 2011. AnalisisPengaruhFakto-

FaktorKualitasHubunganTerhadapKinerjaRantaiPasokan. Semarang. UniversitasDiponegoro. Chopra, Sunil and Peter Meindl. 2007. Supply Chain Management. New York. Pearson. Garoma, Temesgen. 2004. Implementation of Just-In-Time Production System Automotive Manufacturing

Company in Ethiopia and Addis Ababa Bottle and Glass Company. Addis Ababa. Addis Ababa University.

Ghozali, Imam. 2005. DesainPenelitianEksperimentalTeori, KonsepdanAnalisis Data dengan SPSS 16.0. Semarang. BadanPenerbitUniversitasDiponegoro.

Kemenperin. 2013. Indonesia Industry Facts and Figures 2012. Jakarta. Public Communication Centre Ministry of Industry RI. Retrieved October 2nd, 2013 from www.kemenperin.go.id/download/2971

Manuj, Ila and John Mentzer. 2008. Global Supply Chain Risk Management Strategies. International Journal of Physical Distribution & Logistics Management Vol. 38 No. 3, 2008 p. 192-223. Emerald Group Publishing, Ltd

Rahmasari, Lisda., 2011. Pengaruh Supply Chain Management TerhadapKinerja Perusahaan danKeunggulanBersaing. Semarang. FakultasEkonomiUniversitas AKI.

Siagian, Yolanda M. 2007. Aplikasi Supply Chain Management dalamDuniaBisnis. Jakarta. Grasindo.

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Life Satisfaction and Religiosity among College Teachers

Yousaf Jamal, Sayyeda Taskeen Zahra Government College Township, Lahore

Department of Psychology, University of Gujrat [email protected]

Abstract: The present study aimed to explore the relationship between life satisfaction and religiosity amongcollege teachers. Life satisfaction refers to cognitive and affective assessments of life. Religiosity refers to behavior, emotions, and thoughts which are derivative from beliefs about the sacred, associated with a particular religious ritual. A sample of 100 males and females college teachers was selected in a cross-sectional survey research design.Muslim Religiosity Personality Inventory (MRPI) by Steven Eric Krauss (2011) and Satisfaction with Life Scale (SWLS) by Diener (1985) were used to measure the religiosity and life satisfaction respectively. Permissions to use the scales have already obtained from authors. Data were collected from aconvenient sample of 100 college teachers from district Gujrat. Statistical Package for Social Sciences (SPSS) 20.0 version was used for statistical analyses. Findings of Pearson Product Moment Correlations revealed that life satisfaction is positively associated with religious rituals and maumalats at (p< .001 and p< .01 respectively). Multiple Hierarchal Regression Analysis showed that religious rituals and maumalats predict 29% variance on life satisfaction. The research has implementation that religiosity can play a vital role in life satisfaction of male and female college teachers. Keywords: Life Satisfaction, Religiosity, College Teachers

1. Introduction The present study aimed to explore relationship between life satisfaction and religiosity among college teachers of district Gujrat. Teaching is known to be a dedicated, less paid and stressful occupation in Pakistan and as a consequence many teachers experience from less life satisfaction. There are many external factors like monthly income, facilities of life provided by government, religiosity and social status that have been observed matter a lot in the life satisfaction of any individual (Barbera&Gurhan,1997; Sacks, Stevenson, &Wolfers,2013). However, some internal factors of the teachers also play an important role in the life satisfaction of teachers like personality, emotional intelligence, optimism, and religiosity (Aghili& Kumar,2008; Baco,2010; Gull &Dawood,2013). In Pakistan we cannot expect more from external sources of life satisfaction. So, it is important to know internal factors affecting the life satisfaction of teachers. Religiosity is one of the important factors that may affect the teachers life satisfaction. Life satisfaction refers to cognitive and affective assessments of life. These assessmentscontain emotional responses to occasions as well as cognitive judgment of fulfillment and contentment (Diener, 2003). So, life satisfaction is a broad concept which comprises experiencing pleasant emotions and low level of negative moods(Diener, 2003). Religiosity refers to behavior, emotions, and thoughts which are derivative from beliefs about the sacred and associated with a particular religious ritual (Dedert, Studts, Weissbecker, Salmon, Banis&Septhon, 2004, as cited in Sutantoputi& Watt, 2013). Simply, religiosity may be reffered to as state of ones belief in God, characterized by his virtue and spiritual passion. Spirituality and religious passion are positively associated with ones belief in God and religiosity(Salleh, 2012). Religiosity is found to be identical with such terms as religiousness, orthodoxy, faith, belief, piousness, devotion, and holiness (Lewis, 1978; as cited in Holdcraft, 2006). Significance of the study: Many researches on life satisfaction have done in various Western countries, different culture and region. In light of past studies it could be assumed that in Pakistani culture and Islamic background the religiosity can play a vital role in life satisfaction of teachers. As Pakistan has variety of cultures, customs, and traditions in five provinces, FATA and Azad Kashmir, but religion is common in all regions of Pakistan. So, this study has great significance for all regions of Pakistan. In Pakistan external factors like income, facilities of life and social status that have been observed matter a lot in life satisfaction are not fulfilling appropriately. By knowing internal factors like personality, intelligence, optimism and religiosity, it is possible to enhance life satisfaction. Religiosity is one of the important factors that may affect the life satisfaction in three ways. First, religion could be a source for clarifying and resolving challenging

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situations.Second, religion may work to increase a sense of self-empowerment. Third, religion may also provide a sense of meaning, direction and personal identity. Gull &Dawood (2013) revealed that religiosity has significant positive relationship with life satisfaction. The current study will explore role of religiosity on life satisfaction among male and female college teachers of district Gujrat. 2. Method Participants: Participants were 100 college teachers (50 male and 50 female) of district Gujrat. The participants were selected through convenient sampling strategy. Age range of teachers was 20 to 50 years and their education ranged from M.A/M.Sc. to PhD. Monthly income of teachers ranged from 10,000 to 50,000 rupees. Measures MRPI: Muslim Religiosity Personality Inventory developed by Steven Eric Krauss (2011) measures religious rituals and maumalats. It consists of 33 items. Eighteen items in the scale measures Rituals and fifteen items measures maumalats. Participants are asked to answer to the statementsrelevant to their personal experience.On each item answers are to be given on 5-point rating scale (1 = never, 5 = always) with high score meaning high rituals and maumalats, and low score indicated minimum rituals and maumalats. The reliability coefficient of Muslim Religiosity Personality Inventory was found ( = 0.89) (Krauss, 2011). In current research reliability coefficient was found ( = 0.90). SWLS: Life satisfaction was assessed using Satisfaction with Life Scale (Diener, 1985). It consists of five items. Each item is to be rated on 7-point rating scale (1 = strongly disagree, 7 = strongly agree). Possible scale scores range from 5 to 35 with high score meaning high satisfaction and low score suggested low life satisfaction. The reliability coefficient of Satisfaction with Life scale was ( = 0.82) (Diener, Oishi, & Lucas, 2003). The reliability coefficient in present study was found ( = 0.83). Demographics: Demographic information about teachers age, gender, father and mother education, father and mother occupation, marital status, spouse education and occupation, sect, region of residence, family system, monthly income, employment type and qualification were alsoobtained on a data sheet. Procedure: The consent form from each of the participant and permission for data collection was taken from competent authority of the institution. Participants were briefed about confidentiality and privacy of the research. Written instructions on the booklet of the questionnaire were read to them and they were encouraged to ask any query regarding questionnaire. Time taken for completion of questionnaire was 10 to 15 minutes approximately. Statistical Analysis: Statistical Package for Social Sciences (SPSS) 20 versions was used in this study for statistical analysis. Descriptive analysis was used to explore the frequencies and percentages of demographic variables. Pearson Product Moment Correlation was used to find out correlation between life satisfaction and religiosity. Hierarchal Multiple Regression Analysis was conducted to find out the predictors of life satisfaction. 3. Results Table 1: Inter Correlation of Life Satisfaction and Religiosity (N = 100) Variables 1 2 3 M SD

1. SWL - .45*** .35** 26.64 5.60 2. Religious Rituals - .50*** 73.39 10.14

3. Religious Muamalat - 67.39 6.15

Note.SWL = satisfaction with life. **p < .01. ***p< .001

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Table 1 shows that life satisfaction is positively associated with religious rituals and religious maumalats(r = .45, p< .001 and r = .35, p< .01 respectively). Table 2: Hierarchal Regression Analysis for Study Variables Predicting Life Satisfaction (N = 100)

Note. *p < .05.**p < .01. ***p < .001 Hierarchal Multiple Regression Analysis was carried out to find out the predictors of life satisfaction. In first step life satisfaction was entered as outcome variable and demographics (age, gender, sect and marital status) were entered as predictors. No significant predictor emerged in this step. In second step religious rituals and maumalats were entered as predictors and life satisfaction as outcome variable. Religious rituals appeared as a significant predictor of life satisfaction with = .37, p< .01. Religious maumalats also emerged as a significant predictor of life satisfaction with = .21, p

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Limitations: We cannot generalize the study results without throwing light on limitations of the study. Several drawbacks were found in current study. Main limitation of the study is its cross-sectional design which inhibits from drawing causal inferences. From studies with this type of designs we can only determine if the variables are associated to each other or not. Another drawbackof current research of is that we cannot claim about the teachers being representative of general population because they were not randomly selected. There is a probability that participants self-presentational concerns have effect their answers. Another main limitation of the research is that the sample size was small which affect the generalizability of the research. Another limitation was that Forced-choice questions may leave insufficient room for variation in choice. Questionnaires used in the research were not standardized in the context of Pakistan. Implications: Practical implication of study suggests that religiosity play an important role to enhance life satisfaction in male and female college teachers of district Gujrat. Beside all other demographics (income, education, rural/urban) religiosity becomes the strongest predictor of life satisfaction. Religiosity and the teachings of Islam; rituals and maumalat, teach us contentment and tolerance hence, increase the life satisfaction. Recommendations: Questions should be standardized according to local norms.It is recommended for further research that qualitative and quantitative, mixed design should be used. 4. Conclusion The current study was designed to explore the relationship between religiosity as predictor and life satisfaction as outcome variable. In present study religious rituals and maumalats were found significant predictors of life satisfaction of male and female college teachers. References Aghili, M.& Kumar, G.V. (2008).Relationship between religious attitude and happiness among professional

employees.Journal of the indian academy of applied psychology, 34, 66-69. Baco, E.C. (2010). The strength of religious beliefs is important for subjective well-being. Undergraduate

economic review, 6 Barbera, P.A.&Gurhan, Z. (1997). The role of materialism, religiosity and demographics in subjective well-

being.Psychology& marketing, 14(1), 71-97. Belogoumidi, A.&Tilliouine, H. (2009).An exploratory study of religiosity, meaning in life and subjectivewell-

being in Muslim students from Algeria.The international society for quality of life studies, 4, 109-127. Chang, W.C. (2009). Religious attendance and subjective well-being in an eastern-culture country:

Empiricalevidence from Taiwan. Marburgy journal of religion, 14 Dawood, S.& Gull, F. (2013). Religiosity and subjective well-being amongst institutionalized elderly

inPakistan.Health promotion perspectives, 3(1), 124-128. Diener, E., Oishi, S.& Lucas, R.E. (2003). Personality, culture, and subjective well-being: emotional and

cognitive evaluation of life. Annual review of psychology, 54, 403-25. Holdcraft, B. (2006). What is religiosity?.A journal of inquiry and practice, 10, 89-103. Khalek, A.M. (2010). Quality of life, subjective well-being, and religiosity in Muslim college students.Quality

oflife research, 19, 1133-1143. Khalek, A.& Lester, D. (2013). Mental health, subjective well-being, and religiosity:Significant association in

Kuwait and USA. Journal of Muslimmental health, 7, 556-4908. Krauss, S.E. (2011). The Muslim religiosity personality inventory (MRPI) scoring manual.Institute for

socialscience studies. Lai, C.H.C. (2010). Religiosity and subjective well-being in Chiristanity, Buddhism, and Taoism.

UnpublishedPhD dissertation. Deakin University, Deakin. Levin, J. (2011). Religion and positive well-being among Israeli and Diaspora Jews: Findings from the world

value survey. Mental health, religion, and culture, 1469-9737. McCullough, M.E.& Willoughby, B.C.B. (2009). Religion, self-regulation, and self-control: associations,

explanations, and implications. American psychological association, 135, 69-93.

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Putnam, R.D.& Lima, C. (2010). Religion, social networks, and life satisfaction. American sociological association, 75(6), 914-933.

Sacks, D.W., Stevenson, B.&Wolfers, J. (2013) .Growth in income and subjective well-being over time. Unpublished raw data.

Salleh, M.S. (2012). Religiosity in development: A theoretical construct of an Islamic-baseddevelopment. International journal of humanities and social science, 2(14)

Sutantopntoi, N.W.& Watt, H.M.G. (2013). Attribution and motivation: Gender, ethnicity, and religion differences among Indonesia university students. International journal of higher Education, 2, 1927-6044.

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Scoring model for venture capitalists: Iran

Payam Mansour Hosseini, Siamak Tahvildar, Alireza Babazadeh Pishgaman Noavaran Dana (Iranian Venture Capital Company)

[email protected] Abstract: Venture capitalists and entrepreneurs have big impact on economic growth and value added through technological and market innovation. Venture capitalists look for potential entrepreneurs with a prior experience and entrepreneurs look for fund. Venture capitals offer technological, financial and managerial expertise to funded entrepreneurs. In this paper a scoring model has been developed based on an Iranian venture capital experiences. This model is an initial evaluation of business plans which shows whether they are accepted or rejected. Then the accepted business plans will be evaluated in depth from the economical aspect. Keywords: Venture capital, Entrepreneurship, Business plan, Scoring, Iran

1. Introduction The entrepreneurial process often addresses as acting on an unexploited opportunity that exists in research universities, networks and venture capitalists. The entrepreneurial process should lead to economic growth and creation of successful companies (Bresnahan, Gambardella & Saxenian, 2001). Entrepreneurship is described as a function of the type of people engaged in entrepreneurial activity and the role of opportunity (Eckhardt & Shane, 2003). Obtaining finance is hard for new and recently established firms, fast-growing and technology based businesses because of the high fixed costs (Bukland & Davis, 1989). Venture capitalists manage pool of capital in various stages of development and they involve in three parties: suppliers of venture capital, the managers of venture capital fund and the recipients of venture capital money (Brouwer & Hendrix, 1998). Venture capitalists frequently look for individuals with a successful prior experience in entrepreneurship (Burke, FitzRoy & Nolan, 2008). The venture capital industry involves with high risk and uncertainty with the investments made (Sahlman, 1990). Venture capitals offer technological, financial, and managerial expertise to the funded entrepreneurs (Lerner, 1994). The expansion of venture capital activity in most developed countries has provided a new source of long term investment capital. Venture capital is an activity by which corporate investors provide long term equity finance, supported by business skills, to companies with potential to grow with the high risk. The venture capital industry has a high rejection rate as very few businesses can demonstrate their potential to grow. To filter out poor investments, venture capitalists undertake all possible due diligence. The venture capitalists typically involve in the management of the business receiving the finance. Also, venture capital investment needs an exit route. The venture capital industry has a catalytic role in the entrepreneurial process by providing financial and managerial support (Mason & Harrison, 1995). The importance for venture capitalists of evaluating the venture team qualities is related to the high impact and involvement of the entrepreneur in the first phases of development of a new business (Lewis & Churchill, 1983). Bygrave & Timmons (1992) note that venture capital backed companies have their impact on economic contribution and added value through technological and market innovations. Venture capitalists have significant proficiency and expertise in evaluating the product and market. This allows them to examine product and market characteristics of the different ventures in the segments in which they invest. Venture capitalists attribute the failure of new businesses to problems related to the management team (Gorman & Sahlman, 1989). Management team and entrepreneurial qualities have a greater impact on the venture capitalists decision making process than any product and market consideration (Goslin & Barge, 1986). The most challenging task in venture selection is the evaluation of the management team (Gorman & Sahlman, 1989). The venture capitalists are generally involved with entrepreneurs for almost five to ten years until their initial public offering (IPO). During this period, the firm grows in different aspects such as personnel, new products, and/or production capability. The success of the entrepreneurial firm is largely depends on the relationship between the entrepreneur and the venture capitalist (Bygrave & Timmons, 1992; Flynn, 1991). Tyebjee & Brunos work (1981) shows the importance of business plan (BP) as a key phase for venture capital decision making. MacMillan, Siegel & Narasimha (1986) make a list of important factors considered by

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venture capitalists when screening BP. These factors are: 1) the quality of the entrepreneur and of the venture team 2) the validity of the idea and its defensibility against competitors 3) characteristics of the market 4) venture liquidity, and 5) venture return on investment. Many venture capitalists believe that the competence of management is the most important factor in evaluation a venture capital investment. The biggest shortage is the people with the know-how (Doerr, 1990). One finds evidence of the importance that is placed upon human resources formalized in many venture capital deals. A common provision in venture capital agreements shows the importance of acquiring key-man to cover the employees. As a result venture capitalists place a high premium on the knowledge assets of the founders (Wilkins, Van Wegen & De Hoog, 1997). Scoring: The popularity of scoring model is due to its simplicity. Technology evaluation factors for a scoring model could be: ability of management, level of technology, marketability of technology, technology potential and profitability. This requires scoring of individual attributes (Korea Technology Transfer Center, 2003). The main purpose of technology scoring is to make a binary decision (Sohn, Moon & Kim, 2005). Venture capitalists need systematic evaluation methods for making decision on investment (Park & Park, 2003). The results of valuation are expressed in score, index, or monetary value (Sohn, Moon & Kim, 2005). Scoring has been widely used all around the world. Scoring model uses a number of evaluation factors and the evaluator rate score for each factor. Then the overall score is computed (Souder,1972). Introducing Pishgaman Noavaran Dana (Iranian VC Company): Pishgaman Noavaran Dana (PND) was shaped by knowledge based methods in direction of achieving permanent progress in Iranian industries. PND considered the presence of fundamental gaps in Elite context and found the knowledge based problems. Some of them are listed below: Necessities are 1) Creating total circle of Idea to market, 2) Creating scientific circle from knowledge and technologies, and 3) Creating proper relation between knowledge producing centers, knowledge based products and market owners and industries. Gaps are 1) Industries which fail to absorb and create keep and progress the knowledge. 2) Elites weaknesses to create and manage an economical organization. Fail to absorb financial support and investments for their knowledge based projects, 3) Weak link between universities research centers and investors, and 4) Private and governmental sectors avoidance to invest in knowledge based projects for their high risks. PND has chosen its mission as a VC company to connect idea circle to commercialization and market process by investing on new ideas and knowledge based projects. PND Mission includes 1) Answering to key problems of country through knowledge based methods, 2) Research, development, Transferring, Localization of knowledge, Technology in key knowledge based subjects, and 3) Networking, Talents and Elites Guidance and connecting universities researchers to investors. Scoring Model to evaluate market entry: According to Bandarian, Mousaei, Ghadirian & Tabatabaei (2008) factors to be considered for evaluating a project in Iran are: market situation, technical evaluation, social and individual value, risk evaluation, financial evaluation and strategic evaluation. In this paper these factors and their attributes have been redesigned and changed for venture capitalists in Iran. Also, paired comparison is used to compute the final score. Important factors to be considered in PND which influence the decision making process whether to invest in projects are: 1- Technical factors 2- Economical factors 3- Risk factors 4- Market factors 5- Strategic factors 6- Social factors

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2. Methodology for project/market entry In this method, each factor is measured based on the experts opinions. The experts are experienced in the fields that the company receives projects. In our scoring model, all of the attributes are measured in five point Likert scale. With a 1 to 5 scale, a 3 designates a middle value, so there are two integer scores that can be used to designate less than 3, namely 1 and 2, and two greater than 3, namely 4 and 5. Technical Factors: As the title indicates, in this process we have to score technical aspects of the project. To do this we need the research and collect data to score following table 1. The aim is to find out the complexity of technical knowledge and the extent that the project could be copied. The extent that a project needs to import foreign facilities and the standards needed to possess to enter a market. For instance high technical complexity is a positive sign and not having necessary standards would be considered as a negative point. Table 1: Technical factors and attributes

Technical Attributes 1 2 3 4 5

Technical Knowledge

To what extent the technical knowledge in this project could be used as infrastructure of other knowledge?

To what extent the technical knowledge of this project has priority over other technical knowledge in the country?

How innovative is this project?

Production Process

To what extent does the commercialization of this project take time?

How much is the complexity of product production process?

To what extent does this project have technical limitation?

To what extent does this project depend on (Local/Foreign) rare facilities?

To what extent does the requested facility comply with production quantity in this project?

To what extent does this project depend on (Local/Foreign) rare raw materials?

Product Standards

To what extent the plan and product could be copied?

Does the sample product pass related tests? To what extent these tests are reliable?

Does the sample product have technical standards? To what extent these standards are reliable?

Economical Factors: In this process we have to score Economical aspects of the project. To do this we need to fill the table 2. The aim is to find out the benefits, the accuracy of financial planning in a project and finding sensitivity of the project. For instance assuming the costs of a project more than the reality have negative point and high benefit and margin for the project are positive points.

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Table 2: Economical factors and attributes

Economical Attributes 1 2 3 4 5

To what extent do the project costs comply with the requested investment amount? To what extent does the breakeven point proper in this project? To what extent the benefit in this project is appropriate?

To what extent the margin is proper in this project? To what extent does the project comply with economical trends of the country? To what extent does this project bring benefits to the country?

To what extent this project has financial exemption? To what extent the benefit/cost ratio in this project is appropriate? To what extent does the project owner participate in investment? To what extent the project is sensitive to specific factors like (sales, inflation)?

Is IPO possible for this project in the future? Risk Factors: As the title indicates in this process we have to score Risk aspects of the project shown in table 3. The aim is to find out the risks that a project would face in the future. It would be systematic or unsystematic risks. These factors show the probability of failure in the future. For instance all of the below attributes in risk section have a negative point in final scoring. Table 3: Risk factors and attributes

Risk Attributes 1 2 3 4 5

To what extent supporting laws and regulations do exist for this project?

To what extent failure is probable in the production phase of this project?

To what extent the raise in price of raw materials is probable in this project?

To what extent is it probable that another new and similar product enters to the market?

To what extent is it probable that new standard for the product would be imposed?

How much is the probability of market share failure of this product in the future?

How immature or weak is the managerial team of this project?

To what extent the guaranteed sales contracts and accelerative occasions do exist for this project?

Market Factors: As the title indicates in this process we have to score Market aspects of the project. To do this we need the research and data gathering to score following table 4. The aim is to find out the impact of

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market forces on this project. The core is Porters five forces which imply the power of suppliers, buyers to bargain and rivalry among competitors and threats of new entrants and substitute products. These attributes can help to decide whether to enter a market or not. Table 4: Market factors and attributes

Market Attributes 1 2 3 4 5

Rivalry in Industry

How many competitors do exist in this industry?

What is the growth rate in this industry?

How many features does this product possess?

How can you evaluate the demand for this product in domestic market?

To what extent does this product possess competitive advantage over other similar products?

Bargaining Power of Suppliers

To what extent the number of important suppliers can affect the bargaining power of suppliers?

To what extent substitute suppliers are available in this industry?

To what extent raw material suppliers play role in the final quality of the product?

To what extent raw material suppliers can decrease the industrial costs?

To what extent raw material suppliers can produce this product?

Bargaining Power of Buyers

How many important customers are in this industry?

To what extent is it possible to get access to the substitute products?

To what extent can final product decrease customer costs?

Threat of new Entrants

To what extent the brand name of the company can penetrate the market?

To what extent do experts in this industry are available?

Is this product capable of getting access to the latest technology?

To what extent does this product attractive to the customers?

Substitute Products

How many substitute products are in this industry?

Strategic Factors: As the title indicates in this process we have to score strategic aspects of the project. To do this we need the research and data gathering to score following table 5. The aim is to find out if a project is aligned with the company mission. For instance compatibility of the project with PND and country strategies could be considered as a positive point for the project.

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Table 5: Strategic factors and attributes

Strategy Attributes 1 2 3 4 5

To what extent does this product affect the ecological indexes?

To what extent does this BP affect national self sufficiency?

To what extent does this BP affect national security? To what extent does this BP affect national wealth and conserving it? To what extent does this BP affect national power and conserving it?

To what extent does this BP comply with PND priorities? Social Factors: As the title indicates in this process we have to score social aspects of the project. To do this we need the research and data gathering to score following table 6. The aim is to find out if a project can raise social welfare or macro plans for the country. For instance if the project prevents country from importation, it could be considered as a positive point for the project. Table 6: Technical factors and attributes

Social Attributes 1 2 3 4 5

To what extent does this BP prevent country from importation?

How many jobs does this BP create? To what extent does this BP comply with macro plans and policies of the country?

To what extent can we find creativity and novelty in this BP? To what extent does this BP affect the productivity level of the industry? To what extent does the product affect the social welfare of the country?

Paired comparison: The method of paired comparisons is used primarily in cases when the objects to be compared can be judged only subjectively; that is to say, when it is impossible or impracticable to make relevant measurements in order to decide which of two objects is preferable. The method of paired comparisons is sometimes the only practicable experimental procedure. With a 1 to 9 scale, a 1 shows the two factors are equally important and a 9 shows that the given factor is absolutely more important than the other given factor. A 3 shows slightly more important, 5 shows more important and 7 shows strongly more important. The result of paired comparison would be computed weights for each factor. By applying the weights and scores, we can define a rage for accepted and rejected projects (table 7). Table 7: Paired comparison

3. Conclusion In this paper we have attempted to develop a scoring model which can be used for venture capitalists for initial evaluation of the projects. We began by reviewing the literature in relevant papers and books. We have

WeightSocial factors Strategic factors Market factors Risk factors Economical factors Technical factors

Technical factors

Economical factors

Risk factors

Market factors

Strategic factors

Social factors

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identified 6 important factors and their attributes. These factors are: Technical factors, Economical factors, Risk factors, Market factors, Strategic factors and Social factors. In the scoring model, all of the attributes are measured in five point Likert scale by experts. Then by applying the weights which have been computed according to paired comparison, we can calculate the final score of each factor and the sum of them. By applying this scoring method, it is possible to define a range for accepted and rejected projects for venture capitalists. Finally, the accepted ones will be evaluated in depth from economical aspects. Acknowledgement: We are grateful to our colleagues in Pishgaman Noavaran Dana (Iranian Venture Capital Company) for supporting this research. References Bandarian, R. Mousaei, A. Ghadirian, A. & Tabatabaei, M. (2008). Developing a model for technology

commercialising and pricing of petrochemical products. International Journal of Technology, Policy and Management, 8(3), 279-297.

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Sharia Based (Islamic Banking) Financing and its Relevance to Sultanate of Oman

Yasmeen Ali Al-Balushi Rustaq College of Applied Sciences, Ministry of Higher Education, Sultanate of Oman

[email protected] Abstract: In modern days, not only traditional financing gaining importance but also the interest free microfinance gaining an enormous importance to micro entrepreneurs whether it is in developing or least developing countries. This type of financing system provide loan to its clients without interest and there are many different investment modes of funding. This paper present the general trends to the people in showing their interest in Shariah based financing in the sultanate of Oman and how the institutional credit facilities may reach to the rural-based small entrepreneurs by Islamic banking finance and their relationships. Further, a qualitative nature of research methodology is used in this paper; qualitative research enables the researcher to know in depth the aspects of a case and it provides all the facilities in getting and collecting the information. In order to see the reality of the demand of Islamic Banking in the environment of the Sultanate a depth interviews were managed with a group of people. The main respondents in the present study were group of banks employees form Islamic banks and Islamic windows of conventional banks. The end results of the paper were that there is huge demand of Islamic banking system among Omani people and it also shows how Islamic banking system would empower small entrepreneurs. Keywords: Islamic Banking, finance, banking, micro entrepreneurs

1. Introduction Islamic banking finance is based on Shariah (Islamic Law), the lending and borrowing modes of which are different from a traditional bank. Islamic banks lend funds to their customers in kind rather than in cash and charge profits on their borrowed funds. Money in Islamic finance is not a commodity but only a mean to settle a transaction. Islamic banking is relatively recent development and many Islamic countries have realized that dealing with western banking and finance methods are undermining their adherence to Islamic principles (Taylor, 2003). Therefore many Islamic countries reform their financial practice. Islamic finance offers a great incentive for Islamic countries to develop financial market (Ibrahim, 2008). There were at least about 176 Islamic banks in the early 2003 around the world and about 32 of them are operating in an Arab state (Ghannadian & Goswami, 2004). Trade and commerce are not new to the Islam the Prophet Mohammed was a merchant and a trader (Ibrahim, 2008). Today and in the Muslim history Islamic entrepreneurs always find the opportunities to commerce and trade which satisfy them to the Islamic beliefs (ibid). There are many sources of Sharia. The primary source like Holy Quran, the Hadith (saying of the Prophet) and the Sunnah (practices of the Prophet) are the primary source of Islamic law and principal guide. Holy Quran is the first revealed source. Qiyas (analytical deduction and reasoning), Ijma (consensus of Sharia scholars) and Ijtihad (legal reasoning) are the secondary sources of sharia. In addition, further sources in Islam are Istihsan (personal preference) Istislah (public welfare), Darurah (necessity) and Urf (custom). Oman is one of the largest countries in the Gulf region with population of 3,113000 (www.moneoman.gov.om). In the seventh century Oman has adopted the Islam during the life time of Prophet Muhammad. (Background Note: Sultanate of Oman, 2004). Being an Islamic country presently Omans government has established within last two years the legal and regulatory framework which applies to Islamic banks and Islamic windows of conventional banks . The Sultanate Oman was the last country in the six-nation Gulf cooperation Council to introduce Islamic finance . On other hand, all GCC countries have Islamic bank and there are more than 20 Islamic Banks in the GCC. For example, Saudi Arabia (Islamic Development Bank), Kuwait (Kuwait International Bank), Bahrain (Bahrain Islamic Bank), Qatar (Qatar Islamic Bank), and The United Arab Emirates (Dubai Islamic Bank).This motivates me to do my dissertation about Islamic Banking and it is relevant in the context of the economy of Sultanate of Oman. According to the Finance of International Trade in the Gulf Arab States (1993) that during the period of 1920 and 1931 the residents of the Gulf Arab States were disagreeing to deal with the conventional banks because the bank activities were against their Islamic principle which were dealing with interest, once there were discovery of oil in commercial quantities in the Gulf, many conventional banks want to take the opportunities to deal with

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such customer so many people change their attitude towards traditional banking which may result partly to the luck of popularity in Islamic banking system. Today Islamic banking is competing aggressively with conventional banking with unprecedented pressure for innovation (Ibrahim, 2008). The main objectives of the paper would be: to study the lender-borrower relationships that may influence by Islamic banking finance, to study the general trends to the people in showing their interest in Shariah based financing, and to study as to how the institutional credit facilities may reach to the rural-based small entrepreneurs by Islamic banking finance. 2. Literature Review An Islamic bank may be defined as a financial intermediary whose objectives , operations , principles and practices must conform to the principles of Islamic Law (Shariah); and it has to operate all its activities without interest (Alam, 2009, 2003, 2002). Molla et.al. (1988) observes in his study that the main objectives of an Islamic banks is not only the elimination of interest-based transactions, but also the establishment of a just and balanced social order free from all kinds of exploitation. An Islamic bank works as a partner with its customers. The system essentially involves sharing of risks between the owner of capital and the entrepreneurs, as well as sharing the results of the collective efforts. Due to that reason we may call Islamic banking as participatory banking. Molla et.al. (1988), also observes that the aim is not only the elimination of interest-based transactions and the introduction of zakah (Contribution to poor) systems but also the establishment of just and balanced social order free from all kinds of exploitation. Considering interest in Islamic economics Ahmad (1994), argues that elimination of interest does not mean zero-return on capital, rather Islam forbids a fixed predetermined return for a certain factor of production, i.e. one party having assured returns and the whole risk of an entrepreneurship to be shared by others. The author also observed that it is the capital entrepreneurship that shares both the real contribution and the real profitability. The Islamic bank follows the principle of equity-based-investment. The idea of equity-based investment banking is not new to the financial market. If we look into history it may be observed that capital, loan capital as well as venture capital played a great role in promoting the industrial and economic development of various countries of the world. For example, during the 19th and 20th centuries investment banks played a great role in French tradition, while in the British model of banking equity-based investment was limited. Similarly, in Germany, equity-based investment was being practiced by commercial banks during that period. Even the banking crisis in the western world during the great depression in the 30's or the 80's proposed two-tier banking i.e. hundred percent deposit banking and the equity-based investment banking (Alam, 2009). Scharf (1983), in his study (entitled 'Arab and Islamic Bank' conducted by Development centre, Organisation of Economic Co-operation and Development (OECD), reported that Islamic banks may play a key role in the economic growth of a nation. In the modern financial market an alternate arrangement for participation of capital and entrepreneurship started with the advent of Islamic Banking in the 70's. In a number of studies such as IMF, World Bank and IFC, the Islamic banks activities were discussed in detail. In a study by OECD of the European countries, Scharf, (1983) reveals the fact that interest-free banking is a novel form of finance and, they are not only trying to give interest another name but that legal instruments within the framework of Shari'ah exist which permit profitability on a different, albeit Qoranically acceptable basis. Islamic banks belong to the class of equity-participation banks. About the possibility of introducing an interest-free financing system through Islamic banking principle Scharf (1983) also argues that the establishment of Islamic financial systems based on the principle of Shari'ah is not only feasible but also profitable. It has been shown empirically by the Darrat (1988) that the financial (banking) system would be more stable without interest bearing assets (Islamic System). In doing that he looked at Tunisia as the case study. The results show that in the absences of interest bearing financial assets from the economy of Tunisia would be more stable and interest free monetary system is more efficient than interest based system. In other hand, as noted by the Khan (1986) that traditional banking system whether doing well or not it would pay deposit a fixed interest. He concludes that such way

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